By Costantine Muganyizi
Tanzania has tightened its tax framework for non-resident providers of digital and electronic services, introducing new excise-duty obligations, expanding the definition of electronic services and shifting some VAT responsibilities to digital platforms and marketplaces.
The changes, introduced through the Finance Act 2026, took effect from July 1, 2026, and are outlined in a new PwC Tanzania Indirect Tax Alert on non-resident electronic service suppliers.
According to the alert, specified electronic services supplied by non-resident providers to unregistered customers in Mainland Tanzania are now subject to excise duty.
Electronic communication services attract a 17 percent excise duty, pay-TV and subscription video-on-demand services seven percent, commercial advertising for betting, gaming and lotteries 10 percent, while money transfer and payment services attract 10 percent.
PwC said the changes are intended, among other things, to bring non-resident providers into a tax framework similar to that applicable to domestic service providers.
“This change results in a similar treatment to the one that was applied to domestic service providers, thereby promoting fair competition,” PwC said in the alert prepared by its indirect tax team, including Joseph Lyimo and Fadhila Tiisekwa.
Non-resident businesses already providing affected services before July 1, 2026, have 90 days to register, with the transitional deadline set for 29 September 2026.
PwC advises affected businesses to assess their tax exposure and begin registration and system preparations without delay.
The alert also highlights a major change affecting digital platforms. Under the new VAT rules, digital intermediaries such as marketplaces, app stores and aggregators can be deemed to be the suppliers of electronic services provided through their platforms to unregistered consumers in Mainland Tanzania.
This means the platform, rather than the underlying service provider, may carry the VAT compliance responsibility.
PwC also notes that Tanzania has expanded the legal definition of electronic services by adding the phrase “any other service of a similar nature.” The change could potentially bring additional digitally delivered services into the VAT framework.
Meanwhile, Zanzibar is moving towards full enforcement of its VAT regime for non-resident electronic service providers.
The Zanzibar Revenue Authority has confirmed that its electronic-services VAT system is operational, with a transitional period allowing affected businesses until January 1, 2027, to configure systems, register and begin collecting and remitting VAT.
The applicable VAT rate in Zanzibar is 18 percent, with monthly returns due by the 20th day of the following month.
PwC said the developments demonstrate the growing importance of understanding tax obligations in Tanzania’s rapidly expanding digital economy.
It recommends that affected businesses in Mainland Tanzania assess whether their services fall under the new excise-duty categories and determine whether they operate digital interfaces that trigger the VAT deeming rules. For Zanzibar, non-resident suppliers are encouraged to begin registration and use the transitional period to prepare their systems for compliance from January 2027.
