Rwanda Revenue Authority has committed to commence refunding value added tax to members of the business community within 30 days after application.

The development, which is set to commence in July, will come as relief to a large number of traders some who told Business Times that their requests have been pending for over two years which they say is withholding their capital.

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 new process to refund VAT in 30 days was confirmed by RRA Commissioner General Pascal Ruganintwali while speaking at a KPMG Rwanda Budget analysis session.

He said that they were aware of the current concerns by a section of tax payers on the delays and were moving in to review the timelines.

As of February this year, Rwanda Revenue Authority owed about Rwf 30 billion to different members of the business community in value added tax refunds.

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

Out of a total backlog of about Rwf 45 billion owed in refunds to taxpayers in 2018, the authority had paid out about Rwf 15 billion by February this year.

To ease the payment by RRA, the Ministry of Finance and Economic Planning raised the VAT threshold from 10 per cent to 12 per cent with the markup enabling claims.

RRA is expected to collect an estimated Rwf 1,535.8 billion in tax revenue accounting for 53.4 per cent of the total budget.

The domestic revenue mobilization and self-reliance ambitions will among other things rely on improved domestic revenue mobilization capacities and efficiency.

Rather than increase tax burden on the current tax payers, the budget will seek to expand the tax bracket to include aspects previously overlooked such as the informal sector.

The proposed budget also seek to raise funds through domestic borrowing which also gives Rwandans a chance to invest in the development process.

Rwanda Revenue Authority Commissioner General Pascal Ruganintwali noted that among aspects that will drive up domestic revenue mobilization is easing the tax compliance process.

Through digitization of tax systems and processes, Ruganintwali said that the cost of tax collection continues to reduce as well as cost of compliance for the general public.

editor@newtimesrwanda.com