An increase in tax revenue collection of 12.4 percent helped Rwanda Revenue Authority (RRA) move inches closer to its total revenue target of ‘Rwf888.2bn’ for the 2014/2015 fiscal year according to figures announced by Richard Tusabe, Commissioner General of the tax body.
An increase in tax revenue collection of 12.4 percent helped Rwanda Revenue Authority (RRA) move inches closer to its total revenue target of ‘Rwf888.2bn’ for the 2014/2015 fiscal year according to figures announced by Richard Tusabe, Commissioner General of the tax body.
Between July 2014 and June 2015, RRA cast its net wide and deep into Rwanda’s small sea of tax payers and raked in Rwf871.4billion in both direct and indirect taxes.
However, Rwanda’s total budget for 2014/2015 fiscal year was Rwf1753.3billion of which domestic revenue collections had been projected to be RWF986 billion, according to a budget speech presented to Parliament on June 12, 2014.
In the speech, Finance and Planning Minister Claver Gatete told legislators that Rwf 906.8 billion would be mobilized from direct tax revenues while Rwf79.3 billion would come from non-tax revenue sources.
But figures presented by the Commissioner General at last week’s press conference in Kigali indicated slightly lower ambitions from those targeted by government; it is possible that RRA’s targets were revised downwards to more realistic projections.
The Commissioner General said RRA had a total revenue collection (direct tax and indirect revenues) of Rwf888.2 billion in 2014/2015 and that his team collected Rwf871.4 billion giving the tax collector an impressive performance score of 98.1 percent.
The target for direct tax collections, {which include revenues from VAT and other forms of taxation} was Rwf878 billion but RRA managed to collect only Rwf858.4 billion hence registering a shortfall of Rwf19.6 billion.
Nonetheless, Tusabe congratulated his team for attaining a performance score of 97.8 percent (on direct tax collection) which translated to a tax revenue growth of 12.4 percent; he however challenged them to brace for a tougher 2015/2016 fiscal year.
In this 2015/2016 fiscal year, Rwanda projects to spend Rwf1,768.2 billion of which domestic resources are expected to generate Rwf1,174.2 billion both direct and indirect taxes.
The target for RRA’s direct tax collections in 2015/2016 was reduced to Rwf894.8 billion from Rwf906.8 billion the government had projected in 2014/2015.
But if RRA’s target for direct tax revenues was Rwf878 billion in 2014/2015 as revealed on Thursday, then it means the tax body is expected to collect Rwf16.8 billion more in 2015/2016.
No bonus cheques
RRA hasn’t registered any surplus revenue collections since February 2014. Whenever RRA exceeded its revenue collection targets, its workers would earn bonuses from the extra collections but that’s unlikely this year even if they missed the target by only a few percentage points.
The Auditor General’s recent report to parliament highlighted several loopholes in the management of tax body and recommended a thorough overhaul of the institution if it is to meet its critical role of mobilizing resources needed to facilitate government operations. Rwanda hopes to gain fiscal independence and be able to fund its development using domestic resources.
Aiming higher
RRA’s Tusabe announced on Thursday that the tax body will be aiming to achieve a higher performance this year, hoping to exceed the set targets.
RRA last surpassed its collection target in the fiscal year 2012/13 when the tax collector exceeded the target by Rwf 24.2 billion or 3.7 percent. This contributed to the government setting even higher targets for each new year and the RRA is now coming up with strategies to meet the targets.
The tax body’s annual procurement plan for 2015/2016 indicates that RRA will be investing heavily in its staff; it for instance intends to procure consultancy services for the provision of ‘Peak performance’ tips to employees.
Peak performance is a common term in aerobics and body fitness referring to how people can achieve higher fitness results during a workout regime.
Although RRA also intends to procure sports equipment including gym accessories this financial year, peak performance consultancy might be aimed at helping employees perform better at their jobs rather than their body fitness.
Value Added Tax (VAT) forms a larger part of direct taxes but RRA has had challenges in collecting it because of resistance to the use of the Electronic Billing Machines (EBMs).
There are reportedly over 12,000 registered VAT-tax payers across the country but apparently, only 8,000 of them are currently using EBMs.
In months to come, RRA announced it will be enhancing taxpayer registration process as well as increase EBM monitoring systems to ensure that tax payers with the machines actually get to use them.
The past few weeks have seen RRA clamp down on alleged tax evaders around Kigali to recover arrears an exercise that the commissioner announced will continue in coming days.