Online Reporter
Business Reporter
Zimbabwe Revenue Authority (Zimra) has clarified the application of the digital services tax, saying the levy seeks to create a level playing field for local and foreign digital companies.
Speaking on the matter during a ZTN Prime programme – On The Dollar – Zimra Head of Technical Services for Domestic Taxes, Mr Mathias Chinanayi said the digital services tax applies to electronic services provided by businesses domiciled outside Zimbabwe whose services are utilised by local residents.
“This tax is on the provision of electronic services supplied electronically by non-resident companies. These are businesses outside Zimbabwe providing services that are consumed here.
“There are businesses providing electronic services here in Zimbabwe, and non-resident operators are doing the same thing. To promote fair competition, the services coming from outside Zimbabwe are taxed the same way,” said Mr Chinanayi.
He said the tax is applied on imported goods, but rather on the importation of services.
Mr Chinanayi said the digital services tax is paid by the recipient of the service, not the foreign supplier.
“This is not a tax on the supplier. The tax on the supplier is dealt with separately under the Income Tax Act, where a five percent tax is charged on the gross income earned by the foreign supplier. The digital services tax, however, is paid by the person receiving the service in Zimbabwe,” he said.
Addressing concerns over possible double taxation, particularly where foreign service providers already charge VAT, Zimra said the system is structured to avoid duplication.
“There should not be any double taxation. Where tax is charged, withholding mechanisms through intermediaries such as banks, are meant to ensure that the correct amount is remitted to Zimbabwe.”
He, however, acknowledged that operational challenges remain, especially where foreign operators are already registered for VAT or where digital platforms supply both goods and services.
Zimra also conceded that distinguishing between goods and services on complex online platforms remains a challenge.
Mr Chinanayi said there is ongoing work to refine the framework and ensure consistency, compliance and certainty for taxpayers operating in the digital economy.
