Rwanda Revenue Authority (RRA) Commissioner General, Pascal Bizimana Ruganintwali, urged taxpayers concerned with the 2023 income tax to fulfill their obligations, including submitting their ledger accounts for verification, ahead of the March 31, 2024, deadline.

RRA has informed taxpayers that during 2023 income tax declarations, only business expenses supported by EBM receipts, Customs Declarations (DMC) for imports, and withholding taxes will be accepted. However, exceptions have been made for items and services that are hard to obtain electronic invoices. They will be filled in the RRA system as an attachment under ‘Ledger Account’.

This includes purchases from small-scale agriculturalists or pastoralists or non-registered; internal expenditures; services purchased from abroad or from government and government-affiliated institutions, non-commercial, etc. This attachment must be sent to RRA for approval before being used in a declaration, to be deducted in a taxable income.

During a meeting with members of the Institute of Certified Public Accountants Rwanda (ICPAR) and the Association of Tax Advisors in Rwanda (ATAR), on Wednesday, March 6, Ruganintwali emphasised that many taxpayers haven’t submitted their ledger accounts for verification and approval.

"We requested taxpayers to submit them as early as February 15, 2024, but up to this date, we have only received 8,000 submissions out of an expected 59,000. Those we have received have already got feedback regarding approval or necessary corrections,” he said.

He emphasised that submitting a ledger account is in the taxpayer’s best interest. This allows them to obtain approval for the expenses they can declare in their income tax filings, a proactive approach that prevents last-minute rejections from the system, without sufficient time for explanations.

"Income tax filings and accompanying attachments are based on taxpayers’ self-assessment. However, it’s important to note that our system will only accept expenses supported by EBM invoices,” Ruganintwali added.

This tax is being paid according to the new rates provided by the law establishing income tax, gazetted on June 14, 2023. Corporate income tax was reduced from 30% to 28%.

Hajara Batamuliza, Commissioner for Domestic Taxes at RRA, said that since the law was gazetted before the end of 2023, taxpayers’ rights shall be preserved.

"The part related to the profits obtained in the previous months will be taxed at 30%, while the profits obtained when the law was enacted will be taxed at 28%. I want to assure taxpayers that they will have no trouble calculating their taxes,” she said.

"Our system has been adjusted in a way that once a taxpayer submits his/her declaration with accurate accounting, the profits obtained that year will be divided into those two parts. With the pro-rata computation, the system will calculate the amount he/she has to pay,” added Batamuliza.

For taxpayers under the real regime, if they exceed Rwf 600 million of annual turnover, they are required to submit their books of accounts to certified professional accountants for verification.

"Delayed declaration creates issues. You know we no longer use hard documents; we only use technology. But when we use them all at the same time, it creates different problems. That’s why we encourage people to make early declarations,” Batamuliza added.

As the tax year ends on December 31 each year, three months are given to prepare the declarations. However, some taxpayers, including those who don’t need books of accounts, begin to make declarations and payments in the last days.

Apart from taxpayers registered under the real regime who manage their accountancy, there is another category of small enterprises that must pay a lump sum tax of 3 per cent on annual turnover, composed of those whose turnover is between Rwf 12 million and Rwf 20 million.

Micro-enterprises pay a flat tax based on their annual turnover, which is as follows; from Rwf 2 million to Rwf 4 million, pay a flat tax of Rwf 60,000; from Rwf 4,000,001 to Rwf 7 million, pay a flat tax of Rwf 120,000; from Rwf 7,000,001 to Rwf 10 million, pay a flat tax of Rwf 210,000; and those between Rwf 10,000,001 and Rwf 12 million pay a flat tax of Rwf 300,000.

The business activities such as transport of persons and goods by road are imposed a particular flat amount. For vehicles, the taxes are set according to the weight of goods they may carry or the number of persons. For example, Taxi-Voiture pays Rwf 88,200, while a motorcycle pays Rwf 72,000.

The taxpayers concerned with 2023 income tax include newly registered in 2023, and those who were already in business.

Apart from taxpayers, entities exempt from corporate income tax must submit accounting books approved by professional accountants to the Tax Administration by March 31. This comprises the City of Kigali, the District, the Central Bank of Rwanda, foreign or technical cooperation organisations, recognised pension funds, the public sector in charge of social security, the Rwanda Development Bank, and others.

Watch the video that shows how the income tax return is done: