Rwanda Revenue Authority (RRA) has surpassed its revenue collection target for the first six months this financial year. The tax body collected Rwf470.6 billion against a target of Rwf460.3 billion. 

The revenue body is now looking to widen its reach to bring more people into the tax net to boost revenue collections in the second half of the fiscal year to meet the annual target.

To achieve this, Richard Tusabe, the RRA Commissioner General, said the revenue body will conduct a registration exercise for unregistered taxpayers of local government tax.

He said the revenue body will strengthen the crackdown on tax defaulters, noting that it is one of the measures they are employing to meet set targets.

Tusabe said RRA will roll out the automated system for local government tax management to increase compliance and deter any tax leakages

He expressed confidence that intensifying monitoring mechanisms on the usage of electronic billing machines (EBMs) and e-Tax filing will help reduce tax leakages and boost efficiency.

Such measures are also expected to enable the revenue body meet its fiscal year targets despite challenges in the global economic arena and underperformance of key sectors like mining.

"We will enforce the use of EBMs for all VAT-registered taxpayers as required, as well as encourage buyers to always request for EBM receipts at every point of purchase,” Tusabe told The New Times.

Revenue collection increases

Meanwhile, total revenue collections for the first six months of the financial year increased, which saw the tax collector surpass the set target.

The tax body collected Rwf470.6 billion against a target of Rwf460.3 billion during the period, with tax revenue collection for July-December 2015 standing at Rwf463.5 billion compared to Rwf455.0 billion targeted.

Rwf8.4 billion was collected above projections, giving confidence RRA could meet its annual revenue targets.

Overall, tax revenue grew by 13.9 per cent during this period with non-tax revenue collections of Rwf7.1 billion against a target of Rwf5.2 billion and a surplus of almost Rwf1.9 billion – an equivalent of 35.6 per cent over the target.

Tusabe said decentralised taxes and fees (trade licence, property tax, rental income tax and fees) increased by 98.9 per cent to Rwf13.4 billion against a target of Rwf14.9 billion.

This means that total revenue collections over the last six months grew by 14.2 per cent compared to the same period during the 2013/14 financial year.

The driving factors

According to Pascal Bizimana Ruganintwali, the deputy commissioner-general and commissioner for corporate services, RRA conducted outreaches targeting broadening of the tax base and increasing taxpayer registration.

He said more commercial houses were VAT-registered as well as businesses such as garages, washing bays, private schools, and driving schools, which were included into the tax net. This increased the number of taxpayers by 7.4 per cent.

Equally, more efforts were invested in EBM usage monitoring, which saw the number of those using the technology increase by 23.1 per cent.

"Overall, there are 9,966 VAT-registered taxpayers using EBMs, up from 8,096 recorded in June last year. We have been conducting sensitisation and education campaigns across various sectors and the general public to improve their understanding of tax matters, and, ultimately, boost compliance,” Ruganintwali said.

The revenue body collected Rwf19.8 billion from tax arrears compared to Rwf11.3 billion collected between Julyand December 2014.

However, despite the good performance, RRA is wary of the fall in global mineral prices and the VAT zero rating policy on the mining sector that has reduced revenue from the sectors compared to the same period of 2014/15 financial year.

More so, the higher-than-expected increase in cost, insurance and freight values as a result of significant exchange rate depreciation remain a concern.

This exchange rate depreciation, according to Tusabe, accounts for about Rwf9.4 billion of the Rwf18.3 billion nominal increase year-on-year.

Key challenges

RRA will have to put up with resistance by some taxpayers who don’t want to use e-billing machines as required by law which still affects the amount of VAT collected.

The tax body said there are still cases of understatement of prices on most of the goods sold by taxpayers that use EBMs, non-issuance of EBM receipts, and ‘unacceptable’ refund. Some businesses operators still undervalue their goods during import clearance process, which affects revenue collection.

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