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In the BRB pg 21 it says:

Any shots fired as Overwatch can only be fired as Snap Shots

The most recent FAQ also says:

Q: Can the BS1 of a Snap Shot ever be modified by special rules that modify the BS of a model’s Shooting attack (such as Space Marine
Signums or Sergeant Telion’s Voice of Experience)? (p13)
A: No

Would this apply to marker lights on Overwatch, or is that specifically ignored in the Tau codex? (Apologies if it is stated, I just don't have access to the Tau Codex to check myself )

Unfortunately dakka is not a replacement for a codex. To answer your question, it is in the codex.

The Tau Codex answers this on page 68. Specific Codex rules trump general BRB rules.

Given that marker lights provide an explicit exception, yes they can ignore it.

Thanks all!