Corruption remains a major concern for foreign companies and investors in Tanzania, according to the assessment by the US Department of State 2011. According to the report, corruption is economy-wide, and measures to combat it are applied impartially to foreign and domestic investors. It is particularly petty corruption that has been identified by foreign companies as an obstacle to investment. This perception is supported by the World Economic Forum Global Competitiveness Report 2010-2011, in which, business executives have identified corruption as the most problematic factor for conducting business in Tanzania, followed by access to financing and an inadequate supply of infrastructure. According to the report, companies consider the occurrence of irregular payments and bribes in Tanzania as common. In addition, companies behave unethically in interactions with public officials, politicians and other companies to the point that their behaviour constitutes a competitive disadvantage for the country. In the World Bank & IFC Enterprise Surveys 2006, almost half of the surveyed companies operating in Tanzania expect to make informal payments to 'get things done', while a fifth of them identify corruption as a major constraint on their business operations. 

According to Transparency International Global Corruption Report 2009, the informal sector amounts to more than 50% of Tanzania's economy and in the 2009 Policy Brief on Business Environment, published by the NGOs' Twawesa and Policy Forum, the procedures for registering a company in Tanzania are described as non-transparent, time-consuming and arbitrarily applied, thus discouraging companies from entering the formal sector. Ministers and high level officials can exercise a significant amount of discretion, and well connected companies may obtain unfair advantages. In the World Economic Forum Global Competitiveness Report 2010-2011, the surveyed companies give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 3.4 on a 7-point scale (1 'always show favouritism' and 7 'never show favouritism').

One of the main problems regarding business corruption is the lack of enforcement of the various anti-corruption initiatives. Business-relevant areas in which corruption persists include government procurement, licensing, privatisation, taxation, ports, and customs clearance, according to the US Department of State 2011. According to the report, the traffic police, the revenue authority and immigration officials are cited as being very prone to corruption. Public procurement is an area of business activity where foreign companies are very likely to encounter corruption. For example, according to the World Bank & IFC Enterprise Surveys 2006, 43% report that they expect to give gifts in order to secure a government contract, and that the average payment is 3% of the value of the contract. In order to best reduce the risk of extortion and demands for bribes in the procurement process, foreign investors considering bidding on public tenders are advised to use a specialised due diligence tool on public procurement. Foreign investors considering establishing themselves in Tanzania are generally advised to consult with experienced attorneys, to develop, implement and strengthen integrity systems, and to carry out extensive due diligence before committing funds and when already doing business in the country.

Since the late 1990s, the government has improved the country's investment climate significantly with assistance from international donors. Markets have been liberalised and a number of public companies have been privatised with the participation of foreign investors. Tax free export processing zones (EPZs) have been established and the country's membership to the East African Community provides for low tariff trade of some products between member countries. In 2006, Tanzania had the highest inflows of foreign direct investment in the East African region. Nevertheless, Tanzania's regulatory environment still suffers from inefficiency, and companies investing in the country often face inconsistent application of regulations, as illustrated by Global Integrity 2010. Thus, cumbersome bureaucracy is a major constraint on business operations in Tanzania, presenting opportunities for rent-seeking and encouraging corruption.

Companies surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 perceive government administrative requirements to be quite burdensome, and tax regulations are ranked among the five most problematic factors for conducting business in Tanzania. In contrast, inefficient government bureaucracy is not ranked by companies to be among the greatest constraints on business operations in Tanzania. Commercial regulations can be inconsistent, and the lack of transparency increases start-up and overall operational costs. According to the World Bank & IFC Doing Business 2011, Tanzania performs particularly poorly when it comes to dealing with construction permits and registering property that, with slower and more costly procedures than the regional average for Sub-Saharan Africa. Dealing with these business activities requires a company to spend a substantial amount of time preparing numerous documents and business activities in which companies may encounter demands for bribes or facilitation payments by corrupt officials. On the other hand, starting a company in Tanzania is considerably faster and cheaper than the regional average, which according to the World Bank & IFC Doing Business 2011, requires entrepreneurs to go through 12 procedures over an average of 29 days, at a cost of nearly 31% of GNI per capita. According to the World Bank & IFC Enterprise Surveys 2006, senior management can expect to spend 4% of its time on average dealing with the requirements of government regulation.

The US Department of State 2011 reports that the Tanzanian government is modernising the procedures governing business licensing in order to improve the investment climate, and a positive step towards circumventing the regulatory burden faced by companies investing in Tanzania has been the establishment of the Tanzanian Investment Center (TIC) - see 'Public Anti-Corruption Initiatives' in the Initiatives section. Commercial disputes over regulatory issues can be very difficult to settle due to the high levels of corruption within local courts. Arbitration is normally used in cases of commercial disputes, but companies should note that local arbitration is reportedly ineffective. For that reason companies are advised to use the International Centre for the Settlement of Investment Disputes (ICSID) or the World Bank Multilateral Investment Guarantee Agency (MIGA) to which Tanzania is a member. Tanzania has also signed the New York Convention of 1958 on the recognition and enforcement of foreign arbitral awards.