Source: Starlink
Zimbabwe has announced a 15% Digital Services Withholding Tax (DSWT) on payments for digital services provided by foreign companies, including Starlink’s satellite internet service, effective 1 January 2026. The measure was announced in the 2026 National Budget by Finance Minister Mthuli Ncube and targets a wide range of offshore services that do not maintain a physical presence in the country. These include streaming platforms such as Netflix and Spotify, satellite internet providers like Starlink, ride-hailing apps, online content subscriptions, and other digital services.
Implications for Starlink and Satellite-Internet Users
For Starlink and similar satellite internet providers, the new tax represents a direct financial impact on both service operators and end-users. Local banks and mobile money operators will be required to withhold the tax at the point of payment, ensuring real-time collection and addressing gaps that previously allowed foreign platforms to avoid domestic tax obligations. The tax effectively replaces the previous VAT framework applied to imported digital services.
Minister Ncube explained that the tax aims to restore equity in the national tax regime. He noted that many subscription fees, commissions, and access charges for digital services are currently paid outside Zimbabwe’s borders, bypassing domestic tax obligations. This situation, he argued, gives foreign digital platforms an unfair competitive advantage over local companies that remain fully taxed under existing legislation. With the introduction of the 15% withholding tax, every payment made for Starlink connectivity will automatically incur this charge, potentially increasing costs for consumers. For context, Starlink currently prices its standard hardware kit at USD 389, with a monthly service fee of USD 50 for users in Zimbabwe.
Competitive and Market Dynamics
This development may also affect Starlink’s competitive position relative to local internet service providers. Previously, foreign digital services enjoyed a cost advantage as they operated tax-free, creating an uneven competitive landscape. The new tax addresses this imbalance by bringing foreign providers into the national tax system. Though this alone may not shift consumer preferences, it enhances the viability of local enterprises attempting to scale within a challenging competitive environment.
Beyond immediate pricing effects, the tax could influence subscription behaviour. Users may reconsider service uptake or explore alternative payment methods, such as foreign-issued cards, to mitigate additional charges. Starlink and other satellite internet operators may need to revise their pricing structures to adapt to Zimbabwe’s tax regime. Some providers may absorb part of the cost to maintain market share, while others could pass it directly to consumers. This uncertainty has contributed to mixed public reaction. Some users have expressed concern about potential double taxation, noting that platforms including Starlink and InDrive may already incorporate such fees into their pricing, which could now be subject to the additional 15% DSWT.
Could This Affect Starlink User Subscribers in Zimbabwe? The tax arrives as Starlink experiences rapid expansion in Zimbabwe, with user numbers growing from 30,907 in the first quarter of 2025 to 40,146 in the second quarter, a 29.98% increase. The additional cost burden could moderate this growth trajectory, particularly among price-sensitive consumers weighing the service against local alternatives.
The Broader Trend Across African Markets
Zimbabwe’s move aligns with a growing trend across Africa, particularly in markets where Starlink has established a significant presence. Kenya initially introduced a Digital Service Tax in January 2021, charging non-resident providers 1.5% of their transaction value. However, on 27 December 2024, Kenya replaced this with the Significant Economic Presence Tax, which doubled the rate to 3% on total revenue for non-resident digital service providers. Notably, Kenya’s new system excludes telecommunications, satellite, and internet services, an exemption Zimbabwe has not included. Beyond taxation, Kenya has proposed a substantial increase in licensing fees for satellite internet providers, with operating licenses rising from USD 12,302 to USD 115,331. This multi-pronged regulatory approach adds another layer of complexity for providers like Starlink, further complicating their operating environment in the region.
Nigeria has similarly licensed Starlink and put in place comparable tax measures. Zimbabwe’s decision to include satellite internet providers without exemption suggests a more thorough revenue approach, likely reflecting the government’s view of Starlink’s rapid growth and the income opportunity it presents. This broader scope may also indicate Zimbabwe’s intent to capture as much revenue as possible from digital services while demand remains high.
Furthermore, its approach may serve as a template for other African nations seeking to capture revenue from rapidly expanding digital services. As satellite internet adoption grows across the continent, governments facing budget pressures and infrastructure challenges may find the withholding tax model attractive, as it generates immediate revenue with minimal enforcement infrastructure. For providers like Starlink, this trend could create an increasingly complex landscape of national tax regimes, each with different rates, exemptions, and compliance requirements. The cumulative effect of multiple taxation layers across markets may influence expansion strategies and affect pricing competitiveness.
However, the longer-term question is whether these tax measures will eventually push foreign digital service providers to establish a physical presence in African markets, either to sustain their market position or to better navigate an increasingly complex regulatory landscape. How providers respond to this pressure could define the next phase of Africa’s digital economy.