Want to Start a Business? Here’s a Quick Guide to Taxes in Rwanda!

All businesses in Rwanda are required to comply with the tax laws, including payment of taxes within a given period of time. As someone starting a business or who already runs one, understanding your tax obligations is crucial for compliance and smooth operations. The Rwanda Revenue Authority (RRA) provides essential guidance on taxation for new businesses. Here’s a simple breakdown of the taxes you need to know to keep your business legal and running smoothly in Rwanda.

Registering Your Business

  • Business Registration: Must be completed within 7 days of starting operations through the Rwanda Development Board (RDB).
  • Taxpayer Identification Number (TIN): Assigned upon registration, required for all tax-related transactions.
  • Electronic Invoicing System (EBM): Mandatory for issuing invoices.

Types of Taxes

  • Income Tax:
    • Personal Income Tax (PIT) for individuals.
    • Corporate Income Tax (CIT) at a standard rate of 28%, with incentives for publicly listed companies.
    • Micro-enterprises (≤ RWF 12M annual turnover) pay a flat tax based on revenue.
  • Withholding Taxes:
    • 5% on imports for commercial use.
    • 3% on public tenders.
    • 15% on gaming winnings.
  • Value Added Tax (VAT):
    • Standard rate: 18%.
    • Registration required for businesses with annual sales > RWF 20M or quarterly sales > RWF 5M.
  • Excise Duty: Levied on select products such as alcohol, tobacco, fuel, and luxury goods.
  • Local Taxes & Fees: Includes property tax, trading license tax, and rental income tax.

Tax Compliance & Penalties

  • Filing Deadlines:
    • Annual income tax due by March 31.
    • VAT filing: Monthly for businesses earning > RWF 200M annually, quarterly otherwise.
    • Trading license tax due by January 31.
  • Penalties:
    • Late tax payment: Interest of up to 1.5% per month.
    • Non-compliance with EBM: Fines up to 10 times the evaded VAT.
    • Tax evasion: Punishable by fines and imprisonment.

Taxpayer Rights

  • Right to fair assessment and appeal.
  • Option to seek amicable settlement in disputes.
  • Representation by a qualified tax professional.

For more details, visit the Rwanda Revenue Authority (RRA).