Zimra Explains Digital Services Tax, Says Levy Targets Fair Competition
The Zimbabwe Revenue Authority has defended its digital services tax amid growing public debate.
The authority says the measure is intended to prevent offshore digital platforms from gaining an unfair advantage over local businesses operating in the same market.
Tax Targets Foreign Digital Services Used in Zimbabwe
Zimra Head of Technical Services for Domestic Taxes, Mathias Chinanayi, said the tax applies to electronic services supplied by companies domiciled outside Zimbabwe but consumed by local residents.
He explained that the measure seeks to ensure that non-resident digital operators are subject to similar tax obligations as local companies offering comparable services within Zimbabwe.
Promoting Fair Competition
Chinanayi said both local and foreign businesses often provide the same digital services to Zimbabwean consumers, creating an uneven playing field if offshore operators remain untaxed.
“To promote fair competition, the services coming from outside Zimbabwe are taxed the same way,” he said, adding that the levy is not imposed on imported goods but rather on the importation of services.
Who Pays the Digital Services Tax
Zimra clarified that the digital services tax is paid by the recipient of the service in Zimbabwe, not the foreign supplier.
Chinanayi noted that foreign suppliers are taxed separately under the Income Tax Act, where a five percent levy is charged on their gross income, while the digital services tax is settled locally by the consumer of the service.
Addressing Double Taxation Concerns
Responding to concerns about possible double taxation, particularly where foreign platforms already charge value-added tax (VAT), Zimra said mechanisms are in place to prevent duplication.
He explained that withholding arrangements through intermediaries such as banks are intended to ensure that the correct tax is remitted to Zimbabwe.
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