Rwanda Revenue Authority (RRA) has reminded taxpayers to declare and pay the 2025 trading license tax and the 2024 rental income tax on immovable property before the deadline to avoid last-minute challenges, which could lead to penalties.

Both taxes must be declared and paid by January 31, 2025. Taxpayers are encouraged to declare early, even if payment is made later, to avoid potential issues.

Ernest Karasira, Assistant Commissioner for Regional and Decentralized Taxes at RRA, noted that people are responding well but emphasized the importance of early tax filing, with payment to follow before the deadline. He urged taxpayers to act promptly, with just one day left to the deadline.

“We have only one day left. Those who haven’t declared yet should do so now. Declaration is the most critical step, and payment can follow before the last minute of January 31, which is Friday,” he stated. “By doing so, you avoid many issues, such as system congestion.”

Trading license tax

Karasira explained that this tax applies to anyone starting a business in a district and is calculated on an annual basis from January 1 to December 31. Traders can either pay the tax for the entire year or opt to pay it quarterly.

The trading license tax rate is determined based on whether taxpayers can determine their annual turnover from the previous year.

For those who have a turnover between Frw2 million Frw7 million, they pay Frw100,000 per year or Frw25,000 quarterly. For the turnover between Frw7 million and Frw12 million, the tax is Frw120,000 per annum or Frw30,000 per quarter.

The rate increases progressively up to businesses with a turnover of Frw50 billion or more, which pay Frw2 million every year or Frw500,000 on quarterly basis.

For profit-generating activities not subject to corporate income tax; urban businesses pay Frw60,000 every year or Frw15,000 in each of the four quarters, while rural businesses pay Frw30,000 a year or Frw7,500 per quarter.

For individual transportation services, vehicle operators pay Frw40,000 per year or Frw10,000 quarterly, for each vehicle; boat operators pay Frw20,000 per year or Frw5,000 quarterly, for each boat; and a motorcycle operator pays Frw8,000 every year or Frw2,000 quarterly, for each motorcycle.

If a taxpayer opts to pay annually, the patent tax must be paid by January 31, as is the case for the first quarter for those paying quarterly. For subsequent quarterly payments, the Second quarter is due by April 30, the Third by July 31, and the fourth by October 31, of the tax year.

Rental income tax

The rental income tax applies to individuals, who own houses, improvements on buildings, or any other immovable property in Rwanda that is rented out.

The law determining the source of revenues for decentralized entities stipulates that a person must pay tax, if their annual rental income exceeds Frw180,000, and if they are not subject to corporate income tax. A rental contract must be signed by both parties, and it must be in writing.

“I would like to remind taxpayers that the tax is based on the income received. Considering the calculation method and deductions, it is important to declare the actual income received. We have encountered cases where individuals declare significantly less income than they actually received,” Karasira added.

He encouraged property owners to receive payments through traceable methods, such as bank accounts, to provide evidence when needed.

“Declaring accurate income received is crucial. If we find discrepancies, we require corrections, and if the deadline has passed, penalties apply. These penalties are not insignificant,” he continued.

When calculating rental income tax, 50% of the annual rental income is exempted, as it is considered for property maintenance costs. Bank loan interest related to the rental property is also deductible.

For the remaining amount, no tax is levied on rental income less than Frw180,000. However, 20% tax is levied on income between Frw180,000 and Frw1 million, and 30% for income in excess of Frw1 million.

The law stipulates a 40% penalty of the tax due for failure to declare on time or for providing false information. Tax not paid on time incurs a 1.5% monthly interest and an additional 10% surcharge on the amount due, though this surcharge cannot exceed Frw100,000.

Rwanda Revenue Authority (RRA) has reminded taxpayers to declare and pay the 2025 trading license tax and the 2024 rental income tax on immovable property before the deadline to avoid last-minute challenges, which could lead to penalties.

Both taxes must be declared and paid by January 31, 2025. Taxpayers are encouraged to declare early, even if payment is made later, to avoid potential issues.

Ernest Karasira, Assistant Commissioner for Regional and Decentralized Taxes at RRA, noted that people are responding well but emphasized the importance of early tax filing, with payment to follow before the deadline. He urged taxpayers to act promptly, with just one day left to the deadline.

“We have only one day left. Those who haven’t declared yet should do so now. Declaration is the most critical step, and payment can follow before the last minute of January 31, which is Friday,” he stated. “By doing so, you avoid many issues, such as system congestion.”

Trading license tax

Karasira explained that this tax applies to anyone starting a business in a district and is calculated on an annual basis from January 1 to December 31. Traders can either pay the tax for the entire year or opt to pay it quarterly.

The trading license tax rate is determined based on whether taxpayers can determine their annual turnover from the previous year.

For those who have a turnover between Frw2 million Frw7 million, they pay Frw100,000 per year or Frw25,000 quarterly. For the turnover between Frw7 million and Frw12 million, the tax is Frw120,000 per annum or Frw30,000 per quarter.

The rate increases progressively up to businesses with a turnover of Frw50 billion or more, which pay Frw2 million every year or Frw500,000 on quarterly basis.

For profit-generating activities not subject to corporate income tax; urban businesses pay Frw60,000 every year or Frw15,000 in each of the four quarters, while rural businesses pay Frw30,000 a year or Frw7,500 per quarter.

For individual transportation services, vehicle operators pay Frw40,000 per year or Frw10,000 quarterly, for each vehicle; boat operators pay Frw20,000 per year or Frw5,000 quarterly, for each boat; and a motorcycle operator pays Frw8,000 every year or Frw2,000 quarterly, for each motorcycle.

If a taxpayer opts to pay annually, the patent tax must be paid by January 31, as is the case for the first quarter for those paying quarterly. For subsequent quarterly payments, the Second quarter is due by April 30, the Third by July 31, and the fourth by October 31, of the tax year.

Rental income tax

The rental income tax applies to individuals, who own houses, improvements on buildings, or any other immovable property in Rwanda that is rented out.

The law determining the source of revenues for decentralized entities stipulates that a person must pay tax, if their annual rental income exceeds Frw180,000, and if they are not subject to corporate income tax. A rental contract must be signed by both parties, and it must be in writing.

“I would like to remind taxpayers that the tax is based on the income received. Considering the calculation method and deductions, it is important to declare the actual income received. We have encountered cases where individuals declare significantly less income than they actually received,” Karasira added.

He encouraged property owners to receive payments through traceable methods, such as bank accounts, to provide evidence when needed.

“Declaring accurate income received is crucial. If we find discrepancies, we require corrections, and if the deadline has passed, penalties apply. These penalties are not insignificant,” he continued.

When calculating rental income tax, 50% of the annual rental income is exempted, as it is considered for property maintenance costs. Bank loan interest related to the rental property is also deductible.

For the remaining amount, no tax is levied on rental income less than Frw180,000. However, 20% tax is levied on income between Frw180,000 and Frw1 million, and 30% for income in excess of Frw1 million.

The law stipulates a 40% penalty of the tax due for failure to declare on time or for providing false information. Tax not paid on time incurs a 1.5% monthly interest and an additional 10% surcharge on the amount due, though this surcharge cannot exceed Frw100,000.