Inheritance tax and inheritance law in Tanzania
Taxation Researcher | May 10, 2021
The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Tanzania: what restrictions there are and whether making a will is advisable.
No inheritance or gift tax is levied in Tanzania.
What inheritance laws apply in Tanzania?
Local inheritance laws apply to foreigners with assets in Tanzania.
The laws applying to inheritance in Tanzania arethe Magistrate Court Act, Cap 11 (5th schedule), the Probate and Administration of Estates Act (Cap 352) ("PAE"), The Local Customary Law (Declaration) (no.4) Order of 1963 ("LCL"), and the Islamic Law Restatement Act (Cap 375) ("ILR").
The law applicable to foreigners is normally the PAE, based on the principle of "lex situs" i.e. the applicable law is that where the inherited property is located. This law cuts across religions and nationalities provided that the propertyto be administered is located in Tanzania. (The ILR applies only if the deceased was of the Islamic faith). If the spouse of a foreigner is a Tanzanian citizen who owns real estate in Tanzania, then his/her succession is governed by Tanzania law, and not by the law of the foreign spouse.
The High Court of Tanzania is the only court vested with jurisdiction over probate and administration issues concerning foreigners, regardless of the applicable law.
Foreigners are restricted from inheriting and owning land in Tanzania.
Foreigners can only own land in Tanzania if they are investors registered with the Tanzania Investment Centre ("TIC"). Under section 20 of the Land Act, investment status may be granted to any person, company, or group of persons (whether or not formed into a corporate body). The land rights granted to foreign investors derive from the TIC. Upon death or insolvency of the foreign investor, the land rights revert back to the TIC; however a foreigner or foreign company with land rights from the TIC can bequeath shares in the land (subject to any pre-emption clauses which may exist in the Articles of Association of the Company).
The Land Registration Act does not prohibit a foreigner from being a legal personal representative of the deceased, who can administer an estate comprising land located in Tanzania under the powers of a Court decree.
Advocates are necessary.
Advocates are necessary in Tanzania to draw up legal documents, including wills, and to deal with legal disputes in court, for example by representing or defending the petitioner if there is an objection to the granting of either probate or the letters of administration. The nature and extent of the advocates´ participation depends on the wishes of the parties involved. Although the process may be simple and straightforward, parties usually prefer to engage legal counsel as a result of the technical nature of the laws and procedures in legal proceedings.
If there is no will, an administrator must be appointed.
In the absence of a will, an administrator must be appointed by the heirs of the deceased at a clan meeting. It is the duty of the administrator to petition the Court. The petition must be accompanied by a number of documents:
- Minutes of the clan meeting, to show that the heirs have consented to and entrusted the administrator to administer the estate;
- The death certificate of the deceased;
- An affidavit as to the domicile of the deceased person, sworn by the administrator, or one of the heirs;
- Surety bonds executed in favour of the elect administrator, confirming that he will administer the estate honestly.
On hearing the petition, the Court normally grants the letters of administration, unless fraud or foul play is discovered surrounding the preliminary procedures (for example, fabrication of the minutes of the clan meeting, or impropriety in conduct or reputation of the elected administrator).
If there are no heirs, the estate falls to the Tanzanian government, under the appointed Administrator General.
If there is a will, an executor is needed to petition the Court.
If the will does not name an executor, it only serves to define the wishes of the deceased on how the estate should be devolved, and the procedure followed is the same as if there was no will, as described above.
If the will names an executor, it is the duty of the executor to petition the Court to to probate the will. This Petition is accompanied by
- a copy of the will;
- an affidavit to prove the domicile of the deceased;
- surety bonds, to be executed if the will is contested.
The estate of the deceased is then placed by a Court order under the charge of the executor, and the estate must be distributed according to the will.
The administrator of the estate, or the executor of the will, only becomes the legal personal representative of the deceased after registration with the registrar of titles at the land registry. The legal personal representative has powers to sell or lease the landed property for the interests of the heirs. Therefore a foreigner (e.g. the spouse of a Tanzanian citizen) who inherits an estate in Tanzania and who is also appointed as an administrator/executor and registered as legal personal representative can sell the property in that capacity and realize the proceeds.
The best course of action is to make a will.
It is advisable for a foreigner with assets in Tanzania to make a local will. This ensures that the High Court has the necessary guidance to carry out his/her wishes, and it minimizes the time required to administer the estate. In the absence of a local will, the administration of the estate may take a long time, and the wishes of the deceased may not be followed.
A local will can be made under Common Law, before a notary public. The testator can choose to have other witnesses, instead of the notary public. To have the force of law, such a will must be registered in Tanzania under the Registration of Documents Act, Cap 117, otherwise it is invalid.
A will can also be made in Tanzania following the Local Customary Law. An oral will is made in the presence of not less than four witnesses, two of whom must be relatives of the testator. If the witnesses die before the testator, another will must be made. If the the number of surving witnesses is reduced to two, the will is cancelled, and the estate is administered as if the deceased died intestate. A written will is made by a literate testator in the presence of two witnesses, one of whom must be a relative. If the testator is illiterate, the will is made in the presence of four witnesses, two of whom must be relatives. The will must be written in ink, and signed or thumb stamped by the testator.
Property can be gifted during the lifetime of the owner.
The testator is free before death to donate any or all of his/her assets in Tanzania to anyone through a deed of gift based on natural love and affection.
If the donor is married, then his/her spouse must consent to the transfer of a matrimonial home. Once the title to the gift has passed to the transferee, such transfer cannot usually be challenged, unless there are suggestions of fraud or other foul play.
There are no compulsory heirs or reserved portions.
Problems arise if there are many potential heirs, when no will exists to set out the rights of the heirs over the estate of the deceased. Since there are no compulsory heirs or reserved portions in Tanzania law, conflicts may arise between the spouse, the children, and the clan members of the deceased as to how the estate is distributed. This problem might apply to a foreigner with a Tanzanian spouse who owns property in Tanzania. In such cases, the Court decides, for the interest of justice, how the estate should be distributed for benefit of all the heirs.
Property can pass to Minors.
If property in Tanzania is to be bequeathed to minors (under 18 years), or persons of unsound mind, then the will should specify how their inheritance is to be administered (and by whom) pending their reaching the age of majority, or becoming well enough to deal with the property. If the Court finds that for any reason the executor or administrator of the will is unable to administer the bequeathed property in the interest of such a beneficiary, then it may direct that the estate of the deceased be placed for a period of time under the care of the Administrator General.