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Zanzibar banks on technology to boost revenues

Tuesday April 06 2021
mwinyi

Minister of Health and Social Welfare Dr Hussein Mwinyi

By Alex Nelson Malanga

Dar es Salaam. Zanzibar is employing technology to improve public revenue collections, a senior official has said, revealing that actual rollout of virtual fiscal devices (VFD) will start this April.

Zanzibar Revenue Board (ZRB) commissioner Salum Yusuf Ali told The Citizen recently that initial studies have shown that monthly revenue collections will rise by about 20 percent when the semi-autonomous Indian Ocean archipelago ditches manual ways of collecting tax for electronic means.

He said that, by employing VFD and the lectronic tax stamps (ETS) system, monthly collections will rise from the current average of Sh46 billion to Sh55 billion.

“If all the other things remain constant, we are optimistic that our envisaged rise in collection will be realised from the next financial year which starts on July 1, 2021,” Mr Ali told The Citizen in an exclusive interview conducted recently.

He banked his upward revenue trend hopes on signs of tourism recovery, one of the major sources of the Isles’ revenue.

A total of 29,128 tourists visited the archipelago in November 2020 compared to 12,157 travellers who visited the place in October, according to the Chief Statistician of Zanzibar.

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However, the number of November 2020 visitors was about 61 percent of the 47,824 tourist arrivals in November 2019.

According to Mr Ali electronic tax collection systems would seal revenue leakages and tax evasion loopholes.

This is because electronic systems send information directly to the board - and, thus making ZRB aware of transactions being conducted at several businesses within the Isles.

This is contrary to the current paper receipts which enable traders to easily dodge paying tax.

The Norway-based Norway-Registered Development (NRD) won the tender for the installation of VFD and ETS in the Isles.

Mr Ali said the company was now working with a technical team to set the enabling systems, as well as working on some weaknesses observed during the pilot study which took place between August and December last year.

The pilot study, which targeted value-added tax (VAT) payers, covered 300 people.

“We were planning to launch the VFD much earlier; but that did not happen because of the Covid-19 pandemic,” said Mr Ali, who cited some of taxes to be involved as stamp duty, export levy and airport taxes.

“Due to travel restrictions imposed by countries in an effort to prevent the spread of the Covid-19 pandemic, a team of contractors from Norway was unable to come earlier for systems setting and working on the shortfalls registered during the piloting process.”

And because of the same reason, experts for the rolling out of the Electronic Tax Stamp (ETS) have not yet arrived.

“That being the case, I can’t say when exactly ETS will be rolled out because even the testing stage has not been done,” said Mr Ali.

Zanzibar’s decision to consider ETS in its revenue collection efforts comes after two years since Tanzania adopted the system.

The first phase of the ETS rollout in Tanzania Mainland was conducted on January 15, 2019 whereby stamps were installed on cigarettes, wines, spirits, beer, and all kinds of alcoholic beverages.

Phase two of the project was rolled out on August 1, 2019 when ETS’ were stamped on sweetened flavoured water and other non-alcoholic beverages, like energy and malt drinks and soda.

The third phase, which involved enrolling electronic stamps on fruit juices (including grape must), vegetable juices (under Heading 20.09), bottled drinking water, was conducted November 1, 2020.

The Swiss firm Société Industrielle et Commerciale de Produits Alimentaires (SICPA), has been the one behind a successful rollout of ETS in Tanzania.

As a part of the ZRB’s efforts to attract more investors and increase revenue, the board’s commissioner said they were committed to creating a friendly taxation system.

He added that they would set a stage for cooperation with various stakeholders with a view to discussing the problems they are grappling with and chart ways forward.

“To us investors are stakeholders and not enemies. If we sit together at the same table, we will get rid of ‘enormity’ between taxpayers and the taxman,” noted the commissioner.

“We believe if we have similar goals, we believe if we talk the same language, we will realise our targets,” he added.

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