Tanzania: Digital Stamps Boost Tax Collection for Excisable Goods

Alvar Mwakyusa

INTRODUCTION of state-ofthe- art digital systems for collection of taxes including the Electronic Tax Stamps (ETS) management system for excisable goods is among milestones recorded by the

Tanzania Revenue Authority (TRA) this year.

The digital stamps have been touted worldwide for curtailing cheating of taxes through under declaration as well as curbing manufacturing and importation of counterfeit products in markets.

The first phase of ETS was introduced in January 15, this year, exclusively for local and imported beers, wines and spirits while the second phase was enforced on August 1, this year, covering carbonated soft drinks, juices, tobacco products, bottled water in addition to DVDs and CDs.

Figures availed by TRA indicate that implementation of the technology enabled it to post an increase of 34 per cent in excise duty on local and imported spirits and wines between February and October, this year.

Similarly, collection of Value Added Tax (VAT) for the alcoholic drinks jumped by 30.6 per cent during the past ten months to 23.5bn/-while excise duty on carbonated drinks and bottled water surged by 8.7 per cent to 10bn/-between September and October compared to the same period last year.

The TRA Commissioner for Domestic Revenue, Abdul Mapembe, explained that the tax collector recorded an increase of 35 percent equivalent to an increase of 9.130bn/-in both excise and VAT during the months of July to September 2018 for wines and spirits.

For soft drinks, he said TRA recorded an increase of 17.9 percent in the months of August to September 2019 of which they collected 19.049bn/-compared to 16.155.2bn/- which was collected the same period last year. A Swiss firm Société Industrielle et Commerciale de Produits Alimentaires (SICPA) won the tender from TRA for supplying software and hardware of ETS.

The company offers the same digital solutions for Kenya and Uganda. Among others, the company is involved in provision of secure digital solutions for traceability of products subject to excise duties, such as alcohol and tobacco stamps, and regulated products, such as halal products.

One of Tanzania's largest taxpayer, Tanzania Breweries Limited (TBL) is among industry players in the manufacturing sector which has hailed introduction of the digital stamps for enabling smooth and indisputable computation of taxes.

The Managing Director of the country's leading brewing company, Mr Philip Redman, said he impressed that TRA and consumers can trace the products affixed with the digital tax to ascertain whether they are genuine and have paid requisite taxes.

"The electronic stamps provide a good platform to trace the quantity produced by manufacturers and the amount of tax which is supposed to be paid," said Mr Redman in a statement. He explained further that the Dar es Salaam Stock Exchange (DSE), listed company has installed ETS management system at all its plants in Dar es Salaam, Arusha, Mwanza and Mbeya as per directives by TRA.

"TBL started using ETS during the first phase for all its beer brands, wines and spirits and later on extended the technology for Grand Malt during the second phase," he explained. "Among other benefits, the system will shield TBL and other local producers of wines and spirits against counterfeit. TBL is gratified to be among the first companies which have complied with the new technology."

He however complained of low production and loss of time and earnings at its plants whenever the system faces hitches, urging TRA to ensure the technology operates without interruption. "The digital stamps are also costly since we pay 46/-for each compared to 7/-which we used to pay for the paper stamps," he lamented.

The TRA's Acting Director for Taxpayer Services and Education, Mr Richard Kayombo, said the tax collectors is ready to support other countries within the East African Community (EAC) which are yet to introduce the digital system.

Uganda introduced digital stamps on November 1, this year, and thus became the latest entrant to the new technology in EAC after Kenya and Tanzania.

Mr Kayombo, who recently attended the African Tax Administration Forum which was graced by Ugandan President Yoweri Museveni in Kampala, said TRA was ready to share its experience with Uganda Revenue Authority (URA) in implementing the system.

The Ugandan leader told participants who were drawn from across the African continent that implementation of the electronic system is crucial to monitor and trace production lines of manufacturing companies and hence curb counterfeits and cheating of taxes.

The electronic stamps enable tax collection authorities to monitor in real time production lines at manufacturing facilities and eventually compute requisite taxes to be paid to the government.

"There have been many cases of tax evasion in terms of numbers and value of goods manufactured in Uganda. The digital stamps will address these issues," President Museveni told delegates at the forum. Digital Tax Stamps have enhanced technology to allow revenue agencies to monitor in real time the production capacity of manufacturers and also allow consumers to cross check if products are genuine.

They also have a quick response code (QR code) that will allow distributors, retailers and consumers to use an app on their smart phones to verify the authenticity of the products; and a provision for online ordering and approval for delivery of stamps.

"The backing of digital stamps by President Museveni reaffirms commitment of leaders within the EAC to curb counterfeits and cheating of taxes," Mr Kayombo said in an interview. During the first phase which kicked-off on January 15, 2019, a total of 62 producers and importers were enrolled for the system where 44 e-machines have been fitted in 23 factories.

The factories include all seven brewing plants owned by the Tanzania Breweries Limited (TBL) and Serengeti Breweries Limited (SBL), four cigarette producers namely Tanzania Cigarette Company Limited (TCC), Mastermind Tobacco Tanzania, Sino Cigarette Company and Mansoor Industries Limited.

Also on the list were 12 wine and spirit producers including Nyati Spiritz, Tanzania Distilleries Limited (Konyagi), East African Spirits, Mega Beverages Limited, Kibo Spirtz, Blue Nile Distilleries, Banana Investment Limited and CETAWICO, among others.