Decentralised Taxes
The law no 17/2002 of 10th May 2002 authorizes Kigali City and other districts to collect property tax, trading license and rental income tax. There are other duties and fees charged in accordance with the law no 28/2000 of 15/10/2001 as well as mayor’s tariff of 23/07/1996 that is still applicable.
This however, raised public concern and confusion even before districts collected the above fiscal decentralized taxes. Fiscal decentralization was done in line with power decentralization or promotion of economic development in districts and towns.
According to law No. 17/2002 article 5, any house and land registered whether in use or not must pay property tax. The district, town or city councils of the respective areas will determine the rates. The above mentioned article is supposedly to compensate for the abolished poll tax of Rwf 400 per adult person.
For trade license, it varies depending on the type of activity and is fixed every year by the districts or towns but should not exceed Rwf 2000. Regarding the rental income tax, under articles 54-65, law no 17/2002 of 10/05/2002 establishing the source of revenue for districts and towns and its management, revenue derived from rent of buildings and land irrespective of their beneficiaries residence is taxable.
Tax on rental income is among the taxes the central government transferred to the districts and towns. Net taxable income is obtained by deducting from gross income expenses incurred by the owner on maintenance amounting to 50% of the gross revenue.
In case a taxpayer built a house on loan and has a proof of subsidizing that loan, the net revenue is obtained by deducting from the gross revenue expenses incurred on rented house, which amounts to 30% of gross revenue plus interest of the bank.
According to statistics obtained from RRA, the above decentralized taxes may generate more if properly handled by districts and towns in a convenient and flexible manner, thus satisfying their needs.
More information on Decentralized Tax
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