The Government has tabled a Bill that seeks to amend the law establishing value added tax (VAT), cutting a compromise in penalties 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. Under the current law that enforces 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.

In effect, a trader who evades taxes, say, worth Rwf5,000 could end up being fined even ten times more than the value evaded due to noncompliance with the law. 

Electronic billing machines 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.

However, traders have had to be literally forced to take up the use of the machines. Even for those who have, there have remained complaints in enforcement of fines by Rwanda Revenue Authority, with many traders complaining that the fines are often too exorbitant in relation to the taxes evaded.

The proposed law, if enacted, will not only ease such a tax penalty burden on traders but also boost revenue collection as it is expected to make the traders warm up to the EBM system.

Electronic billing machines is one of the systems the Government has put at the centre of efforts to boost domestic revenue to finance the National Budget.

This is why revising the operationalisation of the EBMs is important. Traders can now feel reassured that the Government does not see them as an avenue to raise tax but rather as players who should be proud of their contribution without feeling cheated.