The bussiness community in Gasabo District has called for the review of the trading license issuance procedures and tax regimes, arguing that they are too high for small traders.

According to Fabrice Shema Ngoga, the Gasabo District Private Sector Federation chief, the taxes imposed on small-and-medium entrepreneurs do not reflect the business environment in which they operate.

Ngoga says the relevant authorities and Rwanda Revenue Authority and local government should revise tax and licensing policies of the different categories of traders to reflect the ‘realities’ on the ground.

He adds that taxes should be levied in accordance with the type and size of business or where it is located.

"District officials and tax authorities should be flexible and work with realities of the business environment to enable more start-ups to thrive,” Ngoga said.

He was speaking during a meeting between the private sector and district leaders last week.

Ngoga argued that business in Gasabo is low compared to other parts of the City of Kigali and "cannot in any way fetch as much profits as those enterprises operating in the city centre”.

"Therefore, there is need to find a way of harmonising taxes paid by traders operating in poor performing areas if they are to grow and create more jobs,” Ngoga said.

He says, on average, SMEs pay trading license fees of Rwf40,000, which business operators say is high.

Steven Rwamurangwa, the mayor of Gasabo District, however dismissed the claims of high taxation, explaining that the district falls in the same tax category as local government in the City of Kigali.

He argued that it would be unfair and against the law to charge Gasabo businesses low taxes compared to other traders in the City of Kigali.

"We are aware about this situation and working closely with PSF to address it. We want to jointly come up with recommendations and discuss them with revenue authority soon,” Rwamurangwa notes.

RRA pledges to review matter

Drocelle Mukashyaka, the deputy commissioner for taxpayer services department, says the revenue body is not overtaxing SMEs.

She noted that RRA will look into the matter to see if there are any disparities in the tax policy.

Statistics from RRA indicated that businesses whose annual turnover is between Rwf2 and Rwf4 million pay a flat tax of Rwf60,000 per annum, while those between Rwf4 and Rwf7 million bracket part with Rwf120,000.

Taxpayers with turnover of between Rwf7 million and Rwf10 million pay Rwf210,000 in taxes and those that earn Rwf10- Rwf12 million are charged Rwf300,000 a year.

"While small enterprises with a turnover of over Rwf12 million and Rwf50 million must pay a lump sum tax of 3 per cent on the annual turnover, RRA is committed to continuing on the trajectory to bring most efficient trade facilities that address the needs, nature and size of business. This will also ensure that all businesses expand progressively, thus promoting domestic investment,” Mukashaka said.

She added that all the taxes mentioned above are spread across the year, with businesses remitting manageable quarterly payments of Rwf15,000, Rwf30,000, Rwf52,500 and Rwf75,000, respectively as per category.

"Since it was introduced, the flat tax regime has been embraced by SMEs due to the fact that it is easy to compute and does not require them to hire accountants,” she says.

Fidele Ndayisaba, the City of Kigali mayor, encourages the private sector to continue dialogue to resolve the issue, adding that the upcoming tax reforms could address their concerns.

"You should also take advantage of the diverse business opportunities the district is offering investors, including land, to expand your enterprises. We are especially encouraging real estate developers to use these incentives so that they help us address the housing challenge the city faces,” he says.

He, however, warns unregistered businesses to register before authorities take action.

"Those starting businesses before they are registered cheat the country and affect revenue collections. At worst, they could be a source of insecurity in the business environment.

"It is, therefore, critical that business people register their enterprises for the economic benefit of all Rwandans,” Ndayisaba says.

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The Figures