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  • The tax law requires that when an employer makes available employment income to an employee, the employer must withhold, declare, and pay the PAYE tax to the Rwanda Revenue Authority within 15 days following the end of the month for which the tax was due.
  • In the case of engaging a casual laborer for less than 30 days during a particular tax year, the employer shall withhold 15% of the taxable employment income of the casual laborer.
  • The first 30,000 (thousand) RWF of the income earned is taxed at 0%.
  • Beginning January 2006, employers/employees shall calculate the tax on employees’ taxable income based on the following tax bands and using the formulae provided in the table below as applicable. Employers/individuals that declare their own PAYE can build these formulae into their systems to compute the tax due.

       

Monthly Deductions

TAX BANDS TAX RATE

Frw 0-30,000 0%

Frw 30,001-100,000 20%

Frw 100,000 30%

Annual Deductions
TAX BANDS TAX RATE

Frw 0-360,000 0%

Frw 360,001-1,200,000 20%

Frw 1,200,000 30%

  • The employer is responsible for the correct withholding, declaration, and timely payment to the Rwanda Revenue Authority.
  • The employer is personally responsible for keeping proper books of account to prove that the tax has been correctly withheld, paid, and accounted for. Under those circumstances, where the employer is not required to withhold and pay the tax, the employee is responsible for registering, declaring, accounting and paying the tax..
  • An employer who is not the first employer of an employee must withhold PAYE at the marginal top tax rate of 30%. An individual who receives employment income from more than one employer or who receives incidental employment income such as end of year bonus may file an annual declaration if he wants to claim a tax refund. Only amounts in excess of FRW 5,000 are refunded.
  • An employee who works for more than one employer is obliged to inform his/her employers specifying which one is his/her first employer. The employer is obliged to ask the employee and confirm that he/she is the first employer.

A taxpayer who fails to pay tax within the due date is required to pay interest on the amount of tax. Interest is calculated on a monthly basis at the inter-bank offered rate of the National Bank of Rwanda plus 2 (two) percentage points. For example if the inter-bank rate is 9%, interest is imposed at 11% annually.

Penalties

With regard to PAYE tax, a taxpayer is subject to penalty and fine when failing to:

  1. file a tax declaration on time;
  2. file a withholding declaration on time;
  3. withhold tax;
  4. reply to an information request of the Tax Administration;
  5. cooperate with a tax audit;
  6. communicate the capacity or appointment as described by Article 7 §2 of the Law on Tax Procedures;
  7. register as described by Article 10 of the Law on Tax Procedures; or
  8. Comply with Articles 12, or 13, of the Law on Tax Procedures.

 

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