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Tax Code

Tax Code

24 October 2025

Our World Zanzibar Regulation No.
REG/ZDFZ/05/2025

Part I
Preliminary

Title of the Regulation
Article (1)

  1. This Regulation No. REG/ZDFZ/05/2025, promulgated by OurWorld Zanzibar Limited on 24 October 2025, shall be cited as “Zanzibar Digital Free Zone Regulation No. (5) of 2025, Tax Code,” or herein as the “Regulation.”

  2. This Regulation shall govern the assessment, collection, and remittance of taxes by all lawfully registered, licensed, and authorized entities within the Zanzibar Digital Free Zone (“the Zone”) as well as the resolution of any disputes therein. It shall be applicable to all Regulated Entities within the Zone.

Definitions
Article (2)

The terms used herein shall have the meaning as described in the Glossary of Terms published by the Regulator.

Authorities
Article (3)

  1. The Zone was established pursuant to the President of Zanzibar’s authority to designate Digital Free Zones granted under the Zanzibar Investment Act No. 10 of 2023 and exercised through promulgation of Presidential Designation of Special Economic Zone, reflected in Legal supplement (Part II) to the Zanzibar Government Gazette, Vol. CXXXIII No. 7294, p. 649 (6 December 2024) “SEZ Designation (2024)”.

  2. This Regulation is promulgated by OWZ pursuant to its powers and authorities as Regulator and consistent with the Zanzibar Digital Free Zone Charter (the “Charter”), adopted by OWZ Resolution No. 1, dated 25 June 2025.

  3. OWZ is Regulator of the Zone, said authority granted to OWZ by the President of Zanzibar through Presidential Designation of Special Economic Zone, reflected in the SEZ Designation (2024).

  4. SEZ Designation (2024) authorizes OWZ to offer, on behalf of the Revolutionary Government of Zanzibar, to natural and legal persons registered within the Zone, certain tax incentives, as reflected herein.

Objectives
Article (4)

The objectives of this Code are to establish a simple and transparent tax system, to eliminate unnecessary administrative burdens through automated tax assessment and digital payments, and to promote regulatory clarity, predictability, and fairness for all Regulated Entities.

Functions
Article (5)

The Regulator shall:

  1. assess the Tax Liability for Regulated Entities;

  2. process Tax Liability disputes;

  3. collect Tax payments;

  4. remit Tax payments to the Tax Authorities;

  5. issue and implement Rules and Circulars in connection with this Regulation;

  6. impose penalties and other measures to enforce this Regulation; and

  7. adopt additional measures deemed necessary for performing its functions in accordance with this Regulation.

Part II
Framework

Physical Residence
Article (6)

  1. A Digital Resident shall be deemed to have physical residence in Zanzibar if the User associated with the Digital Resident physically resides in Zanzibar for more than one hundred eighty-three (183) non-concurrent days during the relevant tax year, or as otherwise determined by the laws of Zanzibar.

  2. Any User that meets this criteria shall have any income earned by their Digital Resident and by any Zone Enterprise in which they hold an interest taxed at the appropriate rate detailed in Article (7).

  3. Zone Entities shall have no physical residence. All requisite characteristics, responsible parties and regulatory formalities are entirely digital in nature and recorded on a public Blockchain.

Rates of Tax
Article (7)

  1. In accordance with the SEZ Designation (2024),

    1. A Digital Resident whose User has no physical residence in Zanzibar shall be subject to a five percent (5%) rate of tax on Income earned from Transactions with Zone Entities.

    2. A Digital Resident whose User is a physical resident in Zanzibar in accordance with Article (6), shall be subject to a fifteen percent (15%) rate of tax on Income earned from Transactions with Zone Entities.

    3. All Ventures created by the Venture Creator shall be subject to a zero percent (0%) rate of tax for ten (10) years from the effective date of incorporation on the Venture’s Registration Certificate.

  2. All Digital Residents and Zone Entities including Ventures shall be exempt from any other tax, including VAT and on capital gains or wealth, subject to applicable law.

  3. Citizens of the United Republic of Tanzania are not eligible to receive the income-related tax benefits of SEZ Designation (2024), as outlined above.

Assessment of Tax Liability
Article (8)

  1. The Registrar shall assess the Entity’s Tax Liability on a quarterly basis.

  2. The Tax Liability shall be assessed based on the Entity’s Accounting Records, a physical residence determination, and the Entity.

  3. The Registrar shall send a Tax Report to the Entity that includes:

  4. Accounting Records snapshot for the tax period (“Snapshot”);

  5. Income;

  6. Rate of tax;

  7. Tax Liability due;

  8. Payment due date;

  9. Option to Confirm or Contest the Report.

  10. All calculations in the Report shall be traceable and reviewable through the Entity’s dashboard on the Zone OS.

  11. The issuance date of the Report shall be considered the official start of the Response Window defined in Article (9).

  12. For the purposes of this Regulation, the tax year shall be the calendar year, unless otherwise determined by the Regulator. Where an Entity is registered or deregistered during a tax year, the tax year shall be deemed to begin on the date of registration and end on the date of deregistration, and the Registrar shall assess Income on a pro-rata basis.

  13. Where an Entity incurs a negative Income for a tax period, such loss may be carried forward and offset against positive Income of subsequent tax periods for a period of up to five (5) tax years, in accordance with Rules to be issued by the Regulator.

Response to Tax Report
Article (9)

  1. Upon receipt of the Report, the Entity shall have twenty (20) business days to respond to the Report (“Response Window”) through the Entity’s dashboard.

  2. During the Response Window, the Entity must take one of the following actions:

  3. Confirm: Explicit confirmation by digital signature of the accuracy of the Report and the Snapshot. Upon confirmation, the Tax Liability shall be deemed final and payable.

  4. Contest: If the Entity identifies an error in the Report or the Snapshot, it may submit a Discrepancy Claim.

  5. If the Entity does not respond within the Response Window, the Entity will begin incurring the Late Payment Penalty defined in Article (14) until one of the actions in Article (9.b) is taken.

Discrepancy Claims
Article (10)

  1. If the Entity contests the Report or the Snapshot, it must submit a Discrepancy Claim within the Response Window. The Discrepancy Claim must include:

  2. Statement of the inaccuracy being claimed;

  3. Specific data or calculations believed to be inaccurate;

  4. Supporting evidence substantiating the Discrepancy Claim.

  5. The Registrar shall reject incomplete or unsupported Discrepancy Claims.

  6. Upon receipt of a valid Discrepancy Claim, the Registrar shall review the submitted evidence, underlying data, and perform an audit or reconciliation of the Entity’s Accounting Records if deemed necessary.

  7. The Registrar shall reach a determination promptly upon receipt of the Discrepancy Claim.

  8. Following its review, the Registrar shall issue one of the following final and binding determinations:

  9. Denied Claim: If the Discrepancy Claim is unfounded, the Report shall stand, and the Tax Liability shall be due in accordance with Article (11).

  10. Approved Claim: If the discrepancy is valid in whole or in part, the Regulator shall:

    1. instruct the Entity to amend its Accounting Records accordingly;

    2. provide the Entity with a new Snapshot for confirmation;

    3. issue a new Tax Report (“Revised Report”) reflecting the correct Tax Liability.

  11. If a Revised Report is issued, the Response Window shall reset.

Collection of Taxes
Article (11)

  1. Taxes shall be collected on a quarterly basis by the Regulator.

  2. Following confirmation of the Report or a Denied Claim, the Regulator shall issue a payment request to the Entity’s Official Wallet.

  3. The Entity shall approve the payment request within three (3) business days (“Approval Window”).

  4. If the payment request is not approved within the Approval Window, the Entity shall begin incurring the Late Payment Penalty defined in Article (14) until the payment request is approved.

  5. The Entity must transfer the Tax Liability in Digital Assets, (e.g., USDC, USDT) as directed by the Regulator.

  6. For the purposes of determining Income and Tax Liability under this Regulation, Transactions involving Digital Assets shall be valued based on the amount recorded in the Accounting Records prepared in accordance with IFRS at the time the Transaction giving rise to such Income occurs, using pricing sources or valuation methodologies approved by the Regulator. Subsequent changes in value shall not be taken into account for tax purposes unless and until such gains or losses are realized through a Transaction.

  7. Upon receipt of payment, the Registrar shall issue a Tax Clearance Receipt to the Entity, which shall serve as proof of tax compliance for the relevant period.

  8. Where an Entity has paid an amount in excess of its Tax Liability, such excess shall be credited against future Tax Liabilities of the Entity. No refund shall be issued unless there are extenuating circumstances, as determined by the Regulator.

  9. In the event a failed payment due to insufficient funds or system errors:

  10. The Registrar shall notify the Entity immediately;

  11. Seven (7) business days shall be granted to resolve the issue (“Resolution Period”);

  12. If the issue remains unresolved after the Resolution Period, the Entity shall begin incurring the Late Payment Penalty defined in Article (14); and

  13. The Regulator may, in its discretion, take additional punitive measures, including suspension of the Entity’s registration and seizure of its assets.

Double Taxation
Article (12)

  1. To prevent double taxation of income earned by a User through its Digital Resident, this Article provides a mechanism for tax relief to tax residents and citizens of Zanzibar and Tanzania who are subject to the tax laws of Tanzania.

  2. A User shall be eligible for relief under this Article (12) if:

  3. User is a tax resident or citizen of Zanzibar or Tanzania;

  4. User withdraws from the Zone income or profit distributions earned through its Digital Resident; and

  5. The same income or profit distributions have been taxed by the Tax Authorities under the User’s personal income tax obligations.

  6. A User who meets the requirements of Article (12)(b) shall be entitled to a tax credit equal to the amount of tax previously paid to the Regulator on that income (the “Credit”).

  7. The Credit shall be applied against future Tax Liabilities of the User’s Digital Resident, up to the value of the tax previously paid to the Regulator on that income.

  8. The Credit may be carried forward for a period of up to twelve (12) months from the date of approval. No refund shall be issued for unused Credit.

  9. To claim the Credit, the User must submit to the Registrar:

  10. Certified proof of tax payment to the Tax Authorities;

  11. Evidence showing that the income taxed by the Tax Authorities was derived from the Digital Resident; and

  12. A request for Credit within six (6) months of the Tax Authorities tax payment date.

  13. The Regulator reserves the right to verify, audit, or reject claims for Credit that do not meet the conditions set forth above. Credit obtained through misrepresentation or error may be reversed and subject to penalty.

Tax Payments
Article (13)

  1. The Regulator, acting as the designated tax intermediary for the Zone, is responsible for remitting taxes on behalf of Regulated Entities to the Tax Authorities in accordance with the SEZ Designation (2024), which it shall do on a periodic basis.

  2. Tax payments shall be held by the Regulator in a secure, segregated account on behalf of the Regulated Entities pending remittance to the Tax Authorities.

Part III
Miscellaneous

Enforcement and Penalties
Article (14)

  1. An Entity shall be considered non-compliant if it:

  2. Fails to maintain sufficient funds in its Official Wallet at the time the Tax Liability falls due;

  3. Submits false or misleading information to the Regulator or its designee;

  4. Acts with bad faith in any way, including abusing the Discrepancy Claim process in order to delay or avoid payment of tax.

  5. The Regulator may impose, inter alia, the following penalties for non-compliance:

  6. Late Payment Penalty: A flat fee of five percent (5%) of any unpaid taxes, per month of delay, assessed daily.

  7. Misreporting Penalty: A penalty of up to twenty-five percent (25%) of the underreported tax liability if a discrepancy is found to be the result of willful misrepresentation, or any other act or omission intended to avoid or delay payment of tax.

  8. Suspension of Services: In cases of ongoing or serious violations of this Code, the Regulator may suspend access to Zone services and freeze assets.

  9. The Regulator may waive or reduce penalties in whole or in part where the Entity acted in good faith and took prompt corrective measures, or where the violation resulted from a bona fide error or system failure not attributable to the Regulated Entity.

Privacy
Article (15)

  1. All Tax Reports, Accounting Records, financial data, correspondence, and system logs relating to the Entity shall be treated as confidential by the Registrar and shall not be disclosed to any third party except with the express consent of the Regulated Entity or as required by applicable law.

  2. Where third-party systems or services are used to process financial data the Regulator shall require contractual assurances of data protection and satisfy itself that those systems comply with adequate security protocols and confidentiality measures.

Amendments and Review
Article (16)

  1. The Regulator reserves the right to amend, supplement, or repeal any provision of this Code as may be necessary to improve regulatory clarity and efficiency or adapt to evolving financial technologies, digital business models, and market practices within the Zone.

  2. Any amendment to this Code shall be communicated to all Regulated Entities through its Zone OS dashboard and accompanied by an explanatory note summarizing the rationale and impact of the change.

  3. Unless otherwise specified, amendments shall enter into force no earlier than fifteen (15) calendar days after publication.

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