Penalties and Interest

Taxpayers are obliged to declare their tax returns originating from their motor vehicles/ cycles incomes on time as it is stipulated in the law. It is advisable to honor this obligation in order to avoid penalties and interests.

Interest

“In the event the taxpayer fails to pay tax within the period set forth by the Law, he/she shall be required to pay interest on the amount of tax.

The interest rate is fixed at 1.5 %. Interest is calculated on a monthly basis, non-compounding, counting from the first day after the tax should have been paid until the day of payment, which is included. Every month that begins shall be considered as a complete month.

Interest shall always be payable, even when the taxpayer has lodged an administrative or judicial appeal against the assessment. Interest accrues cannot exceed one hundred percent (100%) of the amount of tax. When the taxpayer pays, the payment shall be used in paying taxes by deducting interest, penalties and tax liability”.

Penalties

With regard to Income tax, a taxpayer is subject to penalty and fine if she/he has failed to:

• a) file a tax declaration on time;
• b) file a withholding declaration on time;b) file a withholding declaration on time;
• c) withhold tax;
• d) reply to an information request of the Tax Administration;
• e) cooperate with a tax audit;
• f) communicate the capacity or appointment as described by Article 7 §2 of the Law on Tax Procedures;
• g) register as described by Article 10 of the Law on Tax Procedures; or
• h) Comply with Articles 12, or 13, of the Law on Tax Procedure

Administrative penalties related to violations of provisions of Paragraph One of this article are set as follows:

• 1° one hundred thousand (100,000) Rwandan francs for a natural person not engaged in any commercial activity and a taxpayer’s annual turnover equal to or less than twenty million (20,000,000) Rwandan francs;
• 2° three hundred thousand (300,000) Rwandan francs if the taxpayer is a public institution or a non-profit making organization and if the taxpayer’s annual turnover exceeds twenty million (20,000,000) Rwandan francs;
• 3° five hundred thousand (500,000) Rwandan francs if the taxpayer was informed by the Tax Administration that he/she is in the category of large taxpayers.
• In case the concerned taxpayer fails to submit his/her certified annual tax declarations and financial statements while he/she has a legal requirement to do so, he/she is subjected to a fixed administrative penalty of five hundred thousand (500,000) Rwandan francs per month until he/she submits them.