MZUMBE UNIVERSITY
MBEYA CAMPUS COLLEGE
DEPARTMENT OF LEGAL STUDIES.
PROGRAMME : LLB III
SUBJECT : LAW OF BUSINESS ASSOCIATION
SUBJECT CODE : LAW 328
LECTURER’S NAME : MR. NUHU SULEIMAN
NATURE OF WORK : INDIVIDUL ASSIGNMENT
STUDENT NAME : MPOKI TOMSON
REGISTRATION NO : 2631322/T.21
SUBMISSION DATE : 6th May 2024
QUESTION
Mr. Robin Van Parsie and his wife Careen Van Parsie are citizens of the United Kingdom and
they are barristers practicing Law in London. While in Tanzania during summer vacation in July
2023 they met with Amos Juakali and Jane Juakali who are advocates respectively with a licence
to practice in Zanzibar. They also met with Dude Tamaambele who introduced them to Kassim
Tubago and Stella Kajimbwa who are her fellow advocates, and Safia Jualamoto an accountant
cum tax consultant. In April 2024 Mr. Van Parsie and his wife, returned to Tanzania after they
decided to practice law in Tanzania and proposed that you should all together establish a law
firm for the purpose of practicing law in Tanzania together with Amos and Jane with the
objective of providing legal services and to be tax consultants, the proposal which you all agreed.
In that meeting Mr. Van Parsie and his wife agreed to contribute ten (10) Modern computers, a
ten (10) years’ licence for the Palgrave library worth 300 million, 1 brand new Toyota Land
cruiser and 2 Toyota Hiace as their capital to the business organization to be formed. However,
they would like to know from you in whose name the vehicles should be registered. On part of
Amos and Jane they agreed to contribute 200 square meters of office space located on the 5 th
floor of Clenn Towers, which was given to Jane as a wedding gift by her father, however Amos
and Jane have signed a memorandum of understanding (MoU) with the management of Clenn
Towers that they would contribute 2 million Tanzanian shillings as monthly charge for the unit
title.
Kassim, Stellah and Safia agreed to contribute 20 million Tanzanian shillings each as their
contribution to the capital of the firm, but they are not sure in whose account the money would
be deposited. You both further agreed that the name of the firm should be Makolo Law
Chambers.
The parties would like you to prepare a legal opinion on the issues raised and on the following;
I. The feasibility and propriety of the proposed business
II. The procedures to be followed from the date of they agreed on the proposed business
to the date of the commencement of the business
III. The mode of contribution of the capital to the business and the ownership of property or
assets to be contributed
IV. The mode of assessment and payment of tax for the business to be formed.
After giving your opinion, you are required to draft the necessary documents (Assume you
name is advocate Mpenja)
TABLE OF CONTENTS
1.0 SCOPE OF THE QUESTION
DATE: 06TH JUNE, 2024.
MAKOLO LAW CHAMBERS,
P.O.BOX 149,
MBEYA- TANZANIA.
RE: LEGAL OPINION REGARDING PARTNERSHIP PROCEDURES
1.0 INTRODUCTION
We appreciate your request for legal guidance regarding the appropriate procedures for
establishing a partnership involving all interested members. Enclosed is our advice on the matter,
formulated after thorough examination of the facts and relevant legal principles. Herein lies the
legal opinion for your perusal.
2.0 MATERIAL FACTS
Mr. Robin Van Parsie and his wife, Careen Van Parsie, both United Kingdom citizens and
practicing barristers in London, encountered Amos Juakali and Jane Juakali, Zanzibar advocates,
during their July 2023 vacation in Tanzania. They also met Dude Tamaambele, who introduced
them to Kassim Tubago and Stella Kajimbwa, fellow advocates, and Safia Jualamoto, an
accountant and tax consultant. In April 2024, the Van Parsies returned to Tanzania, deciding to
practice law there. They proposed forming a law firm with Amos and Jane to provide legal and
tax consultancy services, which was agreed upon.
During the meeting, the Van Parsies committed ten modern computers, a ten-year license for the
Palgrave library valued at 300 million, 1 brand new Toyota Land Cruiser, and 2 Toyota Hiace as
their capital contribution. They sought advice on the vehicle registration. Amos and Jane offered
200 square meters of office space on the 5th floor of Clenn Towers, a wedding gift from Jane's
father. They also agreed to pay 2 million Tanzanian shillings monthly for the unit title. Kassim,
Stella, and Safia agreed to contribute 20 million Tanzanian shillings each but were undecided on
the account for depositing the money. It was mutually decided that the firm would be named
Makolo Law Chambers.
3.0 ISSUES
3.1 Whether the assets should be registered jointly or separate and whose accounts the
money should be deposit
3.2 Whether there is feasibility and propriety of the proposed business
3.3 Whether there is any procedure to be followed from the date they agree on the
proposal to the date of commencement of the business
3.4 Whether there is any mode of contribution to the assets, capital and the ownership of
the property
3.5 Whether there is mode of assessment and payment of tax for the business to be
formed
4.0 THE LAWS APPLICABLE
5.0 THE LEGAL ARGUMENTS
5.1 ISSUE NO. 1
In the scenario involving Mr. Van Parsie and his wife, who seek clarification on the
vehicle registration, and Kassim, Stellah, and Safia, who are uncertain about the
accounts for depositing money, Tanzania partnership law provides guidance for both
situations, which can be seen through the provision of section 191(2)(a) of the Law of
Contract Act,1 which provides that when assessing whether a group of individuals
constitutes a partnership, consideration should be given to joint tenancy, tenancy in
common, joint property, common property, or partial ownership alone does not
automatically establish a partnership, regardless of whether the tenants or owners
share any profits generated from such holdings. Additionally, section 195(1) of the
Law of Contract Act,2 specifies that all property, rights, and interests initially brought
into the partnership's stock or acquired thereafter for partnership business purposes
are considered partnership property. These assets must be held by the partners for
partnership purposes and in accordance with partnership agreements. If land or any
hereditable interest becomes partnership property, it is typically treated as such
among the partners unless stated otherwise.
1
[Cap 345, R.E 2019].
2
Ibid.
5.2 ISSUE NO. 2
According to Tanzania laws, foreign lawyers are permitted to practice law within the
geographical jurisdiction of the country, including those lawyers from the United
Kingdom, provided that they are not suspended from practicing in their home
country, as outlined under section 25(1) of the Advocates Act. 3 Section 29 of the
Advocates Act,4 allows for petition-supported applications to the Attorney General if
such lawyers face suspension in their home jurisdiction. Additionally, section 35 of
the Advocates Act,5 pertains to the application process for a practicing certificate.
These lawyers must adhere to the codes of conduct and ethics outlined in the
Advocates Act,6 and the Tanganyika Law Society Act.7
The proposed business venture suggested by Mr. Robin and his wife to establish a
law firm with Amos, Jane, Kassim, Stellah, and Safia constitutes a partnership.
Partnership, refers to the relationship between individuals conducting business
together with the aim of profit, as provided under section 190(1) of the Law of
Contract Act.8 The term Firm, refers to persons who have entered into
partnership with one another are called collectively, and the name
under which their business is carried on is called the firm name as
provided under section 190(2) of the Law of Contract Act. 9 Normally the partnership
relationship arises from a contract rather than from a status, as per the provision of
section 191(1) of the Law of Contract Act.10
Moreover, section 10 of the Law of Contract Act, 11 provides that all agreements are
contracts if they are entered into voluntarily, involve competent parties, are for lawful
consideration, and have a lawful purpose, while section 11 of the Law of Contract
Act,12 specifies that any individual of legal age, of sound mind, and not disqualified
by applicable law is competent to enter into a contract.
3
[Cap 341, R.E 2019].
4
Ibid.
5
Ibid.
6
Ibid.
7
[Cap 307, R.E 2019].
8
[Cap 345, R.E 2019].
9
Ibid.
10
Ibid.
11
Ibid.
12
Ibid.
5.3 ISSUE NO. 3
In Tanzania, the establishment of a partnership involves several specific steps and the
completion of necessary documentation. Initially, the parties should convene a
meeting to discuss various matters, including the selection of a suitable partnership
name in accordance with Tanzanian laws. This name must be distinct from any
existing registered partnerships or companies within Tanzania.
The second step, entails the preparation of legal documents, specifically the drafting
of a partnership deed. This document outlines the terms and conditions of the
partnership, including but not limited to the partnership name, names of partners,
capital contributions, profit-sharing ratios, roles and responsibilities of each partner,
decision-making processes, dispute resolution mechanisms, and other relevant
clauses.
Subsequently, the partnership may proceed to register its business name. While
registration with the Business Registration and Licensing Agency (BRELA) is not
mandatory for partnerships in Tanzania, doing so provides legal recognition and
protection. Partners may opt for registration to avail themselves of these benefits.
The fourth step, involves obtaining a Taxpayer Identification Number (TIN) from
the Tanzania Revenue Authority (TRA). This TIN is necessary for tax purposes and
compliance with tax regulations.
The fifth step, the partnership should open a bank account in its name. During this
process, the bank may request various documents, including the partnership deed,
TIN, partners' identification documents, and other relevant paperwork.
Lastly, depending on the nature of the partnership's business activities, partners may
need to obtain specific licenses and permits from relevant authorities. It is imperative
to adhere to all regulatory requirements and obtain the necessary authorizations.
5.4 ISSUE NO. 4
5.5 ISSUE NO. 5
In such partnership arrangements, the assessment of various assets for tax purposes
typically relies on their assessed value and the income generated by the partnership.
According to section 46(1) of the Tax Administration Act, 13 tax assessment is
conducted through self-assessment, obligating individuals liable for tax payment to
file tax returns. Here's an overview of the assessment and payment process for the
given scenario:
Income Tax, the partnership's business operations would be subject to income tax on
generated profits. Taxable income is calculated based on revenue minus allowable
deductions and expenses.
Value Added Tax (VAT), depending on the nature of the partnership's activities, it
may need to register for VAT and charge VAT on eligible goods and services
provided. VAT collected would be payable to the Tanzania Revenue Authority
(TRA), offset by any input VAT on purchases.
Annual Tax Returns, the partnership is required to file annual tax returns with the
TRA, providing details of income, expenses, and tax computations.
Asset Contribution, assets contributed by each partner, such as computers, vehicles,
licenses, and office space, would be evaluated and recorded on the partnership's
balance sheet at their fair market value.
Pay as you earn (PAYE), if the partnership has employees, it would need to
withhold and remit PAYE tax on their salaries to the TRA.
Capital Gains Tax, if the partnership decides to sell assets like vehicles in the future,
it could be subject to capital gains tax on any realized gains.
Withholding Tax, the partnership might be required to withhold tax on certain
payments made to partners or other entities, such as royalties, interest, or services
rendered by non-residents.
6.0 OPINION
7.0 CONCLUSION
13
[Cap 438, R.E 2019].
This legal opinion is restricted to the aforementioned matters, laws, and practices outlined
herein and should not be interpreted as extending to any issues not explicitly mentioned. It is
important to note that this opinion does not constitute an expression of views regarding any
representations, warranties, other information, or documents examined in relation to this
opinion, unless expressly confirmed herein.
Furthermore, this opinion is directed solely to MAKOLO LAW CHAMBERS for their
exclusive benefit and should not be relied upon, utilized, or disclosed to any other individuals
or for any other purposes.
We hereby opine and advise.
Respectfully,
……………………….
MPENJA Advocates,
P.O BOX 345,
MBEYA-TANZANIA.
c.c. (to those whom the letter of instruction was copied to)
