TRA puts three more items on ETS regime

Dar es Salaam. Manufacturers are optimistic that the costs of Electronic Tax Stamps (ETS) will go down significantly as the taxman raises the number of products which are subject to the ETS system.

This comes as the Tanzania Revenue Authority (TRA) announces the expansion of the ETS regime to three more product categories, namely: cement, sugar and cooking oil.

The addition of the three products categories will bring the total number of products - subjected to ETS in the newly announced tender - to ten.

Currently, the products marked with the electronic system include beers, wines and spirits, tobacco, fruit wines such as banana and rosella, soft drinks, bottled water and juices.

Through an invitation for a tender advert published in newspapers yesterday, the taxman invited contractors for supply, installation and operation of the system for ETS under the self-financing scheme which will also cover the new products.

Coca-Cola Kwanza director of public affairs, communications and sustainability. Mr Salum Nassor said yesterday that it was his wish to see costs of ETS going down significantly.

“What we need is cost reduction regardless of whether the supplier will remain the same (Swiss company-SICPA) or not,” noted Mr Nassor.

“We need a reasonable price that will take down our operational costs which are currently high.”

Currently, he said, in every Sh100 excise duty per litre, they were paying another Sh39 more to the ETS service provider.

“This additional cost is against the government’s good intention to stabilise the market by maintaining the excise duty rate for four years,” noted Mr Nassor.

The Mtwara-based Ndanda Springs Limited general manager Mwang’ini Madenge said with the economies of scale that the tender winner could be enjoying by providing services countrywide, there would be no reason to have high ETS costs. He said in addition to excise duty of Sh58 per litre of water, they were paying Sh10.8 more as ETS costs and thus eating into their profit margin.

“This is unacceptable. With the increase in the number of ETS users, the costs should at least have been cut by half, if not completely be carried by the government,” noted Mr Madenge.

The number of manufacturers registered with ETS increased from 57 when the system was being adopted in 2019 to the current 272.

The Tanzania Confederation of Tanzania Industries executive director Leodegar Tenga was quoted by media last month as saying they had proposed a cut of 75 percent of ETS costs from past rates.

However, in its recently announced ETS rate cuts, the government decided to bring it down to rates that translate into an average reduction of only four percent across all products, with manufacturers saying the new rates were just a drop in the bucket.

Another manufacturer - who requested not to be named - told The Citizen that with the enrolment of cooking oil, cement and sugar in the ETS system, their prices in the market will increase.

“Prices of edible oil and cement are currently high. The ETS costs could complicate the situation if not handled well,” he said.

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 stamps 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 flavored 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.

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 but it also discourages the entry of counterfeits into the market.