15% digital ser­vices tax kicks in

Local users of foreign-based digital services last week began paying a 15 percent Digital Services Withholding Tax, following the enactment of a new tax regime aimed at bringing income earned by non-resident digital companies into Zimbabwe's tax net.

The tax was introduced through the Finance Act, which was signed into law on Monday, and applies to payments made for offshore digital services such as subscription streaming platforms, e-hailing services, satellite internet providers and other online platforms with no physical presence in Zimbabwe.

Under the new framework, the tax is 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 measure was designed to curb revenue losses arising from the rapid expansion of the digital economy, where offshore platforms generate significant income from local users without being subject to domestic taxes.

He said payments for digital services are largely remitted offshore without attracting value-added tax or income tax, creating gaps in the tax system and disadvantaging local service providers.

The withholding tax applies to a wide range of digital services, including e-hailing service fees, online content and streaming subscriptions, digital advertising, e-commerce services, commissions and satellite-based internet access fees. The levy is charged in lieu of tax on imported digital services.

According to the Finance Act, intermediaries processing payments to foreign-domiciled digital service providers are required to withhold the tax and remit it to Zimra within 30 days of payment.

"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 part of the Act.

The law also requires intermediaries to issue payers with a certificate approved by the Commissioner, detailing the gross payment made to the offshore company and the amount of tax withheld.

Failure to withhold or remit the tax will attract penalties, including liability for the unpaid tax and an additional 15 percent surcharge. However, Zimra may waive penalties in cases where there is no intent to evade tax.

The move comes amid growing use of digital services by Zimbabweans, who spend millions of dollars annually on platforms such as Netflix and other streaming services, e-hailing applications like InDrive, digital advertising through Google and Meta, e-commerce platforms, online gaming, cloud computing services and satellite internet providers such as Starlink.

Presenting the 2026 National Budget in Parliament, Prof Ncube said 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 largely operate 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," he said.

"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, resulting in substantial revenue leakages."

He said the new tax was necessary to safeguard Zimbabwe's taxing rights and promote equity in the tax system by ensuring that income earned by offshore digital platforms from local users is effectively brought into the tax net.