Electronic Tax Stamps on Carbonated Drinks become Genies in the Bottle

It has been found that Electronic Tax Stamp charges in East Africa are becoming rather too high for manufacturers.

Members of Business communities here say the ETS applied on carbonated drink bottles gulp up the earnings from the said beverage drinks.

Electronic Tax Stamp was introduced on carbonated soft drinks in Tanzania from August 2019 at USD 3.60 per 1000 stamps.

Afterward, this was fixed at Tanzanian Shillings 8,082.62 per 1000 stamps.

As a result, businesses have been incurring significant additional costs to manufacture, resulting in loss of margins and difficulty to support their working capital requirements.

That was among the issues raised during the Validation Webinar for the Study on Discriminative Taxes and Harmonization of Excise Duties in the East African Community (EAC).

The virtual meeting was organized by East African Business Council (EABC) in partnership with TradeMark Africa (TMA) and funded by Ministry of Foreign Affairs of the Netherlands,

During the virtual meeting the Executive Officer of EABC John Bosco Kalisa, reminded the seven partner States of an act from the Customs Union Protocol.

The section states that “No Partner State shall impose, directly or indirectly, on the products of other Partner States any internal taxation of any kind in excess of that imposed, directly or indirectly, on similar domestic products.”

The EABC Vice-Chair Simon Kaheru, called for private sector participation in the tax harmonization process.

Kaheru cited that in other EAC Partner States, there are proposals to increase the digital tax stamps to a higher rate than the excise duty, noting that such proposals affect business growth, competitiveness and investment across East African borders.

On his part, Ian Hirschfeld from Coca-Cola Africa said the East African Community needs to set standardization of excise tax.

The Head of Public-Private Dialogue and Export Capability for TradeMark Africa, Ms Paveen Mbeda, reiterated their commitment to partner with both public and private sectors to ensure tax systems are aligned to unlock the full potential of the East African Community bloc.

The excise duty rates across the EAC region, according to the study, are generally on the high side and have a ripple effect on the cost of doing business.