Zimbabwe has begun enforcing a new 15 percent Digital Services Withholding Tax on payments made to offshore digital platforms, marking a major shift in how the country taxes the fast-growing online economy.
The tax, which came into effect last week, is being deducted at the point of payment by banks, mobile money operators and other regulated financial intermediaries whenever local users pay for digital services offered by foreign-based companies.
Authorities say the move is aimed at plugging revenue losses linked to international digital firms that earn income from Zimbabwean consumers without having a physical presence in the country.
Finance Act Expands Tax Net
The levy was introduced through the Finance Act, which was signed into law earlier this week. Government officials say the reform is designed to safeguard Zimbabwe’s taxing rights and promote fairness between local businesses and foreign service providers.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said digital payments have for years flowed out of the country without being subjected to income tax or value-added tax.
“Payments for digital services are largely remitted offshore without being taxed,” he said, adding that the new framework levels the playing field between domestic companies and international platforms.
Wide Range of Digital Services Covered
Under the new system, the withholding tax applies to a broad spectrum of offshore digital services. These include streaming and subscription platforms, online content services, digital advertising, e-commerce marketplaces, cloud computing, online gaming, satellite internet services and commissions charged by e-hailing applications.
The tax is charged in place of VAT on imported digital services and is applied at the time a payment is made by a Zimbabwean user.
Banks, Mobile Money Firms Take Centre Stage
The Finance Act places a legal obligation on banks, mobile money operators and other payment intermediaries to withhold the tax when processing payments to foreign digital service providers. The collected amounts must be submitted to the Zimbabwe Revenue Authority (Zimra) within 30 days.
Intermediaries are also required to issue customers with certificates showing the gross payment and the tax deducted, using a format approved by the Zimra Commissioner.
Penalties for Defaulters
Failure to withhold or remit the tax will attract penalties, including responsibility for the unpaid amount and a 15 percent surcharge. However, Zimra has discretion to waive penalties where there is no evidence of deliberate tax evasion.
Growing Digital Use Spurs Policy Change
The introduction of the tax comes amid rising digital consumption in Zimbabwe, with millions of dollars spent annually on services such as streaming platforms, online advertising through Google and Meta, e-hailing services, cloud computing, e-commerce and satellite internet providers like Starlink.
Government officials say the new tax regime reflects Zimbabwe’s effort to modernise its fiscal policies and align them with the realities of an increasingly digital global economy.
