An outlook of the Legal requirements and Tax Considerations:
Rwanda is currently ranked among the best places to have an investment. In accordance with the Rand Merchant Bank (RMB) report of last year, Rwanda was ranked 8th among the top ten African countries to invest. Rwanda is known for its easiest and quickest means of Company incorporation in a way that incorporation of companies is done online and takes up to two hours for one to fully incorporate a Company.
The Legal requirements:
An investor shall have to start with at least incorporating a Company and the procedure for incorporation is as follows;
Companies are categorized into two, that is Private and Public Companies
Essential requirements for registration of a Private Company are the following;
- A name ending with the words private limited Company or the letters Ltd,
- One or more shares with restricted rights of transfer,
- One or more shareholders with unlimited or limited liability,
- One or more directors of whom at least one must be ordinarily resident in Rwanda,
- Memorandum of Association and Articles of Association. A Memorandum of Association is compulsory while a company can opt not to have an Articles of Association.
Essential requirements for registration of a Public Company are the following;
- A name ending with the words public limited company or letters plc,
- One or more shares all of which must be fully transferable,
- Shareholders whose liability is limited to the amount, if any, unpaid on the shares respectively held by each,
- One or more directors,
- A Company secretary.
Some of the incentives of an investor;
As an investor in Rwanda, there are privileges and incentives one gets to enjoy. Among many other incentives which may be based on the type of Investment, Rwanda guarantees an investor ‘and indeed the practice is’ that all business sectors are open for private investment regardless of the origin, religion of the investor or whatsoever the case but having to put into the governing Laws and Public morals which creates a very friendly environment for you as an Investor to invest.
Now therefore it’s thus worth noting that for one to enjoy the special incentives enjoyed by investors, one must apply for an investment certificate and we “Stabit Advocates” are here to “Solve Your Legal Puzzles”.
Some of the essential requirements for an application of an investment certificate are the following;
- Fill out an appropriate form indicating his or her identity and any other necessary details.
- Payment of non-refundable registration fees
- A certificate of legal personality of the business Company
- A business plan which must include among others name of the project and detailed information on the project in which investment is or will be made, Action plan, the date of commencement of operations and detailed information on any raw materials sourced in the country or in the locality where the investment is operating as provided for in the Law relating to investment promotion and facilitation.
After acquisition of the investment certificate, an investor enjoys a special incentive of preferential corporate tax of zero percent if they fulfill conditions including but not limited to having headquarters or regional office in Rwanda, investing the equivalent of at least ten million United States Dollars (10,000,000USD) in both tangible or intangible assets in Rwanda, providing employment and training to Rwandan Nationals and conducting International financial transactions equivalent to at least five million United States Dollars (5,000,000USD) among others as provided for in the annex to the law relating to investment promotion and facilitation.
The investor enjoys preferential corporate income tax rate of 15% if they export 50% of turnover of goods and services produced in Rwanda including business processing outsourcing, undertaking one of the operations of energy generation transmission and distribution from peat, solar, geothermal, hydro, biomass, methane and wind, operating in the sector of transport of goods and related activities whose business is operating a fleet of at least five trucks registered in the investors name, each with a capacity of at least twenty (20) tons among others as provided for in the annex to the law relating to investment and facilitation.
A registered investor enjoys corporate income tax holiday of up to seven (7) years if they are investing an equivalent of at least fifty (50) million USD and contributing at least thirty percent (30%) in form of equity in the sectors of energy producing at least 25 megawatts, manufacturing, tourism, health and Information and Communication Technology (ICT) among others as provided for in the annex to the law relating to investment and facilitation.
A registered investor dealing in microfinance institutions approved by competent authorities enjoys corporate tax holiday of up to five (5) years. In addition, a registered investor investing in products used in export processing zones shall be exempted from customs taxes and duties according to the customs rules and regulations of the East African Community. Furthermore, a registered investor does not pay capital gains tax. However income derived from the sale of a commercial immovable property is included in the taxable income of the investor. The investors are also refunded Value Added Tax within a period not exceeding 15 days upon receipt of the relevant documents by the tax administration authority.
By Stabit Advocates Rwanda
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