Zimbabwe replaces non-resident digital VAT registration with withholding at source

What changed in detail

With effect from 1 January 2026 the Finance Act, 2025 (Act No. 7 of 2025) substituted section 13A of the Value Added Tax Act [Chapter 23:12], replacing self-registration by non-resident digital-services suppliers with a Digital Services Withholding Tax collected by intermediaries. The scope of electronic services is unchanged; the collection mechanism is not.

Intermediaries must withhold 15.5% of the payment where the foreign supplier is not registered for VAT in Zimbabwe, or a tax fraction of 3/23 where it is. Withholding happens when the foreign payment is processed. Intermediaries are the financial institutions defined in the VAT Act — banking institutions, building societies, the Reserve Bank, POSB, IDBZ, licensed postal service providers, mobile banking and mobile money transfer operators, registered money transfer services and microfinance institutions — and they must remit, issue a withholding certificate to the consumer, and keep records of payments made.

Non-resident suppliers must register where Zimbabwean turnover exceeds, or is expected to exceed, USD 25,000 in any twelve-month period, via the TaRMS simplified e-commerce module. Registered non-residents claim the tax withheld as a credit on their VAT return and pay only the balance, must price VAT-inclusive, and must issue fiscalised tax invoices through the FDMS. Where payment is made outside Zimbabwe, the supplier remains responsible for accounting in full. The tax is payable in United States Dollars.

What it means

Registration has become economically compulsory rather than legally optional. An unregistered supplier loses 15.5% of gross at the payment rail with no credit mechanism, against 3/23 — about 13% — creditable if registered. That gap, plus the credit, is the whole design: it converts registration from a compliance obligation into a pricing decision.

This is the enforcement pattern voluntary-registration regimes reach for when compliance is low, and it is worth watching as a template. Note the leak in it, too: payments routed outside Zimbabwe escape the rail entirely and fall back on the supplier’s own obligation to account.