Online Reporter
Tapiwanashe Mangwiro
Bankers and economists have hailed the Treasury’s clarification that the Digital Services Withholding Tax (DSWT) will not apply where Value Added Tax (VAT) is already being remitted, noting that this demonstrates policy responsiveness.
Further, the banking sector and economic experts said the intervention by the Treasury to shed more light on the tax would strengthen Government revenue inflows by reducing tax avoidance and evasion.
The imported services include digital streaming and online content, e-hailing, and platform-based fees, online advertising and satellite-based and other cross-border digital access offerings.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube yesterday cleared confusion over the scope and administration of the DSWT when he explained that taxpayers already accounting for and remitting VAT on imported digital services in line with the VAT Act will not be subject to the DSWT on the same transactions, stressing the measure is not intended to result in double taxation.
Minister Ncube stressed that any reference to goods within the digital services framework should be interpreted in the context of electronically supplied or digitally mediated services, consistent with VAT provisions.
He reiterated that the DSWT is not a new tax, but an administrative mechanism designed to improve the collection of Value Added Tax on imported services that are already chargeable under the existing legislation.
“Taxpayers who are already accounting for and remitting VAT on imported services in accordance with the VAT Act will not be liable to the DSWT on the same transactions. The measure is not intended to result in double taxation,” the minister clarified in a statement.
The ministry has also moved to correct messaging from local banks suggesting the tax applies to all international card transactions, noting that such interpretations are inconsistent with policy intent.
Economist Tinevimbo Shava said the clarification was critical in restoring confidence among businesses and consumers who had feared overlapping taxes on the same transactions.
“Double taxation distorts behaviour.
“When firms or individuals feel they are being taxed twice for the same activity, they naturally look for ways around the system,” Mr Shava said.
“Through making it clear that VAT-compliant taxpayers are exempt from the DSWT on those transactions, the Government is closing loopholes while encouraging voluntary compliance.”
Mr Shava added that clear tax rules tend to widen the tax base over time.
“When compliance becomes simpler and more predictable, more economic activity stays within the formal system. That ultimately boosts revenue without increasing rates,” he said. Bankers Mr Raymond Madziva said the clarification on bank communications was particularly important for the financial sector and the broader economy. He noted that earlier interpretations risked creating confusion for customers making legitimate international payments.
“Banks sit at the centre of payment flows. If rules are unclear, it creates friction for clients and reputational risk for financial institutions,” Mr Madziva said.
“The ministry’s engagement with banks to ensure correct and consistent application is a positive step that improves ease of doing business.”
Mr Madziva said that by limiting the tax to its intended scope and avoiding blanket application to all offshore card transactions, authorities were reducing incentives for customers to bypass the formal banking system.
“When people feel unfairly targeted, they move to cash or informal channels. That weakens financial intermediation and makes tax collection harder,” he said.
“Clarity helps keep transactions within regulated channels, which is good for banks and for the Treasury.”
Both analysts said the clarification could also help curb tax evasion.
Mr Shava explained that uncertainty often creates space for deliberate misreporting.
“Clear rules reduce grey areas. When the tax treatment is well defined, it becomes easier for authorities to enforce compliance and harder for bad actors to hide,” he said.
Mr Madziva agreed, noting that consistency between policy intent and implementation is key.
“If banks apply the rules correctly and customers understand them, compliance improves across the board. That translates into more predictable revenue for the Government,” he said.
The analysts also pointed to the broader signal sent by the review, saying the willingness to clarify and correct interpretations showed a more consultative approach to tax administration.
“Responsive policy builds trust. Over time, that trust is what sustains revenue mobilisation in a growing digital economy,” Mr Madziva said.
On payment channels, the minister clarified that the tax is not limited to international card payments, but all offshore payments for imported digital services, irrespective of the payment channel used, where such payments are processed through regulated intermediaries in Zimbabwe.
