15% Digital Services Tax Applies Only To Imported Services, Not Goods

The government has clarified that the 15% Digital Services Withholding Tax introduced in the 2026 National Budget applies only to imported digital services, not imported goods.

Finance Minister Mthuli Ncube introduced the tax in the 2026 budget to cover payments for foreign digital services, such as Netflix and Starlink.

The withholding tax replaces the 15% VAT normally charged on such payments and is collected at source by banks or payment platforms.

Clause 44 of the Finance Act 7 of 2025 was initially misinterpreted to suggest that the tax applied to all goods and services purchased from outside Zimbabwe.

However, according to a Treasury letter to the Zimbabwe Revenue Authority (ZIMRA), the law was drafted incorrectly, creating the impression that imported goods were also subject to the levy.

The Ministry of Finance has instructed ZIMRA to implement the tax in line with its original intent and to notify banks and other withholding agents to avoid double taxation, as imported goods will continue to attract VAT at the point of importation.

The tax, which targets payments to offshore digital platforms including e-hailing, online content, and satellite internet services, took effect on 1 January 2026.

A Treasury letter to ZIMRA Commissioner-General Regina Chinamasa, dated 5 January 2026, confirmed that the tax should be applied as intended, not according to the error in the law. The letter reads:

“As you would be aware, the Hon. Minister of Finance, Economic Development and Investment Promotion, through the 2026 National Budget, introduced a Digital Services Withholding Tax on imported services, in lieu of VAT at the standard rate, applicable on payments made to offshore digital platforms.

“Notwithstanding the above, Treasury notes that Clause 44 of Finance Act 7 of 2025 erroneously states that the Digital Services Withholding Tax will apply “whenever payment is made for goods and services that are supplied from outside Zimbabwe”.

“The tax should, however, be applied on imported services only, while VAT on imported goods will be chargeable at the time a consignment is imported into the country.

“In view of the above, the Zimbabwe Revenue Authority is directed to implement the tax in line with the policy intention.

“Furthermore, the Zimbabwe Revenue Authority should immediately advise withholding agents, including Financial Institutions of the above directive, with a view to eliminate potential double taxation of goods, pending rectification of the error by the Office of the Attorney General.”

Related:

VAT Remains Zimbabwe’s Biggest Revenue Earner, Followed By PAYE Entrepreneur warns businesses to check ZIMRA accounts for unexplained tax debts due to system flaw