THE Reserve Bank of Zimbabwe (RBZ) is going after e-commerce, cryptocurrency transactions and content creators are among other new tech-based businesses as it seeks to widen the tax bracket.
“The Republic of Zimbabwe entered into a public-private partnership agreement with Daedalus World Limited of Tortola, British Virgin Islands, in terms of which Daedalus World Limited will assist the Republic of Zimbabwe by providing a revenue collection service through taxing qualifying companies that provide digital advertising, content, cloud computing, e-commerce [and] gambling,” reads part of a general notice published by ICT Minister Jenfan Muswere on 19 January.
The notice says companies offering “betting, gaming and cryptocurrency services to persons and organisations within the territory of the Republic of Zimbabwe” will also now be subject to taxation, with the revenue set to be collected by Daedalus World.
Zimbabwe currently outlaws banks from cryptocurrency transactions. The inclusion of cryptocurrencies into the list of companies to be taxed has raised expectations that Zimbabwe could now be moving towards regulation and taxation of digital currencies such as Bitcoin, joining South Africa that already taxes such transactions.
The new tax revenue collection agreement will target content and digital advertising companies such as YouTube, Google, Facebook and others in addition to e-commerce entities.
Zimbabwe’s increasingly informal economy has witnessed a boom in e-commerce activities, with trade between Zimbabwe and South Africa as well as China and Dubai – from where most e-commerce traded goods are being sourced – increasing.
According to BDO, the global accountancy firm, there will be separate legislation for a compliance framework covering submission of returns, payment of tax and the due date for such payments, among other compliance requirements” for the new e-commerce levies.
The new e-commerce regulations will also likely encompass satellite broadcasters, adds BDO in a note on Zimbabwe’s tax framework.
The government has been seeking ways to prop up revenue collections and is levying a $50 fee on imports of smartphones for which import duty would not have been paid.
Telecom and tech industry players say the new measures are a set back for e-commerce and efforts to boost the internet penetration rate in the country.
In a separate notice published 19 January, the Zimbabwe Revenue Authority directed that the “provision of data and airtime by employer to employee for use at home or outside work premises is a benefit which is taxable in the hands of the employee”.