EFDs, a game-changer in improving business, revenue collection

25May 2022
The Guardian Reporter
The Guardian
EFDs, a game-changer in improving business, revenue collection

A CROSS-section of the business community has applauded the Tanzania Revenue Authority (TRA) for introducing the Electronic Fiscal Devices (EFDs), saying it has shown an enormous impact on their businesses and revenue collection.

Some of the trained officials; train the retailer on how the ‘Hakiki Stempu’ (Verify the Stamp) app works in one of the shops in Dar es Salaam.

In separate interviews traders say through the use of the machines, it is easy to boost businesses and at the same time make the task for TRA to collect taxes easily.

“In that way, we can altogether improve the country’s economy as well as to increase the tax compliance culture, which in turn minimizes tax evasion—a major challenge in many African countries including Tanzania,” said John Minja, Dar es Salaam-based businessman.

Through his liquor business, Minja says EFDs make his business easier as he doesn’t need much to stay in the shop as everything is sold using the machines and his attendants are aware of using the machines, “something that makes me assure of what I sold and not.”

He also said that TRA has come up with electronic tax stamps (ETS) through the ‘Hakiki Stempu App’ which is found and can be installed on people’s phones.

“To me as a businessman, the use of EFDs and the introduction of ETS is a very good idea as the new app to help consumers to verify the authenticity of different consumables,” he said.

“To us, this is okay as it makes the buyer buy something that can verify it instantly,” says Abdulmarik Karim, a Dar es Salaam-based trader.

Karim describes the digital app as good as helping consumers to prove if the goods they are purchasing have quality.

According to Karim, EFDs transmit tax information to TRA directly and have a tax memory capacity that stores data for some years making it easier to track records.

It also helps to avoid conflict during the audit and tax assessment as well simplifies objections and appeals against tax assessments and also helps in the reduction of tax collection costs.

In that arrangement, buyers can verify the stamps were installed on companies that produce beer, wine and spirits, sweetened flavored water, and other non-alcoholic beverages, like energy and malt drinks and soda. It also involved enrolling electronic stamps on fruit juices (including grape must), vegetable juices (under Heading 20.09), and bottled drinking water.

Under the new setup, manufacturers can streamline their production and have a good count without theft cases and end-user- the user is able to get a quality product, fewer fake products in the market now.

A Mwanza-based trader Isabela Maganja views EFDs as a redeemer in her beverage business, encouraging others to venture into the effective use of the system. “It has improved my business because of the trust buyers have in my shop…they know for sure that what I’m selling be it beer or juice is genuine,” she says, commending TRA for coming with that initiatives.

“In the past, I thought EFDs makes me to pay more tax than with manual method, but after being educated I came to understand that the use of machines is everything on what I do,” says Majorie Pallangyo of Arusha, suggesting TRA to put more efforts on public education as many traders are unaware on the importance of tax revenue towards business success.

She says many traders are not aware of the potential benefits of EFDs, that’s why they’re up and down getting out of TRA officials, but rather they should take them positively as their visits are meant to support business growth.

Majorie is encouraging the taxmen to make the EFDs machines available everywhere to increase revenue collection.

“I know it's important that’s why I’m stressing the need to have one in at least every selling point,” she said, suggesting the need for TRA to use a friendly approach that will not push anyone out of business.

TRA has recently introduced a door-to-door campaign aimed to visit the traders to hear their challenges as well as furnish them with tax compliance education.

TRA principal tax management officer, Stephen Kauzeni says among others the campaign educates business people on the effective use of EFDs and issuance of EFDs receipts. “We’re here to ensure that unregistered traders are registered by obtaining Taxpayer Identification Number (TIN), promote the issuance of EFD receipts as well as remind traders to sell products that protect consumer health as well as encourage verification of ETS,” Kauzeni says.

According to him, the authority will continue enhancing its education and awareness programmes for taxpayers in order to improve voluntary tax compliance and thus expand the tax base.

He urges traders and other taxpayers to utilize the education by making sure that they conduct their activities as per the country’s laws which include issuing EFD receipts and paying their taxes on time.

Traders on their part commended TRA for embarking on the campaign saying that education was still needed as some of the traders are unaware of the machines and their importance.

He also urges buyers to develop a culture of demanding fiscal receipts for every purchase made from their sellers for the government to get its required revenues for the country’s development.

TRA has made significant improvements in the ICT system aimed at increasing efficiency, accountability, transparency, and simplifying the collection of government revenue at present. This also includes other fruits like bananas, tomatoes, and all kinds of packaged alcoholic beverages.

So far, factories that are already connected to the Electronic Stamp system across the country are 286, and imports of imported goods are 106, so through the Stamp Verification app, the government will be able to collect appropriate taxes and implement various development projects and social services for the benefit of Tanzanians.

It’s high time for producers and exporters to use the ETS system honestly as the system has many benefits for them including protecting their products in the market against counterfeit goods as well as supporting fair tax estimates.

Available data show that excise duty collections have risen 60 percent if the three years prior to the rollout of ETS’ on beer, wines, and spirits is compared to an almost similar period after the rollout.

TRA collected 297.2bn/- as excise duty on beer, wine, and spirits (both locally-produced and imported ones) during the three years before January 15,2019, but from that time to June 2021, the amount rose to 476.7bn/-, available data shows. There had been double-digit excise duty growth rates from all the products on which ETS’ have been stamped.