Zanzibar sets an 18% VAT on non-resident digital services, with collection deferred to January 2027

What changed in detail

The Zanzibar Revenue Authority (ZRA) confirmed that an 18% VAT rate applies to supplies of electronic/digital services by non-resident suppliers to non-VAT-registered persons in Zanzibar, under Sections 4A and 4B of the VAT Act No. 4 of 1998 (inserted in 2024) and the Tax Administration Procedures (Simplified Registration for Non-resident Suppliers of Electronic Services) Regulations, 2022. Zanzibar operates its own VAT Act and its own revenue authority, separate from mainland Tanzania’s VAT regime. The registration scheme for non-resident suppliers is already in force. As an exceptional transitional measure, non-resident businesses that have not yet registered are told to register now, but are given lead time until 1 January 2027 before they must begin collecting and remitting VAT to the ZRA.

What it means

The compliance clock has already started even though the money doesn’t move until 2027: a non-resident digital-services supplier should register with the ZRA now to use the transitional window for building collection and remittance systems, rather than waiting until closer to the January 2027 deadline. Because Zanzibar’s VAT is a distinct regime from mainland Tanzania’s, registering or accounting for VAT on the mainland does not cover supplies made into Zanzibar.