Nelson Gahadza

Zimpapers Business Hub

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has clarified the scope and administration of the Digital Services Withholding Tax (DSWT), saying the tax applies only to prescribed imported digital services and not to any imported goods.

In a statement, Minister Ncube said the DSWT, introduced through Finance Act Number 7 of 2025, with effect from January 1, 2026, applied to payments made to non-resident suppliers for imported services.

The services include digital streaming and online content, e-hailing and platform-based service fees, online advertising and satellite-based and other cross-border digital access services.

“The tax does not apply to imported goods, which remain liable to customs duty, VAT and other applicable taxes at the point of importation in terms of existing customs and VAT legislation,” the minister said, pointing out that the online purchase of goods was not liable to the DSWT.

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.

“Imported services have been subject to VAT since 2004, with provisions strengthened through Finance Act Number 3 of 2019 to explicitly cover non-resident electronic commerce operators and digital service providers.

“The DSWT was introduced to improve collection of VAT on imported services and not as an additional tax,” Minister Ncube said, adding that the measure shifts the point of collection to regulated payment intermediaries such as banks, mobile money operators and other financial institutions.

Minister Ncube also highlighted that 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.

He said the measure is not intended to result in double taxation.

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.

Minister Ncube also addressed recent bank communications that suggested the tax applies to all international card transactions, saying this interpretation was inconsistent with the policy or legislative intent.

“The DSWT is a compliance mechanism designed to safeguard the country’s tax base, promote equity in the tax system, and modernise revenue administration in line with the digitalisation of the economy,” he said.

He noted that engagements with financial institutions were ongoing, while detailed administrative guidance would be issued by the Zimbabwe Revenue Authority.