Withholding Tax on other payments
A withholding tax of fifteen (15%) percent is levied on the following payments made by resident individuals or resident entities including tax-exempt entities:
- 1° dividends, except those governed by Article 45 of this law;
- 2° interests;
- 3° royalties;
- 4° service fees including management and technical service fees;
- 5° performance payments made to an artist, a musician or an athlete irrespective of whether paid directly or through an entity that is not resident in Rwanda;
- 6° lottery and other gambling proceeds.
- The withholding agent is required to file a tax declaration based on procedures prescribed by the Commissioner General and transmit the tax withheld to the Tax Administration according to paragraph one of this Article within fifteen (15) working days after the tax is withheld.
- Paragraphs 1 and 2 of this Article are also applicable to non-resident individuals and non-resident entities for such payments that can be allocated to a permanent establishment which that person maintains in Rwanda.
Withholding Tax on Imports and Public Tenders
- A withholding tax of five percent (5%) of the value of goods imported for commercial use shall be paid at custom on the CIF (cost insurance and freight value) value before the goods are released by customs.
- A withholding tax of three percent (3%) on the sum of invoice, excluding the value added tax, is retained on payments Or by public institutions to those who supply goods and services based on public tenders.
The following taxpayers are exempt from withholding tax mentioned in paragraph one and 2 of this Article:
- 1° those whose business profit is exempt from taxation;
- 2° those who have tax clearance certificate issued by the Commissioner General.
- The Commissioner General issues a tax clearance certificate to taxpayers who have filed their tax declarations on their business activities; paid the tax due on a regular basis, and have no tax arrears. The certificate is valid in the year in which it was issued.
- The Commissioner General may revoke a tax clearance certificate at any time if the conditions required in paragraph 4 of this Article are not fulfilled.
- Dividend income, as mentioned in the Law No 16/2005 on Direct Taxes on Income, is subject to a flat tax of fifteen percent (15%).
- If dividend distribution was subject to withholding tax as stipulated in the law, the taxpayer does not pay tax on income.
- Dividend income includes income from shares and similar income distributed by companies and other entities as mentioned in the law.
- Dividend income includes income from shares and similar income distributed by companies and other entities.
- In the determination of business profits of a resident company, dividends and other profit-shares received from a resident entity are exempt.
- In the determination of business profits of a resident partnership, dividends and other profit-shares received fron a resident entity are exempt.
Failure to Withhold Tax
A withholding agent who fails to withhold tax in accordance with law 25/2005 is personally liable to pay to the Tax Administration, as provided for by paragraph 2, Article 48 of this law, the amount of tax which has not been withheld including penalties and interest on arrears. However, the agent is entitled to recover this amount from the payee excluding the associated fines and the interest on arrears.
The collection liability of tax mentioned in this Article is treated in the same manner as other liabilities for the purpose of the right of the taxpayer not to accept the amount of the tax imposed or to recover any excess amount withheld and paid.
Records of Payments and Tax Withheld
- A withholding agent maintains and makes available for inspection, by the Tax Administration in relation to each tax period, records showing:
- 1° payments made to taxpayer;
- 2° amount of tax withheld and paid.
- A person who pays withholding taxes shall keep the records referred to in paragraph one of this Article for a period of ten (10) years tax after the end of the tax period to which the records relate.
- The Commissioner General may require a withholding agent to provide a copy of records that is supposed to be kept in accordance with paragraph one of this Article.
Fixed amount of fines
- A taxpayer or any person is subject to a fine if he or she fails to:
- ° file a tax declaration on time;
- 2° file a withholding declaration on time;
- 3° withhold tax;
- 4° provide proofs required by the Tax Administration;
- 5° cooperate with a tax audit;
- 6° communicate on time the capacity or appointment he or she has been given as described by article 7 paragraph 2;
- 7° register as described by article 10;
- 8° comply with articles 12, 13 and 15 of this Law; or
- 9° pay on time the profit tax advance.
- Fines related to violations of provisions of paragraph one of this article are set as follows:
- 1° one hundred thousand (100,000) Rwanda francs if the taxpayer’s annual turnover is equal to or less than twenty million (20,000,000) RWF; or
- 2° three hundred thousand (300,000) Rwanda francs if the taxpayer’s annual turnover exceeds twenty million (20,000,000) Rwanda francs; or
- 3° five hundred thousand (500,000) Rwanda francs if the taxpayer was informed by the Tax Administration that he or she is in a large taxpayer category.
- In case the same violation is committed twice within five (5) years, the fine is twice the original fine. In case the same violation is committed again within such five (5) years, the fine is four times the original fine.