LOCAL users of foreign-based digital services such as subscription streaming platforms, satellite internet providers and other offshore online platforms last week began paying a 15 percent Digital Services Withholding Tax, under a new tax regime meant to bring in income earned by non-resident digital companies into the country’s tax net.
The tax, introduced under the Finance Act, signed into law on Monday, is intended to address revenue losses arising from the rapid growth of the digital economy, where offshore platforms generate significant income from Zimbabwean users without a physical presence in the country. The new levy is being withheld at the point of payment by banks, mobile money operators and other regulated financial intermediaries before being remitted to the Zimbabwe Revenue Authority (Zimra).
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the new measures were necessary to safeguard Zimbabwe’s taxing rights and promote fairness in the tax system, as payments for digital services are largely remitted offshore without being subjected to value-added tax (VAT) or income tax.
Under the new regime, a withholding tax will apply to payments made to offshore digital platforms, including e-hailing service fees, online content and streaming subscriptions, commissions, digital advertising, e-commerce services and satellite-based internet access fees. The tax will be charged in lieu of VAT on imported digital services.
According to the Finance Act, intermediaries such as banks and mobile money operators are required to withhold the tax when processing payments to foreign-domiciled digital service providers and remit the amounts to Zimra within 30 days.
“Every intermediary shall withhold digital services withholding tax from the amount paid to the intermediary for remittal in accordance with Section 13A, and shall pay the amount withheld to the Commissioner within 30 days of the date of payment or within such further time as the Commissioner may for good cause allow,” reads the Act.
“Where digital services withholding tax is withheld, the intermediary shall provide the payer with a certificate, in the form approved by the Commissioner, showing the amount of the payment to be made to a company or other entity domiciled outside Zimbabwe; and the amount of the digital services withholding tax withheld.”
Failure to withhold or remit the tax will attract penalties, including liability for the unpaid tax and an additional 15 percent surcharge, although Zimra may waive penalties where there is no intent to evade tax.
The move comes against the backdrop of the growing ubiquity and use of digital services by Zimbabweans, who spend millions of dollars annually on platforms such as Netflix and other streaming services, InDrive and other e-hailing applications, Google and Meta digital advertising, e-commerce services, online gaming platforms, cloud computing services and satellite-based internet providers such as Starlink.
Prof Ncube told Parliament during his 2026 National Budget presentation that the expansion of electronic commerce had created base erosion risks and unfair competitive advantages, as domestic service providers are fully taxed while offshore digital companies were largely operating outside the tax framework.
“The rapid expansion of the digital economy has enabled offshore digital platforms to supply services directly to domestic users without establishing a physical presence in the country. These include e-hailing platforms, digital streaming services, satellite-based internet services and a range of other online content, advertising and e-commerce platforms.
“These entities are generating significant income from domestic consumers and businesses.
“However, the current tax framework does not adequately capture income accruing to non-resident digital service providers or VAT payable on such services, resulting in substantial revenue leakages.”
Payments for subscriptions, commissions, e-hailing service fees and internet access charges, he said, are mostly remitted offshore without being subjected to VAT.
“This has created base erosion risks and unfair competitive advantages over domestic service providers that are fully taxed in the country,” added Prof Ncube. To safeguard the country’s taxing rights and promote equity in the tax system, it is necessary to strengthen existing tax provisions to ensure that income earned by offshore digital platforms from local users and VAT accruing from services performed by such enterprises is effectively brought into the tax net.
“I, therefore, propose to introduce a Digital Services Withholding Tax at a rate of 15 percent, in lieu of VAT on imported services, for payments made to offshore digital platforms, including e-hailing fees, online content charges and satellite-based internet access fees.” – Sunday Mail
