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RRA encourages taxpayers to take advantage of the new voluntary disclosure incentives

Bizimana Ruganintwali Pascal, Commissioner General of the Rwanda Revenue Authority (RRA) has urged taxpayers who may have not declared or paid taxes to voluntarily disclose themselves and fulfill their tax obligations. This allows them to benefit from the waiver of late payment interest and penalties.

This waiver is provided by the Law on tax procedures for taxpayers who voluntarily disclose to the Tax Administration and pay the due taxes that were not paid before being notified of an imminent audit. The ministerial order determining the modalities and conditions to benefit from voluntary disclosure incentives was approved during the Cabinet meeting of February 27, 2024.

On Wednesday March 6, the RRA Commissioner General held an informative meeting with the Institute of Professional Accountants (ICPAR) members and the Association of Tax Advisors (ATAR) to discuss updates related to taxation.

He mentioned that as Rwanda signs agreements with various countries for the elimination of double taxation, discussions have been held on the exchange of information for tax purposes. This ensures that everyone engaged in profitable activities can be taxed appropriately. This exchange of information occurs through forums such as the Global Forum.

"We can now write to other countries requesting information about a certain taxpayer who is in Rwanda regarding their tax accounts. Many countries have responded positively, and we use this information to tax them according to the agreements we have. That's why we are giving those people a chance to disclose themselves and pay the taxes they didn't declare," he stated.

"Even before the current law was in effect, we have had people voluntarily disclosing themselves and coming forward to pay taxes according to agreements, without penalties. In the past two years, we have received about 4 billion Frw from three taxpayers," he added.

He urged professional accountants and tax advisors to encourage taxpayers to voluntarily disclose their tax liabilities.

A taxpayer granted the voluntary disclosure incentives must pay the total amount of disclosed principal tax within 30 days from receiving the approval notification. Upon request by a taxpayer, the Tax Administration may grant an installment payment plan for a period not exceeding six months.

The Tax Administration revokes the voluntary disclosure incentives if the taxpayer fails to pay the tax disclosed voluntarily, fails to respect the granted payment plan, or submits false or incomplete information that leads to the payment of understated tax.

Regarding the 10% reward on VAT

Another ministerial order approved by the Cabinet determines the reward based on the value-added tax (VAT), which is paid by the final consumer.

Under this initiative, a reward equivalent to 10% of the VAT amount shown on the issued EBM receipt will be given to the final customer. This initiative was conceived after discovering that many vendors do not issue EBM invoices, or the issued invoice does not match the paid amount.

"If a vendor fails to provide an EBM invoice and the consumer alerts us, RRA will contact the taxpayer, instruct them to issue the invoice, and the consumer will receive 10% of the VAT. Additionally, penalties will also be imposed on the vendor, as stipulated by the law, which entails ten times the tax evaded, from which the consumer will also receive 50%," Ruganintwali added.

Ruganintwali also informed taxpayers about an upcoming month-long inspection to supervise the use of EBM throughout the country.

"This inspection includes severe penalties for anyone caught not issuing EBM invoices because EBM has proven to be an essential tool in tax collection, and it has also increased transparency in business operations. We have noticed that most people do not use it for various reasons, primarily because they do not want to pay taxes properly," he added.

The participants of the meeting commended these ministerial orders, stating that providing a reward to consumers will prompt them to request more EBM invoices, thereby increasing revenue to the public treasury.

"This reward for consumers who request and receive EBM invoices is timely because sometimes when you go to a supermarket, they do not give you a receipt, and they provide a payment number that is in someone's name not related to the business, leading to suspicions of tax fraud. This initiative will lead to more invoices being issued, resulting in increased VAT receipts and income tax," a participant reiterated.

Since the launch of EBM in 2013, value-added tax (TVA) received has increased from 259.1 billion Frw in 2013/14 to 699.3 billion Frw in 2022/2023, equivalent to an increase of 170.0%. This also significantly increased income tax, from 120.2 billion Frw in 2013/14 to 538.3 billion Frw in 2022/2023.

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