The Rwanda Revenue Authority has urged taxpayers to submit their 2023 income tax declarations and payments ahead of time to ensure they receive the necessary support before the March 31, 2024 deadline.

This marks the first annual income tax payment period since the publication of Law nº 051/2023 on 05/09/2023, amending Law nº 027/2022 on 20/10/2022, which established taxes on income. Among its provisions, the amendment lowered the corporate income tax rate from 30% to 28%.

Hajara Batamuliza, Commissioner for  Domestic Taxes, mentioned that due to the law being gazetted towards the end of 2023, both rates will be applicable during the annual income tax declarations.

"Now that the amending law has come into force, taxpayers have to benefit from this reduction. We have decided that the law should be applied based on the date of publication. This means that for the last three months of 2023, the income will be taxed at 28 percent, and 30 percent for the first months," said Commissioner Batamuliza on national radio.

She emphasized that with accurate accounting, it is easy to compute income tax depending on the respective months. However, RRA systems will facilitate the process of calculating the due tax without the need to refer back to accounting books.

Emmy Mbera, Assistant Commissioner in Charge of Tax Control at RRA, stated that business overheads accompanying declarations should be justified by EBM receipts or withhold tax documents if locally sourced, or customs declaration documents when imported, for acceptance by the systems.

The law introduces a 15 percent withholding tax on payments or other methods of extinguishing an obligation made to a person not registered in the Rwandan tax administration or to a registered person without a recent income tax declaration. However, income earned by an agriculturalist or pastoralist on agricultural or livestock activities is exempt if the turnover does not exceed Frw 12,000,000 in a tax period.

Mbera added, "To justify your expenses in such a case, what you need to do is to note the identification of the agriculturalist or pastoralist, his names and ID number, the paid amount, those will be important without withholding the 15 percent." 

Taxpayers were urged to verify their necessary documents and check that their inventories match the information within their EBM systems. When turnovers exceed Frw 600 million, books of accounts must be verified by a tax advisor.

"We urge taxpayers to bring their business overheads that are not supported by EBM receipts, customs declarations, or withholding taxes so that we can do our validations before they start their declarations. This has to be done before February 15, 2024, to make our decisions so that our systems shouldn’t reject their declarations," said Batamuliza. 

"We are ready to help these taxpayers who do not have enough supporting documents for their business overheads from January 22, 2024, to ease their declaration processes," she added.

As the new tax period has begun, Mbera urged taxpayers to always request EBM receipts for all their purchases and provide them for their clients to ensure transparent transactions. This will not only ease their tax declaration processes but also ensure that all due taxes shall be paid.

Apart from taxpayers registered under the real regime who manage their accountancy, there is another category of small enterprises that must pay a lump sum tax of 3 percent on annual turnover, composed of those whose turnover is between Frw 12 million and Frw 20 million. Micro-enterprises following their annual turnover must pay a flat amount of tax as follows: From Frw 2,000,000 to Frw 4,000,000, pay a flat tax of Frw 60,000; from Frw 4,000,001 to Frw 7,000,000, pay a flat tax of Frw 120,000; from Frw 7,000,001 to Frw 10,000,000, pay a flat tax of Frw 210,000; and those from Frw 10,000,001 to Frw 12,000,000, pay a flat tax of Frw 300,000.

The activities of road transport of persons and goods are imposed a particular flat amount. For vehicles, the taxes are set according to the weight of goods they may carry or the number of persons. For example, Taxi-Voiture pays Frw 88,200, while a motorcycle pays Frw 72,000.