Tanzania: Electronic stamps improving tax collection


Tanzania has introduced the use of Electronic Tax Stamps (ETS) water bottles and soft, carbonated drinks. The move is meant to add on to the already registered increase in tax collection.

The Tanzania Revenue Authority (TRA) reported earlier this year that it has seen a 34 percent increase in revenue collection thanks to the use of the Electronic Tax Stamps (ETS) on branded products.

The ETS system was first rolled out in Tanzania early last year (15 Jan 2019) after regulations was passed to have all manufacturers in the country install an electronic tax stamp management system.

The tender went to a Swiss-based firm called SICPA which was contracted by the Tanzania Revenue Authority (TRA) to install and enroll all manufacturers, producers and importers onto the system.

To start with, the electronic stamps were used for cigarettes, wines, spirits, beer and other alcoholic beverages. It then begun to be applied for products such as sweetened water and other non-alcoholic beverages with the exception of fruits and vegetable juice.

Speaking at the just ended 44th Dar es Salaam International Trade Fair (DITF), the TRA Deputy Commissioner General, Mr Msafiri Mbibo emphasized the need to increase tax collection and cited the use of ETS on more goods as a key aspect to achieving this goal.

Prior to using the ETS, Tanzania relied on a paper stamp system, which the Deputy Commissioner described as ‘cumbersome and prone to human error.’ He said the paper stamps system was flawed and allowed for cheating by corrupt officials and unscrupulous businessmen.

So according to the Deputy Commissioner not only does the ETS system help increase revenue, it also helps to improve the tax administration in the country.

The ETS system has also played a key role in the reduction of otherwise proliferating counterfeit products from the Tanzanian market. It is, nonetheless, a promising move by the Government, and manufacturers and intellectual property owners should have reason to smile.

Increased tax collection

In the first quarter of the 2019/20 financial year, tax collection rose by a whopping 35.3 per cent on all domestic spirits and wines, a significant rise compared to the corresponding period in the previous year.

Similarly, thanks to the electronic stamps, excise duty and VAT on cigarettes increased slightly by 5.6 percent during the same period.

Furthermore, when it came to soft drinks, excise duty and VAT collected in just two months (August and September 2019) went up by a whole 18 percent compared to the year before that.

Tanzania’s collection of internal revenue has been increasing year after year. The increase is mainly credited to the fifth administration’s strict iron hand on corruption. It is the general view that President John Magufuli has spearheaded a paradigm shift in tax collection, from evasion to compliance.

More companies and individuals are readily paying their taxes on one hand because the authorities are now more strict and will not accept bribes and on the other due to increased nationalism.

Companies are regularly reporting their revenue in the public newspapers and in these reports they also highlight their tax payment.

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Giza Mdoe is an experienced journalist with 10 plus years. He's been a Creative Director on various brand awareness campaigns and a former Copy Editor for some of Tanzania's leading newspapers. He's a graduate with a BA in Journalism from the University of San Jose.

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