Investment in Zanzibar is governed by the Zanzibar Investment Promotion and Protection Authority Act 2018 (ZIPPA Act). The Zanzibar Investment Promotion Authority (ZIPA) has been established under section 3 of the Act and has been vested with the function of regulating, promoting, and administering of investment activities in Zanzibar.
The various benefits provided under the Act have opened the doors for foreigners to invest in Zanzibar in various key sectors which include: energy, real estate, upmarket tourism, agriculture and fisheries, information technology, infrastructural development, industrial manufacturing, and assembling. The Free Economic Zones declared under the ZIPPA Act include Fumba area, Amaan Industrial Park, Maruhubi area and Airport area in Unguja and Micheweni area in Pemba. These areas are offered by ZIPA to potential investors for lease.
One of the fastest-growing sectors which has become a key area of interest to foreign investors is the real estate industry which is dominant in areas like Fumba which has one of the largest and fastest-growing development projects. 
Funds transfer which is an inquiry of many a foreign Investor have been guaranteed since the ZIPPA ACT provides that a foreign national who has invested in Zanzibar may transfer out of Zanzibar, after taxation, the following: –
- dividends arising from or out of his investment of foreign assets;
- the principal and interest of any foreign loan registered in Zanzibar contracted with respect to the investment;
- the proceeds on liquidation or sale of the investment or part of it; and
- any other item of any foreign expenditure related to the investment
Moreover, the ZIPPA Act further guarantees that no approved enterprise, approved domestic enterprise, or any property belonging to any investor can possession be compulsorily taken and no interest in or right over such enterprise or its properties can compulsorily be acquired except in accordance with the provisions concerning the payment of reasonable, full and adequate compensation as provided under Section 17 of the Zanzibar Constitution.
Together with the new slogan of “Blue Economy” which has been adopted by the current Dr. Hussein Ali Mwinyi government, foreign investors may also consider investing in various development projects which are related to the fisheries and marine industry.
Investment on Land/Property by Foreigners in Zanzibar
The Land Tenure Act 1992 provides that land can be leased to a Zanzibari and non- Zanzibari intending to use the land for investment purposes, subject to the approval of the investment project by ZIPA. Provided that in the event the public land (held by the government or public person) to be leased is comprised under a Right of Occupancy, the Minister will be required to obtain consent from the holder of the Right of Occupancy before the land is leased. The maximum period of lease is 99 years, however, subject to renewal.> Thus foreigners can invest on land/property but must first comply with all the procedures of ZIPA so that the investment may be approved.
Lease of any public land developed in accordance with ZIPA may be sold, assigned, sub-leased or sub-divided, inherited or mortgaged. The Lessee is required to obtain approval from the Land Transfer Board before any disposition as well as meet the terms and conditions set by the Minster.
It should be noted that land does not include buildings and other improvements.
Procedures to be Followed to Become an Approved Investor
For a foreigner to become an investor in Zanzibar, he or she must apply to ZIPA to obtain an Investment Certificate. On making such an application the following criteria must be fulfilled by the investor:
- the investor must be investing or intend to invest in capital equivalent to USD 2,500,000 for hotel investment or real estate or for any other businesses for not less than USD 300,000, and
- the investor must undertake a lawful business as provided by the ZIPA Act. 
In addition, the foreigner applying to become an investor in Zanzibar is required to:
- submit a business concept note through an Investment Intention Form;
- within three working days after submitting the Investment Intention Form the Authority (ZIPA) shall inform the applicant that he is required to take an Investment Application Form, and
- the applicant shall take the Investment Application Form after paying to the Authority the requisite fees.
After filling the Investment Application Form, the applicant is required to submit to the Authority the duly filled in Application form together with:
- 10 copies of the Business Plan or Feasibility Study;
- Certificate of Incorporation or a Certificate of Compliance of an enterprise where a corporate is registered outside Zanzibar;
- Memorandum and Articles of Association;
- proof of the availability of funds for the implementation of the investment or proposed investment;
- Passport copy, passport size photograph, and Curriculum Vitae of each shareholder;
- Police clearance certificates from the country of origin and country of residence of each shareholder and director;
- Permit or license granted by the business sector which the business is operating or intended to operate where appropriate;
- proof of payment of the Investment Application form and;
- any other document to support the application.
The feasibility study/business plan abovementioned must also include:
- the name of the proposed investment and the background information of the business;
- the implementation plan of the proposed project and the expected operation date;
- a market analysis which includes information on potential markets, clients, and competitors;
- the business operation which includes detailed information of any raw materials required and its sources, technology to be used, a plan for knowledge transfer, financing and assets to be sourced abroad and the time frame in which they shall be invested, organization structure, and the human resource required for the proposed investment;
- a five-year financial plan indicating financial projection, risk, and sensitivity analysis for investment; and
- Assessment of environmental and social factors.
Upon completion of the procedures by the applicant, within seven (7) working days the authority is required to decide on whether to issue an Interim Certificate to the applicant once satisfied with the application. The applicant shall be required to pay an Investment Certificate fees, so as to be issued with a certificate and become an Approved Investor in Zanzibar.
Acquiring the Status of a Strategic Investment
Once the applicant has become an Approved Investor in Zanzibar, he may also apply to the Authority to be granted the Strategic Investment status. This application is necessary, as the ZIPA Act has provided all the key sectors in which an Approved Investor can invest, which requires an Approved Investor to have acquired Strategic Investment status. This application may be made by the Approved Investor once he has satisfied the following:
- the investor has invested assets equivalent to USD 100 million or more and contributes at least 30% of this investment in the form of equity;
- has employed at least 1000 people; and
- has invested assets equivalent to USD 50 million in innovative investment or in disadvantageous regions in sectors like; energy, real estate, upmarket tourism, agriculture, and fisheries, information technology, infrastructural development, industrial manufacturing, and assembling. 
Incentives Available to Strategic Approved Investors in Zanzibar
Generally, after being granted Strategic Investment status, the Approved Investor shall enjoy incentives during the implementation of the Approved Investment which includes:
- exemption from all duties and taxes on importation and local purchases of construction goods and materials during project construction;
- exemption on income tax on interest on capital borrowed from foreign banks;
- 5 years grace period on payment of land lease;
- 100% foreign ownership is allowed;
- engagement of foreign contractors is allowed; and
- 5 years grace period on payment of land lease for a marina in tourism investment. 
Once the Approved Investment becomes operational to an Approved Investor who has been granted Strategic Investment status, the investor shall also enjoy;
- 50% exemption of the prevailing rate for Corporate Income Tax;
- 50% exemption of Profit Tax for Repatriated Profit;
- 50% exemption for Accelerated Depreciation for five years;
- 50% exemption of income tax on interest on capital borrowed from foreign banks;
- 100% allowance on Research and Development Expenditure;
- 100% retention of all profits after tax; and
- 100% foreign ownership is allowed. 
Strategic Investors with investments in the manufacturing sector may further be granted the following incentives: –
- exemption from payment of any tax on all goods produced for exports;
- exemption from payment of trade levy for raw materials and industrial inputs purchased from Tanzania Mainland;
- exemption from payment of import duty, excise duty, and VAT on importation of heavy machines and equipment;
- exemption from payment of VAT on local purchase of heavy machinery or equipment required during production phase; and
- additional 5 years allowance of 50% Accelerated Depreciation
Incentives Available to Approved Investors in Zanzibar.
For Approved Investors who shall invest in development projects in the Free Economic Zones in Zanzibar, they shall enjoy:
- exemption from payment of tax and duties for machinery, equipment, and heavy-duty vehicles, building and construction materials, and other goods of capital nature to be used for the purpose of developing Free Economic Zone infrastructure.
- exemption from payment of Corporate tax for an initial period of ten years and thereafter a corporate tax shall be charged at the rate in the Income Tax Act.
- exemption from payment of withholding tax on rent, dividends, and rent and interest for the first ten years.
- exemption from payment of property tax for the first ten years.
- remission of customs duty, value-added tax, and any other tax payable in respect of one administrative vehicle, ambulances, firefighting equipment, and vehicles, and up to two buses for employees’ transportation to and from the Free Economic Zones
- exemption from payment of stamp duty on any instrument executed in or outside the Free Economic Zone relating to transfer, lease, hypothecation of movable or immovable property in the Free Economic Zone or any document, certificate, instrument, report, or record relating to any activity, action, project, undertaking or venture in the Free Economic Zone.
- treatment of goods into the Free Economic Zone as transit goods.
- on-site custom inspection of goods within the Free Economic Zones. 
In addition, foreigners who wish to invest in Zanzibar must also apply for work and residence permits. They may do so while in the country.
 Section 35(1) of the Zanzibar Investment Promotion and Protection Authority Act
 Zanzibar Investment Guide 2019 – 2020, pg. 67
 Section 47(1) nad (2)
 Paragraph 1 of the First Schedule of Zanzibar Investment Promotion and Protection Authority Act
 Paragraph 3(a) to (c) of the First Schedule of the Zanzibar Investment Promotion and Protection Authority Act
 Paragraph 3(d) of the First Schedule of the Zanzibar Investment Promotion and Protection Authority Act
 Paragraph 3(e) of the First Schedule of the Zanzibar Investment Promotion and Protection Authority Act
 Third Schedule of the Zanzibar Investment Promotion and Protection Authority Act.
 Paragraph 1 of the Sixth Schedule of the Zanzibar Investment Promotion and Protection Authority Act.
 Paragraph 2 of the Sixth Schedule of the Zanzibar Investment Promotion and Protection Authority Act.
 Paragraph 1 of the Seventh Schedule of the Zanzibar Investment Promotion and Protection Authority Act.