Tanzania: A technological solution to counterfeiting?

In order to increase revenue and counter tax evasion, the Tanzanian authorities have turned to technology. In 2018 the government introduced the Electronic Tax Stamps Regulations, 2018.

What these regulations do is require the use and application of Electronic Tax Stamps (ETS) on all excisable goods. An ETS comprises an adhesive label that uses advanced digital coding technology and is printed on or affixed directly to the product packaging of excisable goods.

The purpose of the ETS is to fight counterfeiting and tax irregularities such as the under-declaration of taxes. In general terms the ETS system facilitates the tracking, monitoring and authentication of stamps and excisable goods along the supply chain so that all excisable goods are properly accounted for and taxed accordingly. The ETS system replaces an old paper-based stamp system that was inefficient. Here is some more detail on how it works:

  • The ETS system requires all manufacturers and importers to install a particular Swiss electronic tax stamp management system. This system makes provision for the ordering of stamps, the application of those stamps to goods, the storing of information, the authentication of products and the monitoring of production. Manufacturers are required to install the system on all production lines, whereas importers must do so in custom-controlled areas.
  • Manufacturers and importers are now required to declare to the authorities packages and labels of all new products that are manufactured or imported, even if those goods are duty-free. They are further required to give at least 30 days’ notice of the production or importation of any new product, or changes in trade mark design. 
  • There is a duty on all people in the supply chain to verify and authenticate the stamps before handling the goods in any manner. 
  • All manufacturers and importers need to register with the authorities in order to receive a registration certificate. 
  • In the case of locally manufactured goods the ETS must be applied at the production facility. In the case of imported goods the ETS must be applied at a place approved by the authorities.

The new system is being implemented in phases on selected goods. The first phase started on 15 January 2019, and this phase covered cigarettes, beer, wines, spirits and other alcoholic beverages. The second phase began on 1 August 2019, and this covers various non-alcoholic beverages.

There are strict penalties for non-compliance involving heavy fines and custodial sentences. The authorities have the power to seize counterfeit stamps and goods carrying counterfeit stamps.

These developments are in line with a recent undertaking from the Tanzanian Minister of Trade & Industry that the war on counterfeiting will be fought by all. Brand owners should see the ETS system as a positive development.

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Date published: 5 December 2019
Author: Spoor & Fisher

Tags: Tanzania Electronic Tax Stamps Regulations