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Personal Income Tax (PIT)
Personal Income Tax (PIT) is levied on income received by an individual. A resident taxpayer is liable to income tax per the tax period from all domestic source and foreign source.
However, a resident taxpayer who was not resident in Rwanda in the five (5) years immediately prior to becoming resident, who works as an expert or a professional directly for an entity carrying out Kigali International Financial Centre licensed activities, is exempted from personal income tax on foreign sourced income during the first five (5) years following the date of becoming resident.
A nonresident taxpayer is only liable to income tax which has a source in Rwanda.
Taxable income for personal Income Tax includes all income sourced in Rwanda resulting from business, employment or investment activities. This includes but not limited to:
- Income generated from goods sold in Rwanda and services performed in Rwanda, including income generated from employment.
- Income generated by artists, musicians or crafts persons from performances in Rwanda.
- Income generated from activities carried out by a non-resident through a permanent establishment in Rwanda.
- Income generated from movable or immovable assets, livestock and inventory generated from agriculture and forestry or the sale of such assets.
- Dividends distributed by a resident company.
Each tax period, a resident taxpayer is liable to personal income tax from all domestic and foreign sources while a non-resident taxpayer is only liable to personal income tax which has a source in Rwanda.
Taxable income is rounded to the nearest thousand Rwandan francs (FRW 1,000) and taxed following the real profit according to the following tables:
First year following the date of commencement of the Income Tax law:
| Annual Taxable Profit in Rwandan Francs | Tax Rate | |
| From | To | Tax Rate |
| 0 720,001 | 720,000 1,200,000 | 0% 20% |
| 1,200,001 | More | 30% |
From the second year which is 2023, the rates are the following:
| Annual Taxable Profit in Rwandan Francs | Tax Rate | |
| From | To | Tax Rate |
| 0 | 720,000 | 0% |
| 720,001 | 1,200,000 | 10% |
| 1,200,001 | 2,400,000 | 20% |
| 2,400,001 | More | 30% |
However, if you operate a small enterprise (FRW 12,000,001 – FRW 20,000,000) you will pay a lumpsum tax of three percent (3%) of your annual turnover.
In this case, you may apply to be allowed to opt out of the lumpsum taxation scheme, and choose to be subject to actual taxation scheme when you decide to carry out accounting or simplified accounting in compliance with relevant laws.
When you opt for the real regime, you must inform the Tax Administration and this decision is irrevocable for a period of three (3) years starting from the date you have informed the Tax Administration.
If you carry out small business and opt for paying taxes on actual profit you must do simplified accounting requiring to keep the following basic records:
- a record of all daily sales which indicate all daily cash and credit sales;
- a record of all daily purchases which indicates goods or services acquired by cash and by credit to constitute a stock in trade or constitute necessary operating expenditures;
- a record of all money transactions which indicates the cash entries and cash expenditures.