Digital Tax: A Policy That Risks Stifling the Very Economy It Seeks to Tap

By ZimCyberSecurity

HARARE – THE introduction of the 15% digital services tax in Zimbabwe reflects a policy direction aimed at expanding the national revenue base and bringing the digital economy within the tax net.

From the perspective of ZimCyberSecurity, the intention behind this policy is understandable, particularly given the increasing reliance on digital platforms and foreign-based service providers by both consumers and businesses.

However, the structure, timing, and implementation of this tax raise significant concerns, especially within an economy that is still striving to achieve meaningful digital maturity.

Zimbabwe remains in a developmental phase with respect to digital adoption. Internet access, cloud computing usage, cybersecurity tooling, software-as-a-service platforms, and fintech solutions are still growing and remain costly due to foreign currency constraints. Introducing a high, blanket digital tax at this stage risks slowing digital transformation rather than regulating it.

For businesses that rely on international digital tools to remain competitive, compliant, and secure, the tax increases operational costs and may discourage further investment in technology-driven solutions.

The government’s primary objectives appear to be broadening the tax base, capturing revenue from foreign digital companies operating within Zimbabwe, reducing capital flight, and creating a perceived balance between local and foreign service providers. While these goals are valid in principle, their practical viability is limited.

Most targeted digital companies do not have a physical presence, infrastructure, or billing operations within Zimbabwe. As a result, enforcement mechanisms rely heavily on local financial institutions and payment gateways, meaning the effective burden of the tax is transferred almost entirely to local consumers and businesses rather than the multinational digital firms themselves.

When compared to other African countries such as Kenya and Nigeria, which have implemented similar digital taxation frameworks, it becomes clear that Zimbabwe’s context differs substantially.

Those markets have larger digital economies, stronger regulatory capacity, and in some cases, regional headquarters or local infrastructure operated by global technology firms. Applying a similar tax framework in a smaller, import-dependent digital economy without complementary industrial and infrastructure policies risks turning digital taxation into a consumption penalty rather than a tool for digital equity or economic development.

For Africa as a whole, digital taxation can only be beneficial if it is aligned with broader strategies for digital industrialisation, skills development, and local value creation.

Regarding the concern that this tax may discourage companies such as Meta, Netflix, and Starlink from operating in Zimbabwe, it is unlikely that these firms will fully exit the market. Zimbabwe represents a relatively small share of their global revenue, and their operating models are designed to absorb regulatory costs across multiple jurisdictions.

However, the tax does reduce the incentive for these companies to deepen their local engagement. This includes investments in local data centres, customer support infrastructure, skills transfer, and pricing localisation. In effect, the tax discourages localisation while leaving consumption largely unchanged.

There has also been a noticeable reaction from consumers and businesses seeking to bypass the tax by using foreign bank accounts, offshore fintech platforms, diaspora cards, and third-party intermediaries. This behaviour is both viable and predictable. It reflects a policy gap where enforcement assumptions were overly centred on local banking systems without sufficient consideration of modern cross-border digital payment behaviour.

The outcome is reduced tax effectiveness, increased informal digital transactions, and further externalisation of capital, which ultimately undermines the policy’s intended goals.

The situation is further compounded by the earlier introduction of the US$5 regulatory fee on foreign digital subscriptions such as Netflix and Starlink. The addition of a 15% digital tax on top of this fixed charge effectively creates a dual taxation layer on the same services. This disproportionately affects low-income consumers, students, startups, and small to medium enterprises.

From a cybersecurity standpoint, this also has national security implications. Many organisations rely on international cybersecurity platforms, threat intelligence services, cloud security tools, and compliance systems.

Making these services less affordable weakens organisational cyber resilience and, by extension, national digital security posture.

In conclusion, while the digital services tax is conceptually aligned with global trends, its current form risks slowing Zimbabwe’s digital growth, increasing consumer costs, and driving digital transactions further offshore.

A more effective approach would involve lower and graduated tax rates, exemptions or thresholds for SMEs, incentives for local hosting and infrastructure investment, mandatory reinvestment mechanisms, and structured consultation with ICT and cybersecurity professionals.

Digital taxation should be designed to support digital adoption and resilience, not inadvertently undermine them.

Key Bullet-Proof Points for Consideration:

• The tax burden falls primarily on consumers and local businesses, not foreign digital corporations.

• Zimbabwe’s digital economy is not yet mature enough to absorb a high, blanket digital tax.

• Dual charges (US$5 regulatory fee plus 15%) amount to effective double taxation.

• The policy incentivises offshore payment methods, reducing tax efficiency.

• High digital service costs weaken cybersecurity readiness and digital competitiveness.