Income Tax includes Personal Income Tax (PIT), Corporate Income Tax (CIT) and withholding taxes. PIT is for sole traders and partnerships, while CIT is for companies.

Taxpayers that are exempted from Corporate Income Tax are not required to register, declare or pay Income Tax. However, they are required to submit their financial statements through E-Tax by the 31st of March after the tax period or three months following specific tax period granted to the taxpayer having made a request to that effect. Taxpayers that are exempted from Income Tax include:

1° The Government of Rwanda;
2° The City of Kigali ;
3° A district with legal personality
4° The National Bank of Rwanda;
5° An organisation exclusively engaged  in faith-oriented, humanitarian, charitable, scientific or educational activities unless it turns out that  revenues earned by such an organisation exceed  corresponding expenses or if it carries on a business activity;
6° An international organisation or agency of technical cooperation if such exemption is provided for by international agreements or an agreement concluded between such an organisation or agency and the Government of Rwanda;
7° A qualified pension fund;
8° The public entity in charge of social security;
9° The Development Bank of Rwanda;
10° Agaciro Development Fund Corporate Trust Ltd;
11° The Business Development Fund Limited (BDF Ltd)”;
12° A special purpose vehicle unless it turns out that  revenues earned by such a vehicle exceed  corresponding expenses;
13° A common-benefit foundation;
14° A resident trustee for income earned by a foreign trust.

15° A company engaged in gaming activities

In addition to this, the following taxpayers are also exempted from Income tax:
a. A person who has an annual turnover of less than two million Rwandan francs (FRW 2,000,0000);
b. A person who receives only employment income;
c. A person who receives only income on investment that is subject to withholding tax.
An individual resident in Rwanda who receives employment income from more than one employer or who receives incidental employment income may file an annual declaration in order to claim a tax refund for excess income tax paid.
Income below FRW 12,000,000 resulting from agricultural and livestock activities is exempted from Income Tax.

It is important to note that only the income above the threshold is taxable.

Income taxable in Rwanda includes the activities performed in Rwanda by any person and activities performed abroad by a resident of Rwanda. Those activities include the following:

1. Services and employment;
2. Activities of a crafts person, singer, artist and a player;
3. Sports, cultural and leisure activities;
4. Activities carried out by a non-resident in Rwanda through a permanent establishment in Rwanda;
5. Use, sale, lease and free transfer of business movable assets;
6. Sale, lease and free transfer of immovable assets allocated to the business;
7. Agricultural, fishing and forestry activities;
8. Usufruct and other rights attached to immovable assets and their sale if such rights are allocated to the business;
9. Investments in shares of companies;
10. Direct or indirect sale or transfer of shares or debentures;
11. Change of profits into shares that increases the capital of partners, except for financial institution with paid-up capital below the minimum requirement set by the National bank of Rwanda
12. Distribution of profits among partners;
13. Lending, deposits and other similar income-generating activities;
14. Transfer, sale and lease of intellectual property;
15. Digital services;
16. Gaming activities
17. Any other income generating activity.

However, all payments made by a resident of Rwanda on services performed abroad, other than those consumed abroad, constitute a taxable income.

Income Tax has four different regimes available for taxpayers of different levels of income. Those include; flat regime, lump sum, simplified accounting method and real regime. The regimes, and their corresponding turnover categories, are displayed in the below table: