How ETS has enhanced tax compliance

THE Electronic Tax Stamp (ETS) system introduced by   the Tanzania Revenue Authority (TRA) in the past three years has enhanced tax compliance and mechanism to cover all traders in the segment by creating an equal playground, it has been said.

TRA’s Project Manager for ETS, Mr Innocent Minja told the ‘Daily News on Saturday’ in an interview that the main objective of rolling out the ETS three years ago was to safeguard the government’s revenue.

“We had a huge challenge on compliance, especially low level of voluntary tax compliance. Historically, we had to station officers to monitor production and ensure the manufacturers declare the true production volumes. However, it was a chaos and a new solution was needed,” Mr Minja said.

He added that among manufacturers, some were not honest and under declared their production data and thus created unfair competition with the honest ones.

According to him, the ETS system has in the three years enhanced tax compliance and mechanism to cover all traders in the segment by creating an equal playground and enhancing fair competition.

“This has led every manufacturer of the selected products to pay taxes fairly,” he said.

The installation of the ETS has ensured that TRA obtains production data on timely basis (real time) from the manufacturers.

“This was because of the excise duty, which is levied upon production of specific goods, therefore knowing the actual production is very critical in revenue collection.” Mr Minja noted.

He further said that, the introduction of ETS came with high technology security features, electronic means that simplified the administration of taxpayers in the country.

“It created transparency in assessing taxes especially Excise Duty, Value Added Tax (VAT) and Corporate Tax, which ultimately minimises tax payers’ complaints,” Mr Minja said.

The installation process, he said, is a continuous as factories increase their levels of automation.

“We have already installed the ETS system for all eligible manufacturers of specified goods. About 135 equipment have been installed to the fully automated factories while others (semi-automated and manual factories) are using the system manually,” he said.

But much as the attention has been on the installation the ETS has become a savior to manufacturers and importers of the selected products.

The system also enables manufacturers to get the quantity of products that were being imported into the market, a vital step that informs local manufacturers on what they should do to protect their products from imports.

“This system has increased transparency, and for now, manufacturers and importers of selected products are assured that everyone is paying a correct tax and now their competition is on other things contrary to before the ETS system.

“The ETS is not only about tax projections. It also helps the manufacturers to get precise information about his production volume and time spent on producing it. It also helps them to know challenges associated with its production processes,” he said.

Mr Minja noted that, despite the positive strides, TRA had on many occasions dealt with manufacturers and importers who use counterfeit stamps.

“We urge manufacturers, importers and public at large, to use the system genuinely and avoid the use of counterfeited stamps because TRA is much into this and the enforcement campaigns are ongoing everywhere in the country,” he stressed.

According to him, they carry out regular enforcement campaigns in each region to educate business people on how to authenticate the stamps.