Electronic stamps lead to 60 percent increase in excise duty revenue
What you need to know:
- The government announced plans to adopt electronic tax stamps in June 2018, and the first phase of the project was launched on January 15, 2019
Dar es Salaam. Tanzania’s excise duty collections have gone up significantly during the past 30 months, thanks to the adoption of Electronic Tax Stamps (ETS).
The government announced plans to adopt the ETS system in June 2018, and the first phase of the project was conducted on January 15, 2019 whereby ETS devices were installed on companies that produce beer, wine and spirits.
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), and bottled drinking water, was conducted November 1, 2020.
Available data show that excise duty collections have risen 60 percent if the three years prior to the rollout of ETS’ on beer, wines and spirits were compared to a similar period after the rollout.
“We collected Sh297.2 billion as excise duty on beer, wine and spirits (both locally-produced and imported ones) during the three years before January 15, 2019 but from that time to June 2021, the amount rose to Sh476.7 billion,” said the ETS project manager at TRA, Mr Innocent Minja.
He said there had been double-digits excise duty growth rates from all the products on which ETS’ have been stamped.
“Excise duty and VAT on beer has gone up by 15 percent while that of soft drinks has risen by 29 percent. Excise duty and VAT on bottled water has gone up by almost 156 percent,” he said.
The ETS enables the government to use modern technology to obtain production data timely from manufacturers. That way, it does not only enable the government to collect the right amount of excise duty; it also discourages the entry of counterfeits into the market.
According to Mr Minja, there could always be room for further improvement in the management of the project, noting however that so far, the benefits extend even to manufacturers.
“While we take note of manufacturers’ view regarding the need to review the ETs rates, we also believe that the project has been beneficial to both of us… It helps manufacturers to be sure of their production quantity in real time,” he said.
Before the adoption of ETS’, excise duty on locally-produced and imported products was being determined through paper stamps which, TRA says, were easy to tamper with.
