TRA credits ETS as game-changer in tax compliance

DAR ES SALAAAM: IN a country where tax evasion continues to challenge economic progress, the Tanzania Revenue Authority (TRA) is embracing new sophisticated technologies to enhance compliance and it is paying dividends.

The Electronic Tax Stamp (ETS) system is proving to be a formidable weapon against tax cheats who have long been defiant in tax compliance.

ETS, a digital system that tracks and verifies the authenticity of products and the taxes due on them, is helping to close the gaps that traditional enforcement methods failed to seal.

The ETS system was introduced in 2019 and initially met with resistance from some manufacturers and importers.

However, it has since gained momentum, with the TRA expanding its use across various sectors, including alcohol, tobacco, soft drinks, bottled water and cosmetics.

Through real-time monitoring, the system not only ensures proper declaration of production volumes but also helps detect underreporting a common tactic used by tax evaders.

For years, the government has struggled to enforce compliance in industries where paper trails can be easily manipulated.

But with ETS, each product gets a unique digital stamp that cannot be duplicated. The system also allows consumers to verify product authenticity using a smartphone app Hakiki App, making every Tanzanian a potential tax enforcer.

The impact is already visible. Since the rollout of ETS, TRA has reported significant increases in tax collections from targeted sectors.

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Speaking during an Editors Forum, organised by TRA in collaboration with SICPA Tanzania, Acting Deputy Commissioner of Small Taxpayers in the Domestic Revenue Department, Hoseya Kidasi touted the role of ETS system as a critical solution to strengthening tax compliance, combating illicit trade and securing government revenue.

Mr Kidasi reaffirmed TRA’s dedication to promoting transparency and fairness in the economy through the ETS system, calling on stakeholders to support the Authority’s efforts to strengthen tax revenue and drive the nation’s broader development agenda.

Reflecting on the impact of ETS, TRA’s Manager for Taxpayer Education, Paul Walalaze, said the adoption of the technology, supplied by SICPA, a Swiss company, has been a game-changer in boosting government coffers.

“The ETS system is clear evidence of TRA’s commitment to strengthening tax compliance and ensuring every eligible business contributes its fair share to national development.

“We’ve been tasked with collecting 30.04tri/- in the 2024/2025 financial year and by April, we had already collected over 26tri/,” said Walalaze, noting that the Authority must secure the remaining 4tri/- in the final two months of the current fiscal year,” stated Mr Walalaze.

ETS Project Manager, Abyud Tweve, highlighted the importance of the system and its broader economic benefits.

“ETS plays a crucial role in levelling the playing field for producers and legitimate businesses. It curbs unfair competition by ensuring that all players abide by the same tax rules, thus promoting fair trade and protecting honest entrepreneurs.”

Beyond revenue, the ETS system has become instrumental in the fight against counterfeit and substandard goods. By enabling swift verification of product authenticity, ETS supports regulatory bodies and law enforcement in identifying and removing illicit goods from the market.

“Counterfeit products undermine public health and consumer trust,” Tweve noted.

“The ETS system helps safeguard consumers by preventing the circulation of harmful and non-compliant goods.”

Furthermore, the digital backbone of the ETS system has ushered in a new era of innovation in public finance management.

“This system significantly enhances transparency and provides us with real-time data,” noted ETS Project Manager Abyud Tweve. “It’s more than just a tax tool it’s a technology-driven solution that strengthens accountability throughout the entire supply chain.”

The General Manager of SICPA Tanzania, Alfred Mapunda, said the ETS system provide a viable solution to tax collection, compliance, transparency and a level playing ground.

The General Manager of SICPA Tanzania, Alfred Mapunda, stated that the ETS system offers a practical and effective solution for enhancing tax collection, ensuring compliance, promoting transparency and creating a level playing field for all market participants.

Despite the successes, TRA acknowledges that a gap remains in public understanding of ETS.

Many citizens are still unaware of how the system works or the benefits it brings to the economy and society.

“Public awareness and education remain essential,” Walalaze emphasised. “We must continue investing in outreach and education to ensure Tanzanians understand not only the importance of ETS but also how it supports national development.”

As the ETS system continues to mature, the TRA is calling on producers, traders and other stakeholders to work together in building a stronger, more resilient economy. “Collaboration is key,” Walalaze said.

“Only by working hand-in-hand with businesses and citizens can we secure the progress we all seek for Tanzania.”

Currently, the ETS system covers a wide range of excisable goods, including wine, spirits, beer, liqueurs, cordials, mineral and aerated water, as well as juices and other beverages.

It also applies to tobacco products such as cigarettes and extends to film and music products, smart cards, lubricants, petroleum jelly, perfumed products and even physical media like discs and tapes.