Dar es Salaam — The government's decision to dump paper tax stamps in favour of electronic ones is proving a success - what with the latest data showing improvement in collections of excise duty and value-added tax (VAT) on various products.
The government announced plans to adopt the electronic tax stamps (ETS) system in June 2018. A Swiss firm, Société Industrielle et Commerciale de Produits Alimentaires (SICPA), won the tender and subsequently signed a contract with the Tanzania Revenue Authority (TRA), for supply, installation and provision of supporting software and hardware for ETS management system.
The first phase of the ETS rollout was conducted on January 15, 2019 whereby stamps were installed on 19 companies that produce alcohol, wines and spirits.
The second phase, which saw ETS being stamped on soft and carbonated drinks plus bottled water, was rolled out on August 1, 2019.
The ETS system enables the government to use modern technology to obtain production data on a real time from manufacturers.
It also aids the government in curbing revenue leakages and determine in advance the amount of tax to be paid as excise duty, VAT and income tax.
Data confirmed by TRA commissioner for domestic revenue Abdul Mapembe show that the excise duty and VAT collections on domestic spirits and wines rose by 35.3 per cent during the first quarter of the 2019/20 financial year compared to the corresponding period of last year.
The taxman garnered Sh25.8 billion as excise duty and VAT from domestic spirits and wines during the first quarter of the 2018/19 financial year, but the amount rose to Sh34.96 billion during the first quarter of the 2019/20 financial year.
Excise duty and VAT on cigarettes rose by 5.6 per cent during the first quarter of the 2019/20 financial year compared to a similar period of last year.
The taxman collected Sh56.7 billion as excise duty and VAT on cigarettes from July to September 2019, a Sh3 billion increase from a similar period of the previous financial year.
For soft drinks, the amount collected as exercise duty and VAT during the two months of ETS (August and September 2019) was 18 per cent, higher than what was garnered during a similar period in 2018.
The taxman collected Sh16.155 billion in excise duty and VAT on soft drinks in August and September 2018, but the amount rose to Sh19.05 billion during the period between August and September 2019.
TRA's director of Taxpayer Services and Education, Richard Kayombo, said the use ETS for excisable goods was introduced to replace the physical paper stamps that were heavily linked to incidents of tax evasion.
"This move is geared towards improving tax administration and it has discouraged tax evasion significantly," he said.