Rwanda Revenue Authority (RRA) has urged taxpayers concerned with the 2023 income tax to pay ahead of the March 31, 2024, deadline, to avoid penalties and interest for late payment.
RRA says that during corporate income tax declarations, only business expenses supported by EBM receipts for local purchases, Customs Declarations (DMC) for imports, and withholding tax, will be accepted to be deducted from taxable income.
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The corporate income tax was reduced from 30% to 28% according to the Law nº 051/2023 of 05/09/2023 amending Law nº 027/2022 of 20/10/2022 establishing taxes on income.
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Hajara Batamuliza, the 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 30%, while the profits obtained when the law was enacted will be taxed 28%. I want to assure taxpayers that they will have no trouble calculating their taxes," she said.
Apart from taxpayers registered under the real regime who manage their accountancy, small enterprises composed of those whose turnover is between Rwf12 million and Rwf20 million must pay a lump sum tax of 3 percent on annual turnover.
Micro-enterprises pay a flat tax based on their annual turnover, which is as follows: from Rwf2 million to Rwf4 million, pay a flat tax of Rwf60,000; from Rwf4,000,001 to Rwf7 million, pay a flat tax of Rwf120,000; from Rwf7,000,001 to Rwf10 million, pay a flat tax of Rwf210,000; and those between Rwf 10,000,001 and Rwf12 million pay a flat tax of Rwf300,000.
Other business activities such as transport of persons and goods by road are imposed a particular flat amount.
For vehicles, taxes are set according to the weight of goods they may carry or the number of persons. For example, a cab or taxi-voiture pays Rwf88,200, while a motorcycle pays Rwf72,000.
The taxpayers concerned with 2023 income tax include newly registered in 2023, and those who were already in business.
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 organizations, recognized pension funds, the public institution in charge of social security, the Rwanda Development Bank, and others.
The law on tax procedures provides administrative fines for non declaration and non-payment of tax on time.
A taxpayer who fails to declare and pay tax within the time limit provided by the law pays such a tax and is liable to an administrative fine of 20% of due tax, if the time limit for payment extends for a period of time not exceeding 30 days; 40% of due tax, if the taxpayer paid within a period ranging from the 31st to 60th day from the final date of payment; and 60% of due tax, if the taxpayer exceeds the time limit for payment by more than 60 days.
A taxpayer who has declared but fails to pay tax within the period provided for by the law pays late payment interests on the amount of principal tax.
The rate of interests for late payment is fixed at 0.5%, if the taxpayer has recorded a delay not exceeding six months with respect to the time limit for payment; 1% if the taxpayer has recorded a delay of six months in tax payment but not more than 12 months; and 1.5% if the taxpayer has recorded a delay of more than 12.
Interests for late payment cannot exceed one hundred 100% of the amount of tax.