Tanzania Raises Digital Services Tax to 3% for Non-Resident Providers

Digital Service Tax(DST) is an income tax that non-resident digital service providers need to collect and report on a monthly basis. The DST was introduced alongside VAT on electronic services provided by non-resident digital service providers. 

The new framework that introduced the application of the VAT and DST rules and requirements came into effect on July 1, 2022. 

Digital Services Tax is calculated on the basis of the gross income that the non-resident digital service provider has received from the non-VAT-registered customers based in Tanzania. DST is calculated at a rate of 2% levied on the gross sales income, excluding VAT. 

If the non-resident provider of digital services is registered for VAT in Tanzania, it is, by default in that case mandated to comply with the DST regime. To calculate DST on its monthly sales, submit the return, and make the payment under the Income Tax Rules for non-resident digital service providers. 

Digital Services Tax 

Latest Updates 

Tanzania adopted important tax changes following the enactment of the Finance Act 2026. The effective date of the changes is July 1, 2026. The DST rate has been increased from 2% to 3% starting from July 1, 2026. 

The new Tanzania Digital Services Tax rate shall be formally applied for the first time to the gross income made by designated non-resident digital service providers, covering the period of July, 2026. 

The first return with the increased rate should be filed, and the corresponding tax remitted by August 20, 2026. 

DST threshold

There is no threshold; it is applied from the first income made from providing digital services to non-VAT-registered customers.

Digital Service Tax Return

Digital Services Tax return is filed monthly, by the 20th of the month following the tax period. The same deadline applies to tax remittance. 

An important fact to bear in mind is that the DST return is filed separately from the Tanzania VAT return for non-resident digital service providers. 

The DST return is Form ITX231.03.E filed online through the TRA taxpayer portal. 

Penalties 

Late filing and late payment of Digital Service Tax (DST) in Tanzania through the Tanzania Revenue Authority (TRA) incur statutory penalties and compounded monthly interest under the Tax Administration Act. 

Monthly penalty: The higher of:

• 2.5% of the tax assessed/unpaid tax, or
• 15 currency points (valued at TZS 20,000 per point)

Late Payment Interest – Compounded monthly interest charged on the unpaid tax amount based on the Bank of Tanzania discount rate.