Construction and hospitality sectors have been ranked worst performers in Rwanda Revenue Authority (RRA) tax compliance survey.

Speaking at a news conference in Kigali, yesterday, RRA commissioner-general Richard Tusabe attributed the poor performance to "the prevailing culture of informal employment that leads to tax evasion through non-payment of Pay As You Earn (PAYE) tax.

The news conference, at RRA headquarters in Kimihurura, was convened to brief journalists on this fiscal year’s tax compliance improvement strategies.

Tusabe said many hotel owners also do not register employees, declare and pay their respective PAYE, "which resulted into loss of revenue.”

The tax body chief vowed to clamp down on any firms found acting contrary to the law.

"We will penalise and close down construction companies and hotels that are not fulfilling their tax obligations,” Tusabe warned.

"Anybody found to have committed criminal offences will be prosecuted to deter and prevent any form of tax evasion by other taxpayers,” he said.

Tusabe said there is high likelihood of large construction and hospitality companies utilising complex schemes to evade taxes.

To improve tax compliance in the two sectors, RRA will increase onsite visits, co-ordinate with industry associations, and improve its internal capabilities through consultative meetings with individual hotels based on the reports, Tusabe said.

During the 2015/16 fiscal year, the construction sector contributed Rwf11.4 billion and hotels Rwf8 billion, which Tusabe said was below the targeted revenues.

He said RRA will introduce an online mechanism to be used by field officers for verification of workers that are making the payment of PAYE so as to identify the tax evaders.

RRA plans to achieve the set target for Financial Year 2016/17 where it intends to collect Rwf1,084.4 billion (tax and non-tax), which is 55.6 per cent of the Rwf1,949.4 billion National Budget.

Tusabe said during 2015/16 fiscal year, RRA collected Rwf980 billion.

According to Pascal Ruganintwali, the deputy commissioner-general and commissioner for corporate services at RRA, the most effective way to gain and maintain voluntary compliance is through building a relationship of mutual trust and respect between the tax administration and taxpayers.

"We need to increase tax education and sensitise taxpayers on implications of non-compliance on their businesses and the economy generally,” he said.

Ruganintwali said revenue collector would simplify administrative procedures, as well as continue guiding taxpayers and motivating them to fulfill their obligations.

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