Enterprises are required to register for VAT if their turnover is above 20 Million Rwf for any period of 12 month or 5 Million Frw in three consecutive months in the last quarter of the year. The final consumer pays the tax and not the person registered for purposes of collecting and accounting for and paying VAT to RRA.
Obligations of a VAT registered taxpayer
Articles 57-63 specify the rights and obligations of a VAT-registered taxpayer and include the following:
- Must display the VAT registration certificate in a plain view at the entrance of his place of business for his client to see.
- Must issue a VAT invoice to his customers every time they purchase goods or services.
- Must file a monthly or quarterly VAT return on the appropriate form (UNG11).
- Must be available at all times to receive VAT officers and present official books of accounts.
- Must use an Electronic Billing Machine in invoice issuing.
Value Added Tax violations
The following administrative fines are imposed to persons who do not comply with provisions of Value Added Tax:
1°in the event of operation without VAT registration where VAT registration is required, fifty percent (50%) of the amount of VAT payable for the entire period of operation without VAT registration;
2°in the event of the incorrect issuance of a VAT invoice resulting in a decrease in the amount of VAT payable or in an increase of the VAT input credit or in the event of the failure to issue a VAT invoice, one hundred percent (100%) of the amount of VAT for the invoice or on the transaction;
3°for issuing of a VAT invoice by a person who is not registered for VAT is assessed a penalty of one hundred percent (100%) of the VAT which is indicated in that VAT invoice and is due to pay the VAT as indicated on that VAT invoice”.
“A taxpayer who commits fraud is subject to an administrative fine of one hundred percent(100%) of the evaded tax. With exception to that penalty, the Tax Administration refers the case to the Prosecution service if the taxpayer voluntarily evaded such tax, like false accounts, falsified documents, or any other act punishable by law. In case of conviction, the taxpayer can be imprisoned for a period between six (6) months and two (2) years.
The Minister’s order determines an award given to any person who denounces a taxpayer who engages in tax fraud”.
Here you will find the list of goods and services that are zero rated and exempted from value added tax as provided by the law.
Tax refund is a result of having taxes withheld on earnings that amount to more than what a person owes in income taxes for a calendar year.
There are times when a taxpayer pays more than what he/she is required to pay. When tax administration receives excess payment of taxes from any taxpayer, it cross checks the documents of the tax filed and verifies the cause of over payment, and the surplus amount discovered is what is referred to as tax refund.
a) For Large Taxpayers
- When the amount to be refunded is less than Frw 200.000, the taxpayer shall deduct that amount during the next filing period;
- When the requested refund is between frw 200.000 and frw 2.000.000, as well as the money that was retained in the Office of the treasury, the taxpayer shall be refunded that money by the Rwanda Revenue Authority before any audit is carried out;
- When a taxpayer requests for refund of less than Frw 2.000.000, or between frw 200.000 and frw 2.00.000 for more than three consecutive times or even suspected of not rightfully demanding for the VAT refund, the RRA carries out an audit to verify the validity of refund request;
- Prior to the refund, the auditor is required to carry out desk audit without going to the taxpayer’s premises.
b) For Medium Taxpayers
- When the amount to be refunded is less than 100.000frw, the taxpayer shall deduct that amount during the next filing period;
- When the amount to be refunded is between frw 200.000 and frw 1.000.000, as well as the money that was retained by the Office of the treasury, the taxpayer shall be refunded that money by the Rwanda Revenue Authority before any audit is carried out;
- When a taxpayer requests for amount less than 1000,000frw three consecutive times, RRA carries out an audit to verify the validity of refund request;
- When the taxpayer requests for amount more than 1000,000frw, RRA carries out an audit to verify the validity of refund request;
c) For Small Taxpayers
- When the amount to be refunded is less than Frw 50.000, the taxpayer shall deduct that amount during the next filing period;
- When the amount to be refunded is more than frw 50.000 and less than frw 500.000, the authority refunds that amount with immediate effect;
- When a taxpayer requests for refund of more less Frw 500.000, for more than three consecutive times, the RRA carries out an audit to verify the validity of refund request; and this is done in a period of three months.
- When a taxpayer requests for refund of more than Frw 500.000, before that money is refunded, the RRA carries out an audit to verify the validity of refund request. Prior to the audit, the taxpayer is informed in writing of the audit to be done in not less than seven working days.
- Privileged & exempted persons such as diplomats, projects funded by international organizations and Non Governmental Organizations that have a convention with the Government of Rwanda of not paying taxes are refunded the money paid as VAT not less than ten working days after filing the form obtained at RRA offices.
- The requirements include an authentic document allowing him/her that exemption or a service card for these Diplomats representing their countries in Rwanda, copies of all invoices and proof of payment for an amount more than Frw 100.000
- Law no 37/2012 Of 09/11/2012 establishing the value added tax in its articles 15, 22 and 24
- When an individual/taxpayer receives a tender from organizations/institutions that are exempted from paying VAT, s/he deducts the VAT as provided for by the law then thereafter files in refund request for VAT from Rwanda Revenue Authority.