Tanzania Revenue Authority's Appeal On Electronic Tax Stamps

TRA director for Taxpayer Services and Education, Richard Kayombo, 

In Summary

The Tanzania Revenue Authority says it achieved a milestone this year after successfully phasing out paper tax stamps in favour of electronic stamps

By Rosemary Mirondo

Dar es Salaam — As 2019 comes to an end, the Tanzania Revenue Authority (TRA) has called on the

public to be vigilant and ensure they purchase locally-manufactured goods marked with electronic tax stamps (ETS).

The TRA director for Taxpayer Services and Education, Richard Kayombo, told The Citizen that the authority has achieved a milestone by its decision to phase out paper tax stamps in favour of electronic tax stamps. Following that decision, the government has been able to curb revenue leakages, and determine in advance the amount of tax to be paid as excise duty, VAT and income tax.

"I urge all manufacturers and importers to adhere to the new system to ensure they don't clash with the law,. At the same time, I call on the public to ensure that, when in doubt, they consult us for clarification, "he said.

He said the use of ETS for excisable goods was introduced to replace the physical paper stamps that were heavily linked to incidents of tax evasion. Therefore it was geared to improving tax administration, and discourage tax evasion.

The government announced plans to adopt the electronic tax stamps system in June 2018 amid protests from manufacturers that the decision would increase production costs.

A Swiss firm, Société Industrielle et Commerciale de Produits Alimentaires (SICPA), won the tender and subsequently signed a contract with TRA, for supply, installation and provision of supporting software and hardware for the ETS management system.

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Manufacturers held a joint meeting with the government, claiming that they weren't opposed to the stamps but the cost of operating the system would add to business costs.

Manufacturers of beer, soda and cigarettes were of the view that the tender was not awarded competitively and that the terms inappropriately required them to pay for the installation of the stamp devices.

They said the new system using digital tax stamps would increase excise duty as it'd be per unit instead of the current duty calculated per liter -making it a burden to producers and consumers alike.

It was revealed that the move would push the tax rate to $10.1 per 1,000 units, resulting in an additional $100 million annual cost to the industry.

Amidst the complaints, the first phase of the ETS rollout was conducted on January 15, 2019, whereby stamping devices were installed on 19 companies that produce alcoholic liquord, wines and spirits.

The second phase, which saw ETS being stamped on soft and carbonated drinks plus bottled water, was rolled out on August 1, 2019.

However after the installation, the story changed when in October this year, Tanzania Breweries Limited (TBL) Mbeya plant revealed to TRA during a tour that they were now confident that with ETS in use, manufacturers were now able to easily identify if fake and smuggled products find their way into the market.

The ETS system enables the government to use modern technology to obtain production data on a real time from manufacturers.

TRA maintained that the tax system will enable the government to track goods right from the factories, border entry points, warehouses to the final destination.

The ETS will replace the current paper stamps applied on cigarettes, alcoholic and non-alcoholic beverages, medicinal drugs, playing cards, bottled water, cosmetics, licences and other products. The stamps have special security features for identification.

Data confirmed by TRA show that the excise duty and VAT collections on domestic spirits and wines, cigarettes and soft drinks rose during the first quarter of the 2019/20 financial year compared to the corresponding period of last year.