Higher Digital Services Tax and New VAT Deemed‑Supplier Rules for Marketplaces

As summarised by Global VAT Compliance, Tanzania’s Finance Act 2026 (effective 1 July 2026) introduces two important changes for non‑resident providers of electronic services. First, the single‑instalment income tax (digital services tax) applicable to registered non‑resident providers rises from 2% to 3% of gross payments; the first affected return is July 2026, due by 20 August 2026. [globalvatc…liance.com]

Second, per the KPMG TaxNewsFlash, Section 51 of the VAT Act (CAP 148) is amended by new subsections 51(2)–(3) introducing a deemed‑supplier rule: where an electronic service is supplied to an unregistered person in Mainland Tanzania through a digital intermediary, online intermediation service or digital marketplace, the platform operator is deemed to be the supplier and thus responsible for collecting and accounting for VAT (the standard rate is 18%). A “digital intermediary” is broadly defined to include any website, portal, application, online store or marketplace enabling a sale. [kpmg.com]

The reform also expands the definition of “electronic services” to include any other similar service delivered through the internet or a telecommunications network, and amends the Excise (Management and Tariff) Act to levy excise duty on certain non‑resident services (e.g. pay‑to‑view and electronic communications) supplied to unregistered end users. This mirrors a global trend of shifting VAT obligations from individual sellers to platform operators. [kpmg.com], [globalvatc…liance.com]