Effective 1st January 2026, Zimbabwe has implemented significant changes to the taxation of electronic services through an amendment to section 13A of the Value Added Tax Act. The primary shift is the introduction of a Digital Services Withholding Tax mechanism.

From Imported Services to Withholding Tax

Previously, electronic services from non-resident suppliers were treated purely as imported services, placing the burden of registration and collection solely on the foreign operator. The new 2026 rules retain the scope of electronic services but mandate intermediaries (financial institutions) to withhold tax at the point of payment.

What Counts as an "Electronic Service"?

The definition is broad and includes any service delivered via telecommunications networks that is automated or platform-mediated. Common examples include:

• Streaming services (Netflix, Spotify, Podcasts).
• Cloud computing and hosting (AWS, Google Cloud).
• Online advertising and digital marketplace commissions.
• Software, apps, and downloadable digital content.
• Technology-enabled services like transport hailing and AI platforms.

Note: This tax does NOT apply to the buying and selling of physical goods, which remain subject to VAT and customs duties at the border.

How the Collection Works

Intermediaries are now required to withhold tax based on the supplier's registration status:

• 15.5% if the foreign supplier is not registered for VAT in Zimbabwe.
• Tax fraction of 3/23 if the foreign supplier is registered for VAT in Zimbabwe.

Intermediary Obligations

Financial institutions, including banks, mobile money operators (EcoCash, etc.), and building societies, must:

1. Withhold and remit the tax to ZIMRA.
2. Issue withholding certificates to consumers.
3. Maintain detailed transaction records for verification.

Compliance for Foreign Suppliers

Non-resident suppliers remains liable to register for VAT if their turnover exceeds USD 25,000 in a 12-month period. They will claim the taxes withheld by intermediaries as a credit on their VAT returns, paying only the remaining balance to ZIMRA.

All Digital Services Tax is payable in United States Dollars (USD).