Overview
The administration of VAT in the United Republic of Tanzania (the Union) differs between Tanzania Mainland and Zanzibar. Each jurisdiction has its own revenue authority. As a result, businesses supplying goods or services to these jurisdictions must consider two distinct VAT regimes.
Similar to Tanzania Mainland and effective from 1 August 2022, Zanzibar introduced a VAT framework specifically targeting non-resident suppliers of electronic services. Under this framework, non-residents supplying electronic services to non-VAT-registered persons in Zanzibar are required to register for VAT in Zanzibar either via the simplified registration framework administered by the Zanzibar Revenue Authority (ZRA) or via a tax representative.
These electronic services are specifically defined in the VAT Act 1998 (Zanzibar VAT Act) with further clarification provided in the Tax Administration and Procedures (Procedures of Simplified Registration for Non-Resident Supplier of Electronic Services and Foreign Tour Operators) Regulations, 2022 (“Regulations”).
Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | Non-VAT registered persons (regardless of whether they are B2B or B2C) |
| Liability to remit VAT | Non-resident supplier |
| VAT rate | 18% (15% prior to 1July 2024) |
| Taxable value | Sales value including any duty, levy, fee, charge (exclusive of VAT) |
| Effective date | 1 August 2022 |
| VAT registration threshold | No threshold |
| Tax invoice | Currently, there are no explicit invoicing requirements for non-resident supplying digital services. However, See further details on the “invoicing” section below |
Services in scope
The Zanzibar VAT Act supported by the Regulations captures a wide array of electronic services. The scope of electronic services includes any service delivered via the internet or electronic means such as:
- Software and software updates
- Web hosting and online platforms
- Streaming and subscription‑based media
- Downloadable digital products
- Database access
- E‑learning platforms (without human intervention)
- Online gaming and virtual services
Registration and compliance
A non-resident supplier of electronic services to non-VAT-registered persons in Zanzibar who does not appoint a tax representative is required to register for VAT in Zanzibar. There is no registration threshold, hence, registration is required from the first supply. Non-resident suppliers of electronic services should therefore verify whether their customers based in Zanzibar are VAT-registered to determine whether they have VAT obligations in Zanzibar.
The application for registration is to be made online via the simplified registration portal using the prescribed form. A Tax Registration Number (TRN) will then be issued to enable the filing of returns and payment of tax.
Recent update – July 2026
In July 2026, the Zanzibar Revenue Authority (ZRA) issued updated guidance via its website confirming that the VAT on electronic services system is now operational. As a transitional measure, non-resident suppliers of electronic services have been granted additionaltime until 1 January 2027 to configure their internal systems, register and commence collecting and remitting VAT. Businesses should register now as a preparatory measure. Those anticipating difficulties meeting the deadline should contact the ZRA directly.
Note: This transitional arrangement is based on public communication from the ZRA website. No formal legal notice confirming this position has been issued to date.
Invoicing
The Regulations exempt non-residents from compliance with the use of local electronic fiscal devices (EFD). However, there is a general rule on tax invoice requirements for taxpayers who issue manual receipts (non - EFDs); the following ought to appear on the invoice:
- The words “tax invoice”, “receipt” or “cash sale” on its face
- Serial number, Taxpayer Identification Number (TIN), Business Registration Number (BRN) trade name, address, and registration number
- Name and address of the client
- The date on which the tax invoice or receipt is issued
- Quantity or volume of the goods or services supplied
- Unit price and total value of goods or services
- Tax charged on the transaction as the case may be
- Seal and signature of taxable person or his authorized representative
Requirement to appoint a tax representative
If a non-resident supplier does not wish to register through the simplified registration mechanism, they have the option of appointing a tax representative to carry out their compliance obligations. However, from a practical perspective, this can be cumbersome due to the joint liability imposed on the representative and other administrative challenges.
VAT on costs
Not claimable.
Other considerations
Exemption from using Electronic Fiscal Devices (EFDs)
Non-resident suppliers of electronic services are exempt from the requirement to use Electronic Fiscal Devices (EFDs). At present there are no explicit invoice requirements for non-residents supplying digital services.
Applicability of Digital Services Tax (DST)
A non-resident supplier is required to account for DST on a monthly basis at the rate of 3% of the turnover or gross payments received from a customer where electronic services are supplied to a resident individual customer (i.e., B2C).
DST does not apply when services are supplied to a resident business (i.e., B2B) as these transactions would be subject to withholding tax instead.
VAT incorrectly remitted to Tanzania Revenue Authority (TRA) instead of ZRA
Where a non-resident supplier has incorrectly declared and remitted VAT on Zanzibar sourced income to the TRA rather than the ZRA, challenges may arise when seeking to correct historical filings and secure the appropriate relief.
Although, in principle, the same VAT cannot be paid twice to both authorities, the practical pathway for resolving such cases remain uncertain. Given the absence of established procedures between TRA and ZRA, affected taxpayers will need to engage directly with the respective authorities to determine the most appropriate course of action. We would be pleased to support in navigating this process and engaging with the authorities to facilitate resolution.
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