Rwanda Revenue Authority has stressed that the usage of Electronic Billing System, commonly known as EBM promotes transparency in the economic sector, and that it is used to monitor financial transactions to easily know who paid the tax and who did not.

The Tax Administration expressed the remarks in an exclusive interview with The New Times’ Bertrand Byishimo ahead of the two-month awareness campaign.

This paper approached Emmy Mbera, RRA’s EBM project coordinator, to talk more on why the EBM system was introduced, the current uptake and future plans.

Below are the excerpts:

What should people expect from this two-month awareness raising campaign?

They simply have to keep in mind that we are conducting awareness raising campaigns in two main phases: The first phase is called adoption phase which sensitizes all vendors, businesses and managers of accounting books, to use EBM because it facilitates them to tax transparently, and also simplifies their tax transactions.

The second campaign focuses on buyers or final consumers to always ask for EBM receipts because it is the only proof that what they have purchased legally belongs to them and that they have contributed to the national development agenda.

How did EBM come about?

The Electronic Billing Machines replaced the use of papers in recording tax payments. It was tough because papers can easily be lost, destroyed, and the information on a paper can be edited anyhow.

That is why we employed the use of technology to address those gaps.

Since 2013, only Value Added Tax payers were obliged to use EBMs but a new law was passed in 2019 obliging all businesses to acquire electronic billing machines, hence, we realized the need to introduce new solutions that could facilitate taxpayers of various categories, which is what we are enforcing now.

What is the current uptake of EBM users?

The persisting problem is the uptake of VAT exempted taxpayers. Most of them do not have the EBM solutions yet. They account to 80,000 to 100, 000, but those include people with Taxpayers Identification Numbers (TIN) but haven’t started their business operations yet.

But for VAT registered taxpayers, almost 98% of them use EBM.

Last year, over 80,000 non-VAT registered taxpayers filed their returns; and these are the ones we are investing our efforts into; we want them to also acquire and start using the Electronic Billing System.

How do taxpayers access any of the EBM solutions that suits their business category?

First of all, there are three major solutions that a taxpayer chooses from, depending on the category of their business.

These include: The "Online EBM” which is given to businesses that mainly provide services, and do not frequently issue invoices. These include lawyers, accountants, tax advisors, researchers, consultants, among others. You just request a virtual online portal for your EBM and once you want to provide an invoice, you fill all the data and an EBM receipt message is sent to the client.

The second one is a smartphone-based system (Mobile App) which is owned by a larger part of taxpayers. With this, you process the EBM receipt with your smart phone and the client gets an automatic message regarding the transaction history. This category is made up of people with an annual sales turnover of less than Rwf 20 million.

The third solution is the computer-based software which is given to taxpayers whose annual turnover ranges from above Rwf 20 million, or any taxpayer who may request for it.  

For mega companies, we integrate their system with ours, so that we are able to monitor their transactions. These include banks, insurance, telecom companies and hotels among others.

To acquire any of these solutions, a taxpayer fills in an online form that is found on RRA website, attaches a copy of Identity card (ID) of the owner of the business or one of the Company’s shareholders; the Full Registration Information for Domestic Company provided by Rwanda Development Board (RDB) or TIN certificate in case of individual enterprise; and the EBM commitment form downloaded from RRA website, well filled, stamped and signed by owner of the business or the shareholder of the Company. After submission, a staff gets in touch to install the solution remotely.

What efforts have you invested in awareness campaigns?

Since early 2021, we did our best to pool energy and educate the population on this, but we were interrupted due to Covid-19 measures including lockdowns, limited physical meetings among others.

Despite that, we have managed to get over 7,000 people newly registered and when we look at how the businesses are responding to our call, we get optimistic that at the end of this year we will have at least a total of 20, 000 new businesses adopt the EBM technology.

We have trained our staff on this, they have been deployed in different provinces carrying out door-to-door campaigns, and facilitating people to get registered.

And that has paid off, because on average, we are getting more than 1,000 people registering weekly.

If we continue like this, we might achieve our target of having 100% non-VAT taxpayers using the EBM technology before June 2022.

What is the difference between VAT and EBM?

This is what I want to make clear for taxpayers to be able to differentiate.

They should understand that using EBM does not mean paying VAT. All taxpayers including those who are not registered on VAT are required to use EBM as obliged by LAW N° 026/2019 of 18/09/2019 on Tax Procedures which states that a person who carries out any taxable activity must issue an invoice generated by an electronic invoicing system certified by the Tax administration.

So, our purpose is not taxing, what we need is transparency, and that is what EBM helps us through: to monitor all transactions and ensure that tax is well paid.

When a buyer is given that small invoice after a transaction, we get all the information there and know who paid the tax and who didn’t.

So, let it be clear that we don’t want to make VAT exempted businesses taxable, because it is contrary to the law.

What we need is information of who pays the tax and not and VAT taxable businesses are the ones with an annual sales turnover above Rwf 20 million and selling VAT taxable goods.

How does EBM benefit businesses and consumers?

For consumers, EBM is a proof that they have contributed to the national development agenda. That is why we urge buyers to ask an EBM receipt to ensure that their contribution in the development agenda is recognized.

Also, taxpayers are once again reminded that all expenses that are not supported by the EBM receipts will not be considered valid during 2021 annual income tax declaration.

Are there sanctions for defaulters?

A business operating without EBM whereas they are eligible to have the latter, is fined with Rwf 200,000. If the same is repeated, the taxpayer is fined twice the taxable amount and could even go up to 10 times the value of the evaded tax. Also, the business can be closed for 30 days.

But that is not our intent, our priority is to first educate them, but it might happen that we get forced to penalize those who intentionally defy the law.