The Tanzania Revenue Authority (TRA) has moved to implement the electronic tax stamp (ETS) on locally manufactured and imported goods even as local manufacturers protest the passing of the project costs to them.
Last year, the government announced a tender award to a Swiss firm SICPA to install and support ETS management system.
Manufacturers said at a joint meeting with the government that they were not opposed to the stamps but bearing the cost of running the system would add to the cost of doing business.
The ETS application took effect this month.
Manufacturers of beer, soda and cigarettes said that the tender was not awarded competitively and that the terms inappropriately required them to pay for the installation of the stamp machines.
TRA Commissioner General Charles Kichere said the ETS was meant to safeguard government revenue by providing accurate production of data on real time.
Tanzania traders object to tax deal for ETS system
Mr Kichere further noted that through application of ETS, the government would determine in advance, the amount of duty to be paid and provided by TRA.
The tax system will enable the government to track goods right from the factories, border entry points, warehouses to the final destination.
"Manufacturers and importers covered by current non-electronic stamps are encouraged to keep stock of old tax stamps up to the end of September , while those with stock of old stamps to last after September this year should declare to in writing for verification,", TRA said in a notice.
"The products already in the market labelled with paper stamps will be sold for a three-month period from October 1 this year before affixation with new electronic tax stamps."
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.
The government contracted SICP, to install and maintain the ETS system at a cost of $10.1 per 1,000 stamps. Manufacturers will meet the contractor's investment costs on top of their own costs of doing business.
The Parliamentary Budget Committee said in a recent report that the application of ETS on soft drinks and other beverages including bottled water will be a burden to consumers as production costs are set to go higher.
The new system using digital tax stamps will increase excise duty as charges will be per unit instead of the current charges calculated per litre, making it a burden to producers and consumers, the committee said.
Soft drinks, beers, juices and water were not charged stamp duty before the introduction of the ETS.
The then Serengeti Breweries Ltd (SBL) managing director Helene Weesie said 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.