Why East Africa is adopting technology in tax collection

21Apr 2021
The Guardian Reporter
Dar es Salaam
The Guardian
Why East Africa is adopting technology in tax collection

EAST African countries are embracing various approaches to expand their tax bases as well as win war against counterfeits affecting businesses and derailing regional trade.

Data shows the region has borne the brunt of cross-border illicit trade -- including counterfeits, smuggling and bootlegging, with Tanzania, Kenya and Uganda reportedly losing a combined $3.2 billion in annual revenues to illicit trade.

Regional countries have in recent years intensified war on the malpractices by adopting new technological systems including digital stamps.

The recent adoption of digital tax stamps (DTS) on cement and sugar earlier this month by Uganda Revenue Authority (URA) was a big step towards winning the battle.

It became the fourth country among the East African Community (EAC) member states to adopt digital stamps in deliberate efforts to fill revenue leakage loopholes.

Digital stamps enable the government to use modern technology to obtain production data on a timely basis from manufacturers.

In Kenya, the Excisable Goods Management System (EGMS) was initially launched in October 2013 to cover tobacco, wines and spirits, and later beer in early 2016.

It was until November 2019 that Kenya Revenue Authority announced the move to digitally tax bottled water, juices, energy drinks and water was viewed as a way to deal a blow to not only counterfeiters but also tax evaders.

Tanzania rolled out the first phase of the Electronic Tax Stamps (ETS) on January 15, 2019 whereby electronic stamps were installed in 19 factories that produce alcohol, wine and spirits.

It has recently launched an operation to crackdown on traders involved in the distribution of illegal electronic tax stamps.

President Samia Suluhu Hassan and Vice-President Dr Philip Mpango have thus tasked the Tanzania Revenue Authority (TRA) to improve and widen the tax base to achieve the target for undertaking recurrent and development expenditures.

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