Tax collectors Rwanda Revenue Authority has given taxpayers using Electronic Billing Machines (EBMs) two weeks to voluntarily disclose any undervalued receipts or face penalties.

The Commissioner for Domestic Taxes at Rwanda Revenue Authority (RRA), Aimable Kayigi, who was addressing a section of taxpayers in Kigali, yesterday, warned against manipulating the machine, saying offenders will face serious charges.

"Some taxpayers issue receipts with lower prices than the actual price of a product to evade taxes,” Kayigi said, adding that RRA will conduct a door-to-door audit to recover the lost revenue.

For instance, he said, a businessperson once imported rice from Pakistan at Rwf14,500 per 25 kilogramme bag, but decided to undervalue it by issuing an EBM receipt worth Rwf4,000 for the same product.

Meanwhile, save for the complaint, it was noted at the meeting that the machines had boosted tax collection, especially for the Value Added Tax.

The EBMs were introduced in 2013 to help in automatically calculating VAT owed by businesses to RRA as well as controlling sales and stock by processing and storing invoices.

"Within just three months of introducing the machines, VAT collection increased by 8 per cent. This is why we need to ensure their consistent use,” said Lawrence Gakwaya, the deputy commissioner for larger taxpayers at RRA.

Currently, officials at RRA say, they have at least 7,000 active EBMs countrywide.

Gakwaya expressed dismay that tax evasion is not only common among budding businesses, but also some established ones as well.

Angello Musinguzi, the manager of tax services at KPMG, a tax advisory firm, said challenges in tax compliance are largely as a result of lack of knowledge on the side of the taxpayer, than intent to be fraudulent, adding that RRA needs to carry out massive sensitisation.

He added that there is need for the tax body to always warn its clients about errors that may be noted in compilation, rather than rushing to impose penalties.

Musinguzi also expressed dissatisfaction that many Rwandans do not have a tax culture, leading to tax incompliance since they don’t give it the attention it deserves.

Nelson Ogara, the head of the tax department at PricewaterhouseCooper Rwanda, another tax advisory firm, said some of the penalties currently imposed on defaulters are too big for taxpayers.

"For instance, a person who is late by a day in paying tax is fined the same amount as one who is perennially late, which I think is unfair,” he said, adding that the mode of penalising should be computed depending on how overdue the taxpayer is.

Musinguzi also highlighted the conspiracy between some tax advisory firms and taxpayers to defraud the revenue body, calling for the withdrawal of licences of those caught in the act.

Speaking to The New Times, Emmanuel Dusabeyezu, the director of finance at Kipharma, a firm that deals in medical supplies – a key taxpayer –, said the meeting was a good forum where they met RRA staff and raised concerns to find a common ground.

Revenue collected by RRA has been growing sharply over the years. For instance, in 1999, only about Rwf62 billion was raised countrywide. However, this grew to Rwf759 billion by the 2013/2014 financial year.

The government targets to collect Rwf906.8 billion this financial year.

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