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Corporate Income Tax (CIT)
Corporate income tax is levied on business profits received by taxpayers other than individuals.
Taxable income for Corporate Income tax include the following:
- A company established in accordance with Rwandan law and a foreign company registered in Rwanda;
- A cooperative society;
- A State-owned company;
- Trustee, enforcer or protector of a trust;
- A foundation;
- A protected cell company or a cell of a protected cell company depending on the choice of the investor at the time of company registration;
- A non-resident in Rwanda person with a permanent establishment;
- An entity established by a District or the City of Kigali if that entity performs an income generating activity;
- An association or entity that is established to realise profits regardless of its nature.
Taxable Business profit is rounded down to the nearest 1000 Rwandan Francs and taxable at a 30% for income generated up to 2023 and rate of 28% from 2024. However, if you are a newly listed company on capital market in Rwanda you are taxed for a period of five years starting from the date of listing on the following rates:
- 20% if your company sells at least 40% of its shares to the public;
- 25% if your company sells at least 30% of its shares to the public.”
For Real Regime, the rate applies to profit, not to turnover. This allows taxpayers to deduct expenses allowances against the income. Zero-rated entities Companies and cooperatives that carry out micro finance activities approved by competent authorities pay corporate income tax at the rate of zero percent (0%) for a period of five (5) years from the time of their approval.
However, this period may be renewed where entities fulfill the conditions prescribed by an Order of the Minister. Those entities are required to submit to the Tax Administration their financial statements not later than 31 March following the tax period.
Investment incentives
In addition to the above rates for CIT, there are investment incentives which refer to tax or non-tax inducement extended to a registered investor following his or her contribution to the national development in order to facilitate and support his or her investment. Companies which benefit from these incentives have the special CIT rates according to the Investment Promotion and Facilitation Law of 2021. Those incentives are in the different categories as summarized below:
1. Preferential corporate income tax rate of zero per cent (0%)
This is granted to the registered investors that meet the investment requirements:
- An international company, which has its headquarters or regional office in Rwanda.
- An entity registered in Rwanda by a philanthropic investor, upon approval by the Private Investment Committee.
2. Preferential corporate income tax rate of three per cent (3%)
This is granted to:
- A registered investor licensed to operate as a pure holding company, if he or she fulfills the requirements.
- A special purpose vehicle registered for investment purpose, if it fulfills the requirements.
- A registered investor licensed as a Collective Investment Scheme, if he or she fulfills the requirements.
- On foreign sourced trading income: it’s granted to a registered investor operating as a global trading or paper trading, if it fulfills the requirements.
- On Foreign sourced royalties: It’s granted to a registered investor operating as an intellectual property company, if he or she fulfills the requirements.
3. Preferential tax incentives for a philanthropic investor
An entity established by a philanthropic investor and upon approval by the Private Investment Committee.
4. Preferential corporate income tax rate of fifteen per cent (15%)
See details of Companies which benefit from the above investment incentives.