Q&A – 7 December 2015
Choice of law in contract
We are a company in Tanzania purchasing some huge machinery from a European manufacturer. We want to know what choice of law we should put in the purchase agreement as we would like to use Tanzanian law? How can we secure ourselves in the transaction? Any other guidance you can give us will be appreciated.
IY, Dar
Such purchase agreements are quite common in international trade. Considering that the manufacturer is based in Europe, and you are here, any issues arising out of the purchase agreement will likely have to be enforced against the supplier in Europe.
European Courts will unlikely adjudicate on a matter that has Tanzanian law as the choice of law. Further, assuming Tanzanian law is agreed and Tanzanian Courts do decide in your favour, you will still need to go execute against the supplier in Europe, which will, depending on the exact European country you are dealing in, mean that you reopen the case in Europe.
We would recommend you engage a lawyer in the country of purchase, and proceed choose the law of that country as we believe adjudication and execution will be easier. Your lawyer there can also look at pros and cons of having an arbitration clause in the agreement.
To secure yourselves in this transaction, we recommend you ensure the purchase agreement is vetted or drafted by a local lawyer in the country of purchase, payment modality be through a letter of credit, you purchase adequate insurance, you conduct pre shipment inspection and get a technical person to look at the machines, ensure you have a warranty or extended warranty, get recommendations of the supplier and do thorough background checks of both the machines and persons you are dealing with.
Tax authority powers to search
Is the tax authority allowed to search my office for tax documents? What about searching my house? I am deeply concerned as am informed that the powers of the Tanzania Revenue Authority have been expanded. What can I do? My last concern is on challenging a tax decision at TRA. I am informed that I can pay an amount of one third of the tax in dispute, or the tax not in dispute whichever is higher. My question is on whether or not the TRA can forcefully proceed collect the remainder tax after I have made such deposit and before my objection is determined?
GG, Mwanza
It is true that the TRA have powers to not only search your office but also your dwelling house, although they can only search your dwelling house without a Court order between 9am and 6pm. Section 42 of the Tax Administration Act of 2015 states that the Commissioner General shall, without a prior notice, be granted free access to any premises, documents, goods, vessels, vehicles, aircrafts or any other assets. You can see that the wording is very wide, and the powers can be delegated to any tax officer.
Your second question has a specific section in the Tax Administration Act which provides in section 51(7) that where a taxpayer files an objection and makes payment under subsection (5), the liability to pay the remaining assessed tax shall be suspended until the objection is finally determined. The suspension of tax would mean that the TRA cannot forcefully collect the remaining disputed tax until the objection proceedings are concluded. Clearly the law comes to the protection of the taxpayer to ensure an equitable and just collection system.
Selling of Kigamboni plot
My sister has asked me to sell her plot in Kigamboni on her behalf and send her the money as she is abroad. She has written to me in writing authorising me to sell it. The lawyer of the buyer insists that I do not have the power to do so. I am confused. Please guide me.
MS, Dar
As per your question the plot belongs to your sister and not to you and therefore as the legal and registered owner she is the one with the power to sell, lease, mortgage or do anything with the plot. As for her being away and wishing to sell it by giving you the power to sell it on her behalf, she cannot do so by just writing to you. We do not know the contents and format of the written authorisation she has written to you as we have not seen it but just a written authorisation is not enough to give you the powers to sell the plot on her behalf.
The law requires for her to issue a power of attorney to you. In this instance such power of attorney will be a specific power of attorney giving you only the power to sell that specific plot on her behalf. That power of attorney has to be dully signed by your sister as the donor and you as the donee and properly attested. It also has to be attached with passport size pictures of both you and your sister.
As per the Land Registration Act, such power of attorney will need to be registered by the registrar of titles. Only after registration can we say that your sister has legally appointed you and given you the power to act for and on her behalf to do what is specifically stated under the said power of attorney.
On a separate note you should also know that power of attorney cannot only be specific but a person can give you a general power of attorney under which you would enable you to act on behalf of that person on a wider range of things.