VAT on Digital Service in Zanzibar

This guideline explains the Zanzibar scheme for VAT on electronic services supplied by non-resident businesses to non-registered persons in Zanzibar.

Zanzibar operates as a semi-autonomous region within the United Republic of Tanzania, where Digital Services Tax (DST) is a Union Tax. However, VAT on electronic services in Zanzibar is administered and collected independently in accordance with the tax laws of Zanzibar by ZRA.

The requirement for non-resident suppliers carrying on economic activities in Zanzibar without a fixed place to register and pay VAT is provided under the Value Added Tax (VAT) Act Number 4 of 1998 by introducing on Sections 4A and 4B in 2024

This is supported under Electronic Services Regulations known as 'The Tax Administration Procedures (Simplified Registration for Non-resident Suppliers of Electronic Services) Regulations, 2022

Electronic Services includes the supply of anything other than goods or real property that is delivered or made available through electronic or digital means, including online communication services or the internet, where such services are supplied to Zanzibar for use or consumption within Zanzibar.

Taxable Supplies means any supply of electronic services to a person located in Zanzibar (In respect of supplies to a recipient who is VAT-registered, this is taxable through a reverse charge mechanism).

A supply by a non-resident supplier of electronic services to a VAT registered person in Zanzibar is taxable through a reverse charge mechanism by the recipient. The non-resident supplier is not required to collect VAT on these supplies provided the recipient has given the supplier its Zanzibar VAT registration number.

The non-resident supplier shall presume the customer to be a non-VAT liable person, unless the customer provides documentation that it is VAT registered in Zanzibar. The supplier shall not be held liable if the information received by the taxable person is erroneous and the supplier can demonstrate that he did not and could not reasonably know that this information was incorrect.

The type of services liable under the Zanzibar scheme for VAT on non-resident suppliers of electronic services is stated in section 4 of Non-resident Suppliers of Electronic Services Regulations. The Tax Administration and Procedures Act, 2022, Part II Section 4.

Example of services covered are:

• software and updating thereof
• images, texts or information
• access to databases
• self-education packages
• music, films and games including gaming activities
• downloadable content, e-book, subscription-based media
• over-top services including streaming television shows, films, music, podcast, software programs including software, drivers, website filters, and firewalls
• electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services
• search engines
• automated helpdesk, tickets for live events
• e-learning
• digital media
• commission received from:
  • the services that link the supplier to the recipient including transport hailing services or platforms;
  • and any other service provided through digital marketplace
  • and any other digital platform or services

There is not introduced a VAT liability regime for platforms (deemed supplier) in the Zanzibar VAT legislation. This means that in situations where services are sold via platforms connecting suppliers and customers, it is the underlying non-resident suppliers who are VAT liable for their own supplies to non-VAT registered customers in Zanzibar, and not the platform.

The same regards platforms in the sharing/ gig-economy. Such platforms are only VAT liable for their own supply of services that are VAT liable, and not for supplies from underlying service providers.

A supply of electronic services by a non-resident supplier shall be treated as a supply delivered in Zanzibar when supplied to an unregistered person, if the customer's declared place of residence, the geolocation of use, or the pattern of consumption of the service is in Zanzibar. The Tax Administration and Procedures Act, 2022, Part II Section 6.

A VAT rate of 18% applies to supplies of electronic services by non-resident suppliers to non-registered persons in Zanzibar.

Registration is required regardless of turnover. No tax representative is required.

Registration is done online through the ZRA VAT Electronic Service Registration Portal (ZIDRAS- Zanzibar Integrated Domestic Revenue Administration System): https://portalzidras.zanrevenue.org

Requirement for registration 

1. Company certificate of country of origin
2. Business contact details
3. Website/platform information
4. Tax Identification Number of country of origin

Upon completion, the business will receive Registration Number and Certificate of Registration via the portal to enable filing and payment of returns.

• How To Register
• How To File Your Tax Returns

Registered non-resident suppliers must file returns electronically every month and pay all tax due on or before the 20th day of the month following the end of the accounting period.

For supplies of electronic services to non-VAT registered recipients in Zanzibar, formal VAT invoices are not required, instead customer receipts are sufficient.

Payments shall be made in US Dollar, and the exchange rate shall be based on the average rate for the whole period (monthly) issued by Bank of Tanzania. 

Payments shall be made to:
Account Name: ZANZIBAR REVENUE AUTHORITY
Bank Name: People’s Bank of Zanzibar
Account No: 0400714000
Swift:  PBZATZTZ
Currency: USD

The supplier liable under this scheme, shall:

1. Keep records that explain all transactions relevant to VAT liable supplies to Zanzibar 
2. Keep them for at least 7 years
3. Keep them in English (or easily convertible)
4. Store them electronically or in paper form be able to produce them if requested.
5. Payment confirmation to ZRA
6. Business incorporation documents of home country
7. Billing address in Zanzibar

VAT registration as a non-resident supplier of electronic services shall not, in itself, give rise to any additional tax obligations.

VAT on supply of electronic services from non-resident suppliers was introduced in Zanzibar VAT legislation 16. august 2022, with later partial implementation. Complete guidelines forbusinesses were published in April 2026 and the scheme fully implemented.

The scheme for non-resident businesses to register and collect VAT on qualifying supplies of electronic services is already in force. As an exceptional transitional measure for non-resident businesses that have yet to register, they should register from now on as a preparatory measure but will be allowed lead time until 1 January 2027 to build their internal systems and to start collecting and remitting VAT to ZRA from 1 January 2027 onwards. Businesses who believe they will not be able to fulfil these obligations by 1 January 2027 should contact the ZRA via the below email address or phone numbers for Support and Taxpayer Assistance to discuss their situation.

ZRA provides assistance through e-vat.zra@zanrevenue.org , or call us at +255777425843 and +255774186060