Financial institutions, including banks and insurance companies, are now mandated to provide information to the Commissioner General of the Rwanda Revenue Authority (RRA) regarding accounts, as outlined in a ministerial order issued on September 30, 2024.

This order establishes detailed guidelines for implementing the Common Reporting Standard (CRS).

The Minister of Finance and Economic Planning, Yusuf Murangwa, published the order in the Official Gazette on the same day. It specifies reporting requirements and due diligence procedures that financial institutions must follow concerning each account they maintain.

According to information obtained by The New Times from the Ministry of Finance and Economic Planning (MINECOFIN), this is the first order implementing the Automatic Exchange of Information (AEOI) law established on March 31, 2023, under the CRS framework, created by the Organisation for Economic Co-operation and Development (OECD), which serves as a global forum for data analysis and best practices in public policy.

The CRS aims to enhance tax transparency concerning financial accounts held abroad, requiring the collection and automatic exchange of account holder identities, balances, and income credited to these accounts, as per OECD guidelines.

MINECOFIN noted that Rwanda has committed to adhere to the Global Forum standards for the transparency and exchange of information for tax purposes. The AEOI under the CRS mandates that reporting financial institutions conduct thorough due diligence on both existing and new accounts to identify reportable accounts.

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These institutions must report their findings to the Commissioner General of tax administration, who serves as the competent authority.

This document plays a crucial role in implementing the AEOI under the CRS, guiding financial institutions to meet their CRS obligations effectively.

Here are six key provisions in the ministerial order:

1. Reporting Obligation

Reporting financial institutions must comply with the due diligence procedures outlined in this order. For the calendar year 2024 and each subsequent year, they are required to submit an information return to the Commissioner General detailing every financial account identified as a reportable account maintained during that year. Reports must be submitted by April 30 of the year following the reporting year.

The tax administration will exchange the information contained in these reports with reportable jurisdictions within nine months after the calendar year ends. Reportable jurisdictions are countries or territories that have agreed to share financial account information under the CRS.

2. Identifying Reportable Accounts

Financial institutions must review their accounts to identify which ones are reportable. An account is considered reportable from the date it is identified as such, and unless stated otherwise, information related to a reportable account must be reported annually in the calendar year following the year it was identified. Once classified as reportable, an account remains so until there is a change that removes it from the reportable category.

3. Reportable Account Balance or Value

The guidelines stipulate that the balance or value reported must reflect the account's status as of December 31 each year. If a balance or value cannot be determined on this date, the institution will use the nearest normal valuation point. For cash value insurance or annuity contracts, the cash value or surrender value as of the most recent contract anniversary within the relevant calendar year may be reported.

4. Excluded Accounts

The ministerial order outlines accounts that are exempt from review and reporting obligations. These include retirement or pension accounts that comply with specific regulatory requirements and tax-favored accounts. Conditions for exclusion also apply to accounts with limitations on contributions or withdrawals, such as those affected by retirement age, disability, or death. Additionally, life insurance contracts with coverage that ends before the insured turns 90 are excluded, provided they meet set criteria.

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MINECOFIN emphasised that the main criteria for excluded accounts is to minimise the risk of tax evasion, simplify the reporting process, reduce the administrative burden on financial institutions, and ensure that compliance efforts focus on accounts with a higher risk of tax evasion.

5. Reportable Information

For each reportable account holder who is an individual, the reporting financial institution must provide details including the name, current residence address, jurisdiction of residence, Taxpayer Identification Number (TIN), date and place of birth, and confirmation of valid self-certification. For entities that are account holders, the institution must report the name, address, jurisdiction of residence, and TIN.

If an entity has controlling persons who are reportable individuals, information regarding their TIN and their roles must also be reported. Additional reporting requirements include the total gross amounts of interest, dividends, and other income generated in the calendar year.

6. Non-Reporting Financial Institutions

The guidelines specify entities excluded from the reporting obligations, such as state organs, international organisations, and the Central Bank, except when payments arise from commercial financial activities. Other non-reporting entities include specific retirement funds, exempt collective investment vehicles, and trusts, provided the trustee reports all required information.

The guidelines also allow for the inclusion of entities deemed to present a low risk of tax evasion based on their characteristics.