Where a person commits an offence against the provisions of the Fair Competition Act, Chapter 285, Revised Edition 2002, of the laws of Tanzania, as amended from time to time (the Act) (other than under Part VI, Part VII or sections 58, 59 or 88), the Fair Competition Commission (FCC), a body tasked with promoting and protecting effective competition in trade and commerce and protecting consumers from unfair and misleading market conduct, is sanctioned to impose on that person a fine of not less than five percent (5%) of his annual turnover and not exceeding ten percent (10%) of his annual turnover.
The source of turnover from business or investment which the FCC was empowered to impose a fine, prior to changes made on section 60 (1) of the Act as shall be explained below, was determined on the global source test, that is, from both the local and foreign income sources.
In examining an offender’s financial disclosures, including financial statements, the FCC would determine the overall total turnovers generated from within Tanzania and outside Tanzania, for it to impose a percentage of fine commensurating with the offence.
Equally, where an offender did not have any turnover in Tanzania, then, the FCC had powers to impose fine on the foreign income source.
It is important to point out that, the FCC’s jurisdiction to impose a fine on both local and foreign source is based on the provision of Section 7 of the Act, which gives it extraterritorial jurisdiction over; (a) a citizen of Tanzania or a person ordinarily resident in Tanzania; (b) a body corporate incorporated in Tanzania or carrying on business within Tanzania; (c) any person in relation to the supply or acquisition of goods or services by that person into or within Tanzania; and (d) any person in relation to the acquisition of shares or other assets outside Tanzania resulting in the change of control of a business, part of a business or an asset of a business, in Tanzania.
This position of imposing a fine on global income sources was highly unfriendly to investors and more so to would-be offenders because of, (1) the consequence of adding income generated from a foreign source increased astronomically the degree of fine to be paid by the offender, and (2) unfair to those who did not have any source of income derived from Tanzania, thus exposing their foreign income sources.
In the course of administering fines, there were concerns raised by the business community, among others, regarding this extraterritorial application of fines, from both the local and foreign income sources. The FCC took note of these concerns, triggering changes to section 60 (1) of the Act by the Finance Act No. 8 of 2020 (Finance Act).
The Finance Act has now amended section 60 (1) of the Act and limited fines imposed by the FCC to turnovers which have sources in Mainland Tanzania. What this means is that, going forward, fines will only be imposed on turnovers that have a source or are derived from Mainland Tanzania.
In that regard, where an offender has no source of turnover in Mainland Tanzania, including for emphasis purposes, Zanzibar, then such imposition would be inapplicable.
Note: This is not a legal opinion and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.
