Zanzibar Hospitality Industry: Compliance as a Cornerstone for Sustainable Growth

Zanzibar’s tourism sector reached new heights in December 2024, welcoming 91,611 international visitors, a remarkable 30.5% increase from the 70,186 recorded during the same month in 2023. Adding to this achievement, a recent study by Bounce crowned Zanzibar as the second-best island getaway destination in 2024, surpassing renowned locations like Mallorca, Ibiza, and Sardinia.

The hospitality industry undeniably serves as the backbone of Zanzibar’s economy, drawing tourists from across the globe. Yet, thriving in this sector requires more than offering breathtaking views and luxury accommodations. Compliance with local laws and regulations is paramount to fostering sustainable growth, maintaining ethical business practices, and safeguarding the island’s unique resources and communities.

For investors and operators, meeting compliance obligations is not just a marker of responsible business conduct, it is a legal mandate. Failure to comply can result in fines, operational disruptions, or reputational damage, making it crucial for businesses to navigate Zanzibar’s regulatory framework effectively.

This article provides a roadmap to key compliance requirements within Zanzibar’s hospitality industry, guiding stakeholders in building operations that align with local regulations while contributing to the archipelago’s economic and cultural preservation.

1. BUSINESS REGISTRATION AND LICENSING

The foundation of legal compliance begins with proper business registration. All hospitality businesses, including hotels, resorts, lodges, and restaurants, must:

• Register with the Zanzibar Business and Property Registration Agency (BPRA) to obtain a business license.
• Secure a Tourism License from the Zanzibar Commission for Tourism, which is mandatory for operations catering to tourists.
• Obtain additional permits, such as the Food and Beverage License which is granted under Zanzibar Food and Drug Agency (ZFDA) in accordance to The Zanzibar Food, Drugs and Cosmetics Act No.2 of 2006 and Alcohol Sale Permit as per Section 6(1) of the Liquor Act No.9 of 2020, depending on the nature of services offered. 

Non-compliance with registration and licensing can result in fines, business closure, or legal actions.

2. ENVIRONMENTAL COMPLIANCE

Zanzibar’s natural beauty is central to its tourism appeal, making environmental compliance a critical component for hospitality businesses. Operators must:

• Comply with the Environmental Management Act No. 3 of 2015, which mandates environmental impact assessments (EIA) for new developments.
• Follow guidelines on waste management, resource conservation, and pollution control as prescribed by the Zanzibar Environmental Management Authority (ZEMA).
• Obtain necessary environmental clearance certificates.

Failure to comply with environmental laws can lead to revocation of licenses and reputational damage.

3. LABOR AND EMPLOYMENT REGULATIONS

The Zanzibar labor laws emphasize fair treatment, safety, and welfare of employees in the hospitality sector. Key compliance points include:

• Adhering to the Employment Act No. 11 of 2005, which governs employment contracts, working conditions, and minimum wage standards.
• Providing employees with written contracts detailing roles, wages, working hours, and leave entitlements.
• Ensuring a safe working environment in line with the Occupational Health and Safety Act.
• Avoiding discriminatory practices and promoting gender equality.

Violations of labor laws can attract penalties, labor disputes, and negative publicity.

4. TAX COMPLIANCE

Zanzibar has two key tax authorities which are Zanzibar Revenue Authority (ZRA) which operates under The Zanzibar Revenue Authority Act No.11 of 2022 and Tanzania Revenue Authority (TRA) under Tanzania Revenue Act, CAP 399

ZRA is responsible for collecting taxes specific to Zanzibar, such as VAT, excise duty, and hotel levy. In the hospitality sector, hotels and businesses must register with ZRB to remit VAT on goods and services and pay the hotel levy, which is charged per room or guest. ZRB also oversees tax compliance for local businesses, ensuring proper documentation and timely tax payments

TRA is responsible for collecting taxes on behalf of the Union Government, including corporate income tax, Pay-As-You-Earn (PAYE) for employees, and withholding tax. Hospitality businesses in Zanzibar must comply with TRA regulations for taxes that fall under the Union mandate.

Interaction with the Hospitality Sector:

Hotels must adhere to ZRB for Zanzibar-specific taxes, such as VAT and hotel levy.

They must also file corporate income tax and employee-related taxes with TRA, ensuring compliance with both authorities.

Regular audits and documentation are required to avoid penalties from either body.

This dual taxation system requires businesses to manage compliance with both authorities effectively to operate legally in Zanzibar.

PROCESS OF OBTAINING A ZRA TIN NUMBER IN ZANZIBAR

• Application Submission: Both applications for TIN and ZRA Number require to fill out and submit the application forms to the to the respective Authorities. However, in Zanzibar, an investor is required to first acquire TIN Number before ZRA Number.
• Provide Required Documents: The required documents for the application of TIN Number include Certificate of incorporation, Approval letter from either ZIPA or Zanzibar Commission for Tourism (ZCT), IDs of the Directors and Memorandum and Articles of Association. Whereas, the required documents for the application of ZRA Number include, Certificate of Incorporation, Business Licence from the Municipal Council of where the business is located and MEARTS. All these documents should be certified. 
• Verification: Both ZRA and TRA review the applications and supporting documents for accuracy and compliance.
• Issuance of ZRA and TIN Number: Once approved, the ZRA and TIN Numbers are issued, enabling the taxpayer to conduct taxable activities.

Businesses must register for tax identification numbers, maintain accurate financial records, and file returns within stipulated timelines.

TIMELINES FOR FILING TAXES IN ZANZIBAR

• Value Added Tax (VAT): Filing and payment are due by the 20th of the following month.
• Pay-As-You-Earn (PAYE): Employers must file and remit PAYE deductions by the 7th of the following month. 
• Corporate Tax: Annual returns must be filed by six months after the end of the financial year (typically by 30th June for entities following the calendar year).
• Excise Duty and Other Specific Taxes: Filing and payment are due by the 20th of the following month.
• Property Tax: Typically paid annually, with deadlines set by local authorities.
• Failure to comply with these timelines may result in penalties or interest charges. Always consult with ZRA or a tax professional to ensure up-to-date compliance.

5. HEALTH AND SAFETY STANDARDS

Public health and safety are paramount in the hospitality industry. Establishments must:

• Obtain health and safety certificates from the Ministry of Health and Social Welfare. Establishments are required to obtain health and safety certificates issued by the Ministry of Health and Social Welfare in Zanzibar. These certificates confirm that the premises meet the minimum public health standards as stipulated under the Zanzibar Public and Environmental Health Act.
• Regular Health Inspections: Hospitality businesses in Zanzibar must undergo routine inspections conducted by authorized health officials to ensure continuous compliance with safety regulations, as mandated by local public health laws.
• Hygiene and Sanitation: All areas of the establishment, including kitchens, restrooms, and dining spaces, must be maintained in a clean and sanitary condition. The Zanzibar Food Safety Act outlines specific requirements for sanitation and hygiene in hospitality establishments. Proper waste disposal systems should be in place to prevent contamination and pest infestations, as regulated by the Zanzibar Environmental Management Act.
• Food Safety: Establishments must ensure that all food and beverages are prepared, stored, and served in compliance with food safety standards as specified in the Zanzibar Food Safety Act. Employees handling food must undergo regular health screenings and attend training on safe food handling practices, as required by Zanzibar regulations.
• Employee Health and Safety: Employers should provide a safe working environment for staff, including access to first aid kits, protective equipment, and proper training on workplace safety protocols, as outlined in the Occupational Health and Safety Regulations of Zanzibar. Staff should be educated about personal hygiene practices to reduce the risk of spreading diseases, in line with Zanzibar public health guidelines.
• Fire Safety Measures: Hospitality establishments must install fire safety equipment, including fire extinguishers, smoke detectors, and fire alarms, and conduct regular fire drills as required by the Fire and Rescue Act of Zanzibar. Emergency exits must be clearly marked and accessible at all times, adhering to Zanzibar’s building and safety codes. Emergency Preparedness: Businesses should have a clear emergency response plan in place to handle health-related incidents, natural disasters, or other emergencies, as recommended by the Zanzibar Disaster Management Policy. Employees must be trained on how to respond effectively to emergencies to minimize risks to customers and staff.
• Compliance with Local Laws: Establishments must stay updated on changes in Zanzibar’s health and safety laws and regulations to ensure ongoing compliance. This includes adhering to any directives from the Zanzibar Ministry of Health, Labour, and Welfare. Non-compliance can lead to health code violations, fines, and loss of customer trust.

6. CONSUMER PROTECTION AND SERVICE STANDARDS

The protection of consumer rights and service quality is governed by the Tourism Act and Consumer Protection Regulations. Businesses must:

• Provide truthful information about services, prices, and offerings.
• Address consumer complaints promptly and fairly.
• Ensure standard contracts are clear, fair, and accessible.

In Zanzibar, consumer protection and service standards are primarily regulated under the Tourism Act and the Consumer Protection Regulations, which draw authority from the broader constitutional and legislative framework. Below is a detailed breakdown of the legal framework:

THE CONSTITUTION OF ZANZIBAR (1984, AS AMENDED). The Constitution of Zanzibar provides the overarching framework for human rights, including economic and social rights. While it does not explicitly mention consumer protection, it guarantees:

• The Right to Fair Treatment: Article 12 prohibits discrimination and ensures equal protection of the law. This extends to consumers who may face unfair or discriminatory business practices.
• The Right to Justice: Article 13 guarantees access to justice, enabling consumers to seek redress for grievances.

 THE TOURISM ACT (NO. 6 OF 2009). The Tourism Act is a cornerstone of consumer protection in the tourism sector. Key provisions include:

• Licensing and Standards as provided under Part IV which establishes that all tourism businesses must obtain a license from the Zanzibar Commission for Tourism (ZCT). Licenses are issued based on compliance with specific service quality and safety standards.
• Duty of Care as stipulated under Section 44 whereby tourism operators must ensure the safety, security, and satisfaction of their clients. This includes providing truthful information about packages, accommodations, and activities.
• Prohibition of Misrepresentation which is stated under Section 45 prohibits misleading advertisements or claims about services or pricing are strictly prohibited. Businesses must be transparent about additional costs, cancellation policies, and limitations of service.
• Dispute Resolution as provided under Section 47. The Act mandates the establishment of a clear dispute resolution mechanism for addressing consumer complaints. Complaints may be escalated to the Zanzibar Tourism Commission if unresolved.

CONSUMER PROTECTION REGULATIONS (2014)

These regulations provide comprehensive guidelines on consumer rights and business obligations, covering all sectors beyond tourism which are:-

• Key Consumer Rights include right to information whereby consumers must be informed of all material facts about a product or service, right to safety whereby businesses must ensure that goods and services do not pose undue risks to consumers’ health or safety and lastly right to redress whereby consumers have the right to seek remedies through refunds, replacements, or compensation if their rights are violated.
• Obligations for Businesses: Whereby firstly, fair contracts must be written in simple, understandable language, avoiding unfair terms. Secondly prompt complaint handling whereby businesses must respond to complaints within a reasonable timeframe and thirdly, non-discrimination whereby businesses must not engage in discriminatory practices based on gender, religion, or nationality.
• Penalties for Non-Compliance: Violations can result in fines, license revocations, or other penalties as determined by regulatory authorities.

THE FAIR COMPETITION ACT (NO. 8 OF 2004)

This Act ensures fair market practices and prohibits anti-competitive behaviors that harm consumers which are dived into two:-

• Prohibition of Unfair Trade Practices which include false advertising, price-fixing, and monopolistic practices are prohibited.
• Consumer Advocacy Section under Section 33 wherebythe Act establishes a Consumer Protection Unit under the Zanzibar Fair Competition Commission (ZFCC).The Unit is responsible for educating consumers, investigating complaints, and enforcing compliance.

 THE ZANZIBAR STANDARDS ACT (NO. 1 OF 2011)

This Act mandates quality control of goods and services to ensure consumer safety and satisfaction.

• Certification and Quality Assurance. Products and services must meet specific standards approved by the Zanzibar Bureau of Standards (ZBS).
• Market Surveillance. ZBS conducts inspections and testing of goods to ensure compliance with safety and quality standards.

INSTITUTIONAL FRAMEWORK

Several government bodies work together to enforce consumer protection and service standards which are:-

• Zanzibar Commission for Tourism (ZCT) which regulates the tourism industry, ensuring compliance with service standards and resolving disputes.
• Zanzibar Fair Competition Commission (ZFCC) which enforces fair trade practices and investigates consumer complaints across all sectors.
• Zanzibar Bureau of Standards (ZBS) which oversees quality assurance for goods and services in the market.
• Zanzibar Consumer Protection Council which is an advisory body advocating for consumer rights and providing policy recommendations to the government.

LEGAL REMEDIES AVAILABLE TO CONSUMERS

Consumers in Zanzibar have access to various remedies in case of violations which are mediation and Arbitration handled by ZCT, ZFCC, or relevant industry bodies, Legal Action whereby consumers may file lawsuits in courts or tribunals for damages or injunctions and Administrative Penalties whereby Regulatory bodies can impose fines or revoke licenses of non-compliant businesses.

CONCLUSION AND RECOMMENDATIONS.

Compliance with Zanzibar’s hospitality laws is essential for fostering a responsible, sustainable, and profitable tourism sector. Businesses must stay informed of evolving regulations, invest in training for staff, and adopt compliance monitoring systems to avoid legal pitfalls. By adhering to these requirements, stakeholders not only contribute to legal and ethical operations but also enhance the overall tourism experience, safeguarding Zanzibar’s reputation as a premier global destination.

This analysis is for informational purposes and should not be considered legal advice. For specific legal concerns, please consult with a qualified professional.