The Taxation of Non-Resident Digital Service Providers Without Physical Presence In Tanzania: Jurisdictional and Enforcement Challenges

The study examines the jurisdictional and enforcement challenges associated with taxing non-resident digital service providers without physical presence in Tanzania. The rapid growth of the digital economy has enabled non-resident providers to supply digital services to Tanzanian consumers without establishing conventional physical premises in the country, creating challenges for traditional tax rules based on physical presence. The study adopts doctrinal and non-doctrinal legal research methodologies. The doctrinal approach analyses relevant tax legislation, subsidiary legislation, policy documents, international tax materials and scholarly literature, while the non-doctrinal approach draws on empirical information obtained from selected respondents and interviews with Tanzania Revenue Authority tax officials. The study is guided by the Ability to Pay Theory, Benefit Theory and Neutrality Theory. The findings indicate that jurisdictional challenges include difficulties in establishing a taxable nexus, determining the location of digital transactions and consumers, accessing information held outside Tanzania, and exercising taxing authority over providers operating across borders. The study further finds that enforcement is constrained by difficulties in identifying and monitoring non-resident providers, obtaining reliable transaction information, reliance on voluntary compliance, limitations in monitoring payment systems, technological and data-integration challenges, and difficulties in enforcing tax liabilities against providers located outside Tanzania. The study concludes that although Tanzania has established a legal and administrative framework for taxing non-resident digital service providers, its effectiveness is constrained by practical jurisdictional and enforcement challenges. The study recommends clearer rules on taxable nexus and transaction location, strengthened access to relevant information, improved digital registration and monitoring, enhanced integration of payment and tax administration systems, and stronger international cooperation.