Rwanda Revenue Authority owes about Rwf 30 billion to different members of the business community in value added tax refunds.

Tax refunds come about after having taxes withheld on earnings that amount to more than what a person owes in income taxes for a calendar year.

To process the refunds, RRA cross-checks the documents of the taxes filed and verifies the cause of over-payment to discover the surplus amount.

The concerns have been long standing for over two years with a section of large taxpayers expressed concern over delays by the revenue body to pay back refunds, which they say is withholding their capital.

The delays in refunds of the VAT are occasioned by a shortage of funds to reimburse taxpayers.

Officials say that out of a total backlog of about Rwf 45 billion owed in refunds to taxpayers, the authority has so far paid out about Rwf 15 billion.

To ease the payment the Agency’s parent ministry, the Ministry of Finance and Economic Planning raised the VAT threshold from 10 per cent to 12 per cent with the markup enabling claims.

According to Aimable Kayigi, the commissioner for Domestic Taxes at RRA, the development has made it possible to make refunds in the current fiscal year with over Rwf 26 billion refunded.

"There were challenges on the issue, however since then there were a number of measures that had been taken. To start with the Ministry of Finance has raised the threshold rate from 10 per cent to 12 per cent from July last year. From that increase, from a total of refund requests from July last year till now, we have had requests of 27.5 billion, upon which we have so far refunded 26.9 billion,” he said.

The agency has since admitted to challenges in clearing the backlog which currently stands at about Rwf 30 billion.

Last year, RRA has requested the finance ministry for a supplementary budget to enable them make value added tax refunds, which have been pending and accumulating over time.

However, the plan did not sail through as plan with the ministry opting for a new approach all together to raise the threshold.

A senior manager of medium scale manufacturing firm in Kigali told Business Times that the persistence of the issue has  to an extent held back capital that could have otherwise been used to increase their efficiency.

It’s still unclear when the backlog will be cleared.

editorial@newtimes.co.rw