A BRIEF SURVEY ON SOME OF THE TAXATION PROCEDURES IN RWANDA
The Rwanda Revenue Authority (RRA) is the government organization responsible for overseeing the collection of taxes and other tax related matters in Rwanda. The RRA issues Tax Identification Numbers (TIN) to all tax payers (for the companies, the TIN is linked to the Company registration number/code). The TIN is used by the tax payers to declare their taxes.
There are different categories of taxes that companies must pay while operating in Rwanda. They include the following:s
- Corporate Income Tax (CIT)is levied on the profits of the company at the rate of 30%. The CIT declaration is done annually and is submitted not later than 31stMarch of the following tax period.
- Value Added Tax (VAT)is levied on taxable goods and services at the rate of 18%. However, some goods are exempted from payment of VAT. They include among others transportation services, health and medical services and educational materials and services. The VAT declaration is submitted to the tax administration on the date that is earliest of the date on which the invoice is issued, the date on which payment of goods and services including a partial payment is made, the date on which goods are either removed from the premises of the supplier or when they are given to recipient and the date on which the service is delivered.
It is imperative to note that a person must register for VAT when he or she carries out any taxable activity and whose turnover is equivalent to (20,000,000Rwf) in the previous fiscal year or (5,000,000Rwf) in the preceding calendar quarter within a period not exceeding seven (7) days form the end of the concerned year or quarter. In addition, all VAT registered taxpayers in Rwanda are required to acquire and use an Electronic Billing Machine (EBM) to issue tax invoices to their customers on every transaction they make failure of which such VAT registered tax payers are liable to penalties.
- Withholding Tax levied on employment incomeis paid according to the rate below;
– 0-30,000Rwf at 0%
– From 30,000Rwf – 100,000Rwf at 20%
-From 100,001Rwf – More at 30%
– Income from a casual labourer is subjected to tax on a special rate of 15%. However in computing casual labourer’s tax, an income not exceeding 30,000Rwf per month is rated at 0%
– An individual or entity that pays its employees in cash or in kind are responsible for withholding tax on employment income. This tax declaration is done within 15 days following the end of each month or quarter depending on the relevant laws.
- District taxes
These are referred to as decentralized taxes which are paid to the district. They are;
– Trading licence tax (Patente) of 40,000Rwf paid on an annual basis. However, this tax changes with changes in the annual turnover of the company.
– Public Cleaning Fees of 10,000Rwf paid monthly
- Payroll Statutory deductions
– Social Security Contributions– The total contribution to the Rwanda Social Security Fund is 8%. (5% is made by the employer and 3% is made by the employee). The 5% employer contribution includes the 2% for the occupational Hazards Fund.
– Maternity leave Benefits Contribution. This is a monthly contribution to the maternity leave benefits scheme managed by RSSB. The contribution made is 0.6% of the employee’s gross salary. Both the employer and employee contribute 0.3% each.
– Community Based Health Insurance (Mutuelle de Sante): This is a solidarity health insurance system in which persons (families) come together and pay contributions for the purpose of the protection and receiving medical care in instances of sickness. This is an employee contribution of 0.5% from the net salary per month.
Tax payers are required to declare their taxes before the deadline set by RRA failure of which they are liable to payment of penalties. In the event that a tax payer fails to pay the taxes on time due to different reasons and consequently penalties are issued on such tax payer and putting into consideration the fact that RRA can waive penalties and interest accrued on unpaid taxes but cannot waive principal tax, RRA offers the tax payer a chance to pay such outstanding taxes in installments upon explanation and issue of a valid reason for failure to declare the taxes on time and as well offers the tax payer a chance to apply for waiver of penalties though one should have a very good reason as to why he or she never declared the taxes on time as required by RRA. The waiver of such penalties is at the discretion of the RRA administration after an assessment of the reasons provided for failure to declare taxes on time.
At Stabit Advocates, we have a team of Tax professionals that will assist you in any tax matters you might have. Don’t hesitate to reach out using the contact details hereunder provided.s
Drawn and Drafted by;
Stabit Advocates Rwanda
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