Zimbabwe introduces 15% tax on digital services

The Government has announced a 15 percent digital services withholding tax on all payments made to offshore online platforms, a move aimed at regulating the rapidly expanding digital economy and securing the country's revenue base.

Finance Minister Professor Mthuli Ncube unveiled the measure while presenting the 2026 national budget on Thursday, saying it will take effect from 1 January 2026. The tax will impact millions of Zimbabweans using streaming services, ride-hailing apps, online content platforms, and satellite internet services.

"Most digital subscription fees, commissions, and access charges are currently paid outside Zimbabwe's borders without attracting Value Added Tax (VAT), giving foreign digital platforms an unfair competitive advantage over local service providers who are fully taxed within Zimbabwe," Prof Ncube said.

The Minister explained that as more services migrate online, many transactions with offshore companies occur outside the country's tax net, resulting in revenue leakages and uneven competition for domestic businesses.

Under the new framework, banks and mobile money operators will be required to withhold the 15 percent tax at the point of payment. This ensures real-time collection and addresses enforcement challenges that have hindered previous efforts. Payments for services such as Netflix, Spotify, Amazon Prime, ride-hailing apps, digital content subscriptions, or Starlink satellite internet will automatically have the withholding tax deducted before the money is sent offshore.

Prof Ncube noted that similar tax measures have been adopted internationally as governments adjust to digital commerce, emphasizing that the policy is expected to broaden revenue sources while leveling the playing field for local companies competing with multinational tech giants.

The announcement, however, has generated backlash among users, particularly on social media. Concerns have been raised about potential double taxation for platforms like Starlink and InDrive, which already include VAT in their charges. Some citizens also warned that the tax could push people to use foreign-issued cards to bypass the new levy.

The Government has stressed that the measure is intended to ensure fairness and sustainability in Zimbabwe's growing digital economy, even as critics debate its potential impact on consumers and online businesses.