Legislators have welcomed a new Bill that seeks to amend the law establishing the value added tax (VAT) and introduce a more stringent fine for noncompliance in use of electronic billing machines (EBMs).

The proposed law seeks for offenders to pay a fine corresponding to the amount evaded in taxes.

Ever since introducing the mandatory use of EBMs for efficiency in collection of taxes, the Government has been slapping traders with administrative fines that vary between Rwf500,000 and Rwf20 million for not using the machines.

But the traders have been complaining, saying the fine was too high since one would be fined onerously for just failing to use the machines.

Benjamin Gasamagera, the chairperson of Private Sector Federation (PSF), told The New Times yesterday that it was not plausible for someone to be fined Rwf5 million when they have only evaded Rwf5,000 in taxes.

Now the Government wants to calculate the fines according to the amount of evaded taxes, said Amb. Claver Gatete, the minister for finance and economic planning, while presenting the Bill before the Lower House yesterday.

The proposed law provides for administrative fines applicable in case of non-use of electronic billing machine to be equal to 10 times the value of the tax evaded.

In case the person repeats the fault, administrative fine is 20 times the value of the evaded tax.

"Wishes from members of the private sector on using EBMs with regards to sanctions had to be respected. We need to correct the challenge and ensure that people are sanctioned reasonably in proportion with the mistake made,” Gatete said in an interview shortly after addressing legislators.

If enacted into law, the new changes will leave Gasamagera and many other traders he represents happier and ready to do business without fear of being fined exorbitantly for slight omission or commission in their use of EBMs.

"What is fair is that the sanction will be proportionate with the mistake made,” Gatete said.

In the new Bill for VAT, the Government has also introduced a new article to underline that the administrative fines provided for in the law for not using EBMs will not preclude either the payment of the tax due or the criminal proceedings against the taxpayer concerned.

It means that, on top of paying the fines, taxpayers will be compelled to pay the evaded taxes and also face the normal wrath of the law for the crime of tax evasion.

Other changes introduced in the bill on VAT are mainly tax exemptions that have been made for services of agriculture insurance, fees or expenses charged to investors by a regulated collective investment scheme such as the capital market, as well as goods intended for public institutions in charge of defence or national security like materials, supplies, equipment, machinery and motor vehicles.

Farming in the country has continued to be seen by the financial services sector as a risky venture and the insurance sector has been challenged to support agriculture sector, a backdrop that perhaps makes it plausible to exonerate VAT on agriculture insurance services.

Debate on the Bill will continue at the committee level in Parliament.

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