Taxes are a crucial source of revenue for governments. However, many Developing Countries struggle to collect sufficient revenues to finance the most basic of services such as healthcare and education, and finance investments in human capital and infrastructure, placing a disproportionate burden on citizens, particularly the poor. The World Bank estimates that 86% of low-income countries collect less than 15% of GDP in taxes, which is considered the minimum level of taxation that a country should collect to support its growth and development.
The Tanzanian Government has taken fundamental steps to make its tax system gain efficiency by leveraging technology, improve operational performance, enhance compliance, and support revenue collection, specifically through the Electronic Fiscal Devices (EFDs) and the Electronic Tax Stamp System (ETS). EFDs track sales transactions, ensuring proper reporting and compliance by businesses, while the ETS system monitors excisable goods such as tobacco, alcohol and spirits, beer, soft drinks, and water, preventing non-compliant manufacturers from evading taxes.
ETS is an instrument of compliance, as each stamp is proof that a producer or an importer is complying with its obligations to pay the excise duty tax set by the Government. The use of the ETS system is enforceable by the Electronic Tax Stamps Regulations (2018) and requires all manufactures and importers to be registered and to use it.
This move has helped the country to raise its tax collection by 81.6 percent, amassing an additional TZS 2,608 billion, compared to the pre-ETS era that was before 2019. Tax revenue collection in the fiscal year 2023/2024 increased by 18.1 percent compared to the previous fiscal year. From TZS 1.407 billion collected from ETS-marked products, TZS 1.007 billion came from excise duty alone.
In the first three months of the fiscal year 2024/2025, TRA collected TZS 7.53 trillion, equivalent to 101.32% of the set target of TZS 7.43 trillion. This represents a 13.47% growth compared to TZS 6.63 trillion collected during the same period in 2023/24. These three months’ revenue collections enabled TRA to achieve and surpass the revenue target for nine consecutive months of the financial year. From July to March 2024/25, TRA collected a total of TZS 24.05 trillion, representing 103.62% of the target of TZS 23.21 trillion, and a 17.01% growth compared to TZS 20.55 trillion collected during the same period in 2023/24.
ETS has also been deployed in neighboring countries of the East African region. In Uganda for example, the Uganda Revenue Authority (URA) saw a raise of 30 percent in revenue collection by June 2023, compared to financial year 2018/2019 (ETS was deployed in the country in 2019). ETS also helped to broaden the tax base, with 1,201 registered taxpayers, compared to 40 before the implementation of the system. In Kenya, revenue collection on excise goods is continuing to grow, which demonstrates that the solutions chosen by the Government to increase tax revenue are effective (including the Electronic Goods Monitoring System, or EGMS, the same technology as ETS).
About the ETS System
ETS is cited by the International Monetary Fund as a measure increasing tax collection in Tanzania. ETS has been deployed by SICPA, a Tanzania-based company contracted by TRA since January 2019 following a competitive public procurement process.
SICPA oversees the installation and enrolling of manufacturers, producers, and importers on to the ETS system. The installation of the ETS system is at SICPA’s cost.
ETS enables manufacturers to streamline their operations by applying stamps on excisable goods, storing information, authenticating products, and monitoring production. ETS is integrated with TRA’s Tax Management System. It ensures accurate and real-time data on domestic production, and import of goods, all along the supply chain.
The ETS equipment is strategically placed in production facilities and custom-controlled areas and marks each product with a marking label, which not only submits real-time data to TRA but also verifies the authenticity of goods throughout the supply chain.
This groundbreaking system, based on a century of knowledge in physical security, digital technology, and data science, is transforming industry, providing manufacturers and importers with unprecedented efficiency and transparency.
The technology enables the constitution of forensic evidence required to convict fraudsters, thanks to ETS’ material and digital security features. ETS also enables the identification of fraud “hot spots” along the supply chain and optimizes law enforcement operations as well as TRA’s resource allocation.
As such, ETS differs from the solutions proposed by the tobacco industry, for instance, as it meets the requirements of the World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC) Protocol, which calls for the implementation of tracking and tracing systems under the total control of public authorities, and completely independent from the tobacco industry. ETS has been notably praised by The Lancet journal in a paper ‘Global Health 2025: The path to halving premature death by mid-century’, for its ‘dramatic effectiveness’ on health over the digital-only, non-WHO FCTC compliant tobacco industry system.
Tanzania’s Tax Collection Struggles Prior to ETS
Prior to the introduction of ETS, tax collection in Tanzania was carried through self-declaration by the manufacturing industry. For the Tanzanian Government, this presented challenges due to compliance and under-declaration of effective production data volumes. The fiscal authorities had to physically deploy staff to monitor the number of goods produced in manufacturing plants. Similarly, producers had to physically count their products to determine the number of goods produced.
Counterfeit products presented another challenge for the Government, TRA, manufacturers, and consumers. With the enforcement of ETS in 2019, consumers can now also check that they are getting the product they expect, with TRA’s Hakiki App.
Today, TRA’s tax system has been installed on multiple production lines in factories in the country – helping reduce illicit trade and counterfeiting.
Impact in Tanzania and in the Broader Eastern African Region
The impact of ETS technology in Tanzania can also be seen in the wider context of the East African region. The Governments of Uganda and Kenya have, too, implemented ETS, whose published positive results underscore its effectiveness in enhancing tax administration, increasing visibility into illicit trade, and improving compliance across multiple industries.
ETS has also been a catalyst for significant investment and growth among manufacturers, notably in the beverage industry in Tanzania, but also in Uganda, indicating a trend towards expansion and modernization of the regional economy.
The Tanzanian Government has set the ambitious objective to increase tax revenue to 14.4 percent of GDP by 2026. Through TRA, the Government is also a strong promoter of tax related opportunities and compliance in secondary schools, for example in Zanzibar. Speaking to the Tanzania Chamber of Commerce on 26 November 2024, Tanzania’s Deputy Minister of Industry and Trade also urged businessmen ‘to make sure they formalize their business, issue and claim receipts for the sales and purchases they make, prevent and completely reject contraband businesses and expose taxpayers’.
In a meeting with members of the Budget Committee of the National Assembly in Dar es Salaam on 3 December 2024, Yusuf Mwenda, the TRA Commissioner General, referred to the introduction of ETS as a measure which helped to increase revenue collection in Tanzania as well as compliance among taxpayers. He also presented new tools and enforcement measures and the hiring of 1,000 new staff members to particularly address the illicit trade and smuggling of domestic and traded goods, such as alcohol, in the territory.As technology and digitalization advance, so will the Tanzanian Government’s efforts to transform tax administration with an effective and sovereign tax system, bringing value and growth to the nation, and enforce its ability to invest in social services, infrastructures, schools, or public health programs.
Read more articles by Cynthia Bavo
This is not true. Zanzibar also has EFD machines and follow the same process… do your research properly