Rwanda Government has approved three ministerial orders aimed at promoting tax compliance and business practices, including one that determines a 10% reward on the Value Added Tax (VAT) to consumers on every electronic invoice (EBM) requested.

The cabinet meeting held on 27 February 2024 approved ministerial orders determining modalities to apply for the authorization to acquire foreign services not available in Rwanda; modalities and conditions to benefit from voluntary disclosure incentives; and a ministerial order determining the reward based on the value-added tax. 

During the post-cabinet press conference, Minister of Finance and Economic Planning, Dr. Uzziel Ndagijimana, emphasized that the ministerial orders aim to enhance taxation efforts for national development.

"Thanks to several reforms put in place, Rwanda has made significant progress in tax collection and compliance. However, a lot more needs to be done. These ministerial orders seek to streamline our efforts towards better and efficient tax collection, as taxes are key to improving the lives of citizens in health, education, economic development and more,” Minister Ndagijimana said.

10 percent reward of VAT on the invoice 

Every person who carries out any taxable activity issues an electronic invoice (EBM). However, challenges remain, including reluctance in issuance of EBM receipts amongst taxpayers, issuance of receipts with undervalued price, and the lack of culture to request EBM receipts amongst the buyers.

According to the new Ministerial order, a consumer who requests, and is issued with an electronic invoice is eligible for a reward of 10 percent of the VAT amount shown on the issued invoice. If a consumer is denied an EBM invoice and informs the tax administration, they are eligible for an additional reward equivalent to 50 percent of penalties paid. The law provides an administrative fine of ten 10 times the value of the evaded value added tax. 

Rwanda Revenue Authority Commissioner General, Bizimana Ruganintwali Pascal, said that there will have a dedicated account for the withheld 10 percent for consumers. The amount will be deposited into the mobile money or bank account within 15 days after the end of each quarter, after checking the criteria.

Eligible consumers must be registered in the VAT reward system and indicate key information, including name, mobile phone number, bank account or mobile money number, national ID or any other identification document for a foreign national, address in Rwanda. 

Authorization to acquire foreign services not available in Rwanda 

Taxpayers are now permitted to import services and are VAT exempt if they are demonstrated to be unavailable in Rwanda. To apply, a taxpayer submits a request to the Minister accompanied with evidence-based documentation; and proves that he or she made a call for tenders and that no successful bidder was found in Rwanda.

He also provides a recommendation letter issued by a competent regulator organ to certify that there are no providers of this service in Rwanda or that those existing do not have a satisfactory standard to provide the service. The application must be made two months before acquiring the service.

Voluntary disclosure 

Among the latest tax reforms, tax procedures law determines that the interests for late payment and related penalties do not apply when a taxpayer voluntarily discloses to the Tax Administration and pays due taxes before being notified of an imminent audit.

The changes are being applied at the time Rwanda is working with other signatory countries to exchange information for tax purposes, under the Global Forum, to combat tax evasion.

A taxpayer granted the voluntary disclosure incentives pays the total amount of disclosed principal tax within a period of 30 days from the receipt of the approval notification. The Tax Administration may, upon request by a taxpayer, grant an installment payment plan for a period not exceeding six months.

The tax administration revokes the voluntary disclosure incentives if the taxpayer fails to pay the tax disclosed voluntarily; fails to respect the payment plan granted; or submits false or incomplete information that leads to payment of understated tax.