Tanzania has rolled out the electronic tax stamp (ETS) in six key regions, heralding the end of physical stamps, whose use has been linked to incidents of tax evasion and counterfeiting.
The regions are Dar es Salaam, Arusha, Kilimanjaro, Mwanza, Shinyanga and Mbeya
In June, Finance Minister Dr Phillip Mpango announced the launch of the ETS.
This is part of the government’s plans to raise money for infrastructure development to transform into an industrial economy in the coming eight years.
Tanzania Revenue Authority Commissioner-General Charles Kichere kick-started the use of the ETS application in September for beer, soda and cigarette makers.
The exercise began with the installation of e-tax machines at the Tanzania Cigarettes Company and Nyati Spirit in Dar es Salaam.
Paper stamps have been used on products such as cigarettes, alcoholic and non-alcoholic beverages, medicinal drugs, playing cards, bottled water, cosmetics, hunting licences, firearms registration and music equipment.
The government contracted Swiss firm SCPA Ltd to install software and hardware for the ETS management system at a cost of $10.1 per 1,000 units (stamps), to be paid by manufacturers and importers.
Manufacturers will also meet the contractor’s investment costs.
Late last year, manufacturers warned that running the system would add to the cost of doing business.
Manufacturers and importers covered by non-electronic stamps were allowed to use the paper tax stamps until the end of September 2018, after which they had a three-month grace period to change to the ETS system.
TRA hopes that the new system will help create transparency in assessing key taxes such as excise duty, VAT and corporate tax.
Mr Kichere said that through the ETS, the government can determine in advance the amount of, say, excise duty due to be paid to the TRA, while enabling the tracking and traceability of goods from the factories through border entry points, warehouses and on to the final destination.