Digital Services Withholding Tax

Question

Answer

 
  1. What is Digital Service Withholding Tax (DSWT)?

 

DSWT is a mechanism where Banks (and other financial intermediaries) are required to withhold a tax when a customer in Zimbabwe makes a payment to a foreign supplier for taxable digital services.

 
  1. What is the rate to be applied on each payment made for the imported Digital services?

 

The standard VAT rate of 15.5% of the payment amount will be levied or charged where the foreign supplier is not registered for VAT in Zimbabwe.

 
  1. When does the tax come into effect?

The tax is applying to payments made from 1 January 2026 onwards
  1. Does the Digital Services Withholding Tax (DSWT) apply to all foreign payments?

No-The DSWT applies only to payments for imported Digital/electronic Services. It does not apply to payments for physical goods, zero rated services and on designated exempt transactions.

 

 
  1. On what type of payments is the DSWT being applied?

The Tax is being applied on payments for imported digital/electronic services.

Electronic services include, but are not limited to, services that are:

• Supplied or delivered through electronic or telecommunications networks

• Automated or platform-mediated in nature; and capable of being supplied without the physical presence of the supplier in Zimbabwe
  1. What are the services which are NOT subject to the Digital Services Withholding Tax?

The tax does NOT apply to:

• Imported physical goods

• Services rendered physically

• Services consumed outside Zimbabwe

• Zero rated and exempt services for VAT purposes eg Educational, Financial and Medical Services
  1. What are the examples of Electronic Services subject to the Tax?

Online subscriptions and digital platform access;

• Streaming, cloud computing and hosting services;

• Online advertising and digital marketplace commissions;

• App-based, platform-mediated and technology-enabled services;

• Downloadable digital content (apps, e-books, films);

• Subscription-based electronic media (news, magazines, journals);

• Over-the-top (OTT) services (films, music, podcasts);

• Software programs, drivers, firewalls and filters;

• Electronic data management, cloud storage and file-sharing;

• Music, games and other digital entertainment;

• Search engine and automated helpdesk services;

• Tickets supplied electronically for live events;

• Digital content for listening, viewing or playing on any digital media;

• Platform-based transport hailing services; and

• Services supplied by Artificial Intelligence platforms.

The above examples also include physical goods supplied in electronic format (e.g. e-books, digital newspapers, digital films, etc.
  1. Do payments to local suppliers of electronic services attract the Digital Services Withholding Tax?

No-Payments to local suppliers of electronic/digital services do not attract Digital Services Withholding Tax.

 

 
  1. Which payment methods do the Digital Services Withholding Tax (DSWT) apply to?

DSWT applies to payments made using Mastercard and VISA cards and through Telegraphic Transfers (TT).
  1. Is the Intermediated Money Transfer Tax (IMTT) the same as the Digital Services Withholding Tax (DSWT)?

No- IMTT and DSWT are different taxes that apply to different types of transactions. IMTT applies to electronic money transfers, while DSWT applies to payments for digital/electronic or online services. In some cases, both taxes may apply to the same transaction.
  1. At what point is the DSWT Charged?

The tax is withheld or collected by Banks from the source at the time of processing or making the foreign payment.

 
  1. Are there amount limits on which the Digital Services Withholding Tax apply?

No-There are no limits. It applies to all payments regardless of amount.