Rwanda Revenue Authority (RRA) remains optimistic that it will hit its target of Rwf782.5 billion for the current fiscal year, despite last year’s slower economic growth that is hurt tax collection.

Richard Tusabe, RRA Commissioner General, yesterday said the tax body is tightening tax administration and collection mechanism to seal any loopholes so as to achieve its targets during the last quarter of the financial year.

Tusabe was announcing the revenue collection results for the first nine months of the current fiscal year (July 2013 to March 2014) that saw RRA fall below its Rwf581.1 billion target for the period by Rwf26.8 billion.

Reduction in government expenditure, following delays and cuts in disbursement of development aid in 2012, is blamed for last year’s slower economic growth rate of 4.6 per cent— the lowest in almost a decade.

"The slowdown in economic activities affected domestic demand in 2013. This had a negative impact on the collection of Value Added Tax (VAT), excise duties and income tax,” he explained.

Despite failure to meet the target, the tax body, however, registered a 95.3 per cent achievement rate and a 14.5 per cent increase compared to what was collected during the same period of the previous year, according to Tusabe. 

The biggest negative impact on revenue collection was felt in the decline in imported goods with the Cost Insurance and Freight (CIF) value of all the goods imported during the period reducing by 12.9 per cent compared to the previous fiscal year’s growth rate of 17.8 per cent.

"Personal and transportation vehicle imports were the main goods whose importation declined during the past few months, with most banks noting that fewer people and firms were able to acquire loans to import them,” he explained.

As a result of subdued demand, some of the country’s large taxpayers such as Bralirwa posted only marginal growth which hurt domestic tax collections such as VAT and excise duty, Tusabe said.

"Previously, the brewer’s revenue was growing by double digit figures, this year it grew by two per cent which automatically had an effect on excise duty, VAT, profit tax and Pay As You Earn Taxes; since they were no longer going to give bonuses to their employees.”

Despite the challenges however, Tusabe said, it was still possible to hit the Rwf782.5 billion annual collection target as RRA had devised strategies to close gaps as the fiscal year comes to an end.

"We are looking towards having more businesses using the electronic billing machines, using appropriate methods of tax auditing that take lesser periods in order to carry out more of them, carrying out more tax surveillance countrywide and more public sensitisation on the benefits of paying taxes,” he said.

With Rwf554.3 billion collected during the past nine months of the fiscal year ending June 30, RRA will be aiming to collect Rwf228.2 billion in order to hit its target.