How e-stamps changed TRA’s revenue collection

What you need to know:

  • Tax collectors have in the past experienced a challenge with compliance and declaration of true volumes of production, something that demanded new solutions that was to match the demands of the day.

Dar es Salaam. Tanzania Revenue Authority (TRA) is planning to add more products to the Electronic Tax Stamp (ETS) system after noting “success in the revenue collection” which is near to the targets of the current fiscal year.

Speaking to The Citizen, TRA’s ETS Project director Innocent Minja said the targeted products include sugar, cement, edible oil, Khanga/Vitenge and others that have been identified so far.

“We have already installed the ETS system for all eligible manufacturers of specified goods. About 135 equipment have been installed to the fully automated factories while others (semi-automated and manual factories) are using the system manually,” says Mr Minja in an exclusive interview.

Part of the continued success in revenue collection has been attributed to rolling out of the ETS which now appear on most locally manufactured and imported goods.

The system enables manufacturers to get the quantity of products that are being imported into the market, a vital step that informs local manufacturers on what they should do to protect their products from imports.

“This system has increased transparency, and for now, manufacturers and importers of selected products are assured that everyone is paying a true/correct tax and now their competition is on other things contrary to before the ETS system.”

According to the minister for Finance and Planning, Dr Mwigulu Nchemba, tax revenue were Sh19.99 trillion by April this year, equivalent to 93.3 percent of the estimates of Sh21.42 trillion for the current financial year.

The “successful revenue collection” is partly attributed to the ETS which was rolled out three years ago to safeguard the government’s revenue by ensuring that there is a use of modern technology to obtain production data on timely basis (real time) from the manufacturers.

The first phase of the project which was rolled out by a Swiss firm, Société Industrielle et Commerciale de Produits Alimentaires (SICPA) - was launched on January 15, 2019.

Initially the electronic stamps were installed in 19 companies that produce alcohol, wines and spirits across the country. During the second phase which kicked off in August 2019, electronic stamps were installed on products such as sweetened or flavoured waters and other non-alcoholic beverages, a process that began on August 1, 2019.

As expected, the introduction of ETS came with high technology security features, electronic means which simplified the administration of taxpayers in the country. “It created transparency in assessing taxes especially Excise Duty, Value Added Tax (VAT) and Corporate Tax, which ultimately minimises taxpayers complains,” he says.

Tax collectors have in the past experienced a challenge with compliance and declaration of true volumes of production, something that demanded new solutions that was to match the demands of the day.

“We had a huge challenge on compliance, especially the low level of voluntary tax compliance. Historically, we had to station officers to monitor production and ensure the manufacturers declared the true production volumes. However, it was chaotic and a new solution was needed,” says Mr Minja.

He adds further, among manufacturers, some were not genuine and under-declared their production data, this created unfair competition with the genuine ones. “ETS has led to every manufacturer of the selected products paying taxes fairly,” he says.

Prior to the rollout of the Electronic Tax Stamps, there were only 57 manufacturers of such products who were paying taxes to TRA but that number has since grown several folds

“So far, we have over 337 manufacturers of selected products who are using the ETS System. Further, we have 129 importers of the selected products who are using the system. So in total we have 466 taxpayers using the system so far.”

Despite the positive strides, TRA has on many occasions had to deal with manufacturers and importers who use counterfeit stamps.

“We urge manufacturers, importers and the public at large, to use the system genuinely and to avoid the use of counterfeited stamps because TRA is much into this and the enforcement campaigns are ongoing everywhere in the country, “says Minja.

According to him, they carry out regular enforcement campaigns in each region to educate business people on how to authenticate the stamps.

“We have special gadgets to check and authenticate the genuineness of the stamps, also we have provided special cards called validators to the wholesalers and stockists to enable them verify the stamps on the goods they receive,” clarifies.

They have also developed an application called HAKIKI STEMPU which is available on smart phones with Android or iOS systems to enable the public to verify the stamps easily.

Those found with fake stamps face either lengthy jail terms of up to three years or fines ranging from Sh5 million to maximum Sh50 million, or both.