Rwanda’s total revenue collections, excluding local government tax and fees, increased to Rwf514 billion in the first semester of 2016/2017 fiscal year compared to Rwf470.6 billion collected during the same period last year.

However, the figure falls just slightly short of the set target of Rwf516.5 billion and represents 99.7 per cent of performance level.

According to the Rwanda Revenue Authority (RRA), collections from local government taxes and fees, which include trading license, property, tax rental income and income tax among others, amounted to Rwf16.7 billion against the target of Rwf17.8 billion.

Richard Tusabe, the RRA Commissioner General, attributed the growth in collections to the increasing number of new taxpayers, strong monitoring mechanism and increased uptake of Electronic Billing Machines (EBM).

The revenue body vowed to keep widening tax base and to bring more people into the tax net to boost revenue collections going forward.

Speaking to The New Times after announcing the figures in Kigali yesterday, Tusabe, said the revenue body will continue to conduct registration exercise for unregistered taxpayers, especially for local government tax.

Through taxpayer registration alone, the total number of new taxpayers increased by 7,840 in the first six months of the fiscal year, representing a 5 per cent growth.

According to Tusabe, tax registration helped broaden the country’s tax base, especially on the new requirement that all commercial houses must pay Value Added Tax (VAT) on rental income.

Professional associations in this sector, including architects, engineers and property valuers, were also taxed.

The Commissioner General warned the revenue body will continue cracking down on tax defaulters as one of the measures they are employing to meet targets.

"Alongside monitoring taxpayers’ compliance and enforcement of tax arrears, RRA conducted strong sensitisation and education campaigns in various sectors and among the general public to improve their understanding on tax matters and improve compliance,” Tusabe said. He lauded electronic payment systems that have made it more convenient for people to remit taxes but also played a key role in bringing down tax leakages.

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

Enforcement of the use of EBM was yet another notable factor in the improved revenue collections.

RRA said that the number of EBM users increased from 11,436 in June 2016 to 12,805 by December.

Key priorities going forward

Meanwhile, the tax revenue targets for the 2nd semester 2016/17 stands at Rwf588.1 billion.

This will include central government tax revenue, equivalent to Rwf571.7 billion, and the local government tax of Rwf16.4 billion, in addition to non-tax revenue amounting to Rwf21.0 billion.

To achieve its targets, RRA says it will continue to embrace VAT input validation systems which started this year.

The strategy is expected to enable RRA increase VAT collection and automatically eliminate fictitious VAT declarations and the corresponding claims of VAT refund, Drocelle Mukashyaka, the deputy commissioner for taxpayer services, told The New Times.

Enforcing the use of EBM by monitoring the VAT registered taxpayers and sensitising consumers about the importance of collecting EBM receipts is expected to play a big role in achieving the targets, officials said.

The revenue authority will also emphasise the use of electronic cargo tracking system in order to reduce fraud and enhance trade facilitation along northern and central corridors, they added.

Taxpayer registry cleanup

To further broaden the tax base, RRA said it will conduct a taxpayer registry clean-up exercise to help bring more taxpayers, who are informally involved in business, into the tax net.

"We will enforce the use of EBMs for all VAT-registered taxpayers as required, as well as continue with sensitisation and education campaigns, reminding taxpayers to fulfill their tax obligations and to use online facilities available to them,” said Tusabe.

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

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

Read also: Import levy model should be limited to EAC and AU, says Rwanda Revenue Authority

editorial@newtimes.co.rw