The Finance Act No. 7 of 2025 introduced Digital Services Withholding Tax (DSWT) as a measure to ensure that income earned through online platforms is fairly taxed in Zimbabwe. This move raised concerns around possible double taxation and whether DSWT constituted an entirely new tax. In response, the Minister of Finance, Economic Development and Investment Promotion issued a press statement on 7 January 2026 to clarify how the tax applies.
Scope of the Tax
DSWT applies to payments made by individuals or entities in Zimbabwe for digital services, particularly where those services are provided by offshore companies that do not have a fixed place of business in the country. Covered services include online advertising, streaming platforms, digital subscriptions, and other services delivered electronically. The tax is not a new form of taxation but rather a revised collection mechanism. Previously, offshore suppliers were required to appoint local representatives to collect and remit the tax, which proved administratively challenging. Under the new framework, the responsibility is placed on payment intermediaries.
Double Taxation
The DSWT does not apply to online purchases of physical goods. It is limited to electronically supplied goods and digitally mediated services. Additionally, imported goods and services that are already subject to VAT on imported services fall outside the scope of this tax.
Mechanism for Collection
When a payment is made for a qualifying digital service, a portion of the payment must be withheld as tax before the balance is paid to the service provider. Banks and regulated payment intermediaries such as mobile network operators and microfinance institutions are responsible for deducting and remitting the tax. The withholding occurs at the point of payment by a person resident in Zimbabwe, generally interpreted as a person holding an account with a local financial institution.
Compliance Requirements
Individuals and intermediaries are encouraged to familiarise themselves with the applicable regulations and comply within the prescribed timelines. Ongoing monitoring of guidance issued by ZIMRA is essential, as failure to comply may result in penalties, interest, or other charges imposed by the tax authority.
Source: Press Statement – Clarification of the DSWT introduced by Finance Act No. 7 of 2025, issued on 7 January 2026.