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Trade Licence

 

Legal Reference:

The trading license tax is governed by Law No. 75/2018 of 07/08/2018 determining the source of revenue and property of decentralized entities

Person liable for the trading licence tax

The trading licence tax is paid by any person for each place in which he/she opens a business activity within a District.

Tax period for the trading licence tax

The tax period for the trading licence tax starts on January 1st and end on December 31st. If taxable trading activities start after January, the taxpayer pays trading licence tax equivalent to the remaining months of the year including the one in which the activities started. For the taxpayers conducting seasonal or periodic trading activities, the trading licence tax is paid for a whole year, even though the taxable trading activities do not occur throughout the whole year.

Trading licence tax rate

For the taxpayer registered for VAT, the trading license tax is based to their respective turnovers of the previous year, as follows:

Turnover

Tax due in Rwf

From Rwf 1 to Rwf 40,000,000

60,000

From Rwf 40,000,001 to Rwf 60,000,000

90,000

From Rwf 60,000,001 to Rwf 150,000,000

150,000

Above Rwf 150,000,000

250,000

 Please note that Taxpayers who sell goods or services exempted from value added tax but whose turnover is equal or greater than twenty million Rwandan francs (FRW 20,000,000) pay the trading licence tax in the same manner as taxpayers registered for value added tax.

For others not registered for VAT, the trading license tax depend on the type of activity and location, as shown in the table below:

Type of Activity

Rural area
Rwf

Towns area
Rwf

City of Kigali

  • Vendors without shops, small scale technicians who do not use machines
  • Sewing machine

4,000

6,000

8,000

B) Transporters of people and goods on motorcycles

8,000

8,000

8,000

C) Traders and technicians who use machines

20,000

30,000

40,000

D) All other vehicles besides bicycles

40,000 on each vehicle

40,000 on each vehicle

40,000 on each vehicle

E) For transport activities by motor boat

20,000 on each boat

20,000 on each boat

20,000 on each boat

F) Others profit - oriented activities

20,000

30,000

40,000

The District Council determines annually the rural or urban areas and small scale activities.

Date of trading licence tax declaration       

Any taxpayer files a tax declaration to the tax administration not later than 31st January of the year that corresponds to the tax period.

Trading licence tax declaration for the head office and operating branches

If a taxpayer has branches, a trading licence tax declaration is required for the head office as well as for each branch of his/her business activities basing on the turnover of the previous year for the head office and for each branch.

In case a branch does not have or cannot determine its turnover, the trading licence tax is declared based on the turnover of the head office.

Trading licence tax declaration basing on the number of business activity buildings

If a taxpayer carries out different business activities in different buildings, he/she files a trading licence tax declaration for each business activity.

When a business is made of several activities carried out by the same person in the same building, only one trading licence tax certificate is required and only one tax declaration for all business activities is filed.

Trading licence tax declaration for business in more than one District

In case a business is spread across more than one District, the taxpayer files his/her declaration of trade licence tax in each District where he/she operates.

Trading licence tax payment

The trading licence tax assessed by a taxpayer himself/herself is paid to the tax administration not later than 31st January of the tax year. Payment is done through Mobile Money, Mobicash, Infinity, E-payment, E-Banking or physically to any commercial bank.

 If the trading licence tax is not paid by the due date, the taxpayer is not allowed to start or to continue his/her business activities without having paid such tax.

Business activities undertaken while the taxpayer is in arrears with the payment of his/her trading licence tax are illegal. The tax administration has the power to stop such activities.

Trading licence tax exemption

Non-commercial State organs, as well as small and medium enterprises during the first two (2) years following their establishment, are exempted from trading licence tax.

Issuing a trading licence tax certificate

After consideration of the trading licence tax declaration and proof of payment of such tax, the tax administration issues a trading licence tax certificate showing that the trading licence tax for the tax year specified on the certificate has been paid by the taxpayer.

Posting of the trading licence tax certificate

The trading licence tax certificate is displayed clearly at the entrance of the business premises or affixed to the car, boat or any other vehicle for which the tax was paid.

Refunding of trading licence tax

In case the taxpayer terminates or changes his/her business activities during a tax year, he/she is, after an audit, refunded the paid trading licence tax depending on the remaining months until 31st December of that tax period.

Appeal procedures

    Appeal procedures are the followings:

    • The taxpayer who is not satisfied with the action taken by the decentralized entity against him, he can submit a written and signed objection, within thirty (30) days, to the concerned decentralized entity.
    • The decentralized entity must communicate its decision in writing within sixty (60) days. If not, the objection of the taxpayer is deemed to be valid.
    • If the taxpayer is not satisfied with the decision of the decentralised entity, he can send a written and signed appeal to the competent court within thirty (30) days following the receipt of the decision.  
    • If the taxpayer wins the case, the concerned decentralized entity must pay back the overpaid tax within 1 month after that the decision has been taken.

    Note: The appeal shall not suspend the obligation to pay tax, interest and penalties.

     

     

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