Zimra working on modalities of taxing social media

The Zimbabwe Revenue Authority (Zimra) has said it is working on modalities of taxing social media, however admitting that remains a complex issue.

The cash-strapped government is leaving no stone unturned in its efforts to collect whatever revenue is available among Zimbabweans.

Responding to a CITE question on social media taxation during a virtual press conference on tax in forex, organised by the tax collector, one of the Zimra commissioners said they were still strategising on how they could effectively execute that.

“We definitely are interested in getting our share of the income that is earned by the operators of social media platforms,” said the commissioner.

“These social media platforms have got owners that are earning income out of their platforms and the income therefrom is the income that must be declared by those who are operating on our system. We then must expect that the income they generate is taxed also in foreign currency if they earn this in foreign currency.”

The commissioner was however quick to say the taxation of the digital economy also comes with challenges.

“The question now is we are dealing with the taxation of the digital economy,” he remarked.

“Indeed it is a complex development that we continue to apply our minds to and make sure that the reforms that we are carrying out are reforms that also focus on making sure that the share of the revenue that is being generated within social media is earned and taxed in Zimbabwe.”

He further explained: “We have developed different withholding taxes that are currently operating and some of them were introduced as late as with effect from January 2019 where we expect those that are earning that income to withhold and declare taxes to Zimra for purposes of us accounting for the income that is being earned by social media.”

Meanwhile, in a notice to its clients, Facebook said it was required to charge VAT on the sale of adverts to all advertisers in Zimbabwe.

“Due to implementation of Value Added Tax (VAT) in Zimbabwe, Facebook is required to charge VAT on the sale of ads to all advertisers in Zimbabwe,” said Facebook.

“All advertisers with a business country of Zimbabwe will be charged an additional 14.5 % VAT on advertising services purchased on or after September 1, 2020.”