With the October 23, 2024 deadline fast approaching, taxpayers have a last opportunity to voluntarily disclose and settle any taxes not declared before 2023. This initiative has provided relief by allowing participants to pay only the principal tax, without penalties or late payments interest.
Initially, this one time opportunity was first offered from March 22, 2024, and was supposed to last for three months until June 23. However, some participants were unable to complete the process and requested additional time.
This opportunity was provided for all domestic taxes unpaid before the year 2023. Most of the taxes voluntarily disclosed include withholding tax, Pay As You Earn, Value Added Tax (VAT), and property tax.
Paul Habimana, Niwewe Ltd’s CEO, is one of the taxpayers who took advantage of this opportunity. After a self-assessment, he discovered several tax errors in payments for the years 2020, 2021, and 2022, which allowed him to pay the correct taxes for these three years without penalties or late payment interest.
"For 2022 alone, I paid nearly RWF 2.4 million. Without this opportunity, the penalties would have been significant. For the total of Rwf 7.5 million I paid, the penalties could have exceeded Rwf 10 million. This was a benefit and allowed me to straighten out my accounting records,” he explained.
He encourages other taxpayers to take advantage of this opportunity while it lasts, as it was designed to help businesses correct past errors before Rwanda Revenue Authority’s (RRA) audit.
Apart from business-related taxes, Donald Ndahiro from Bugesera District voluntarily disclosed unpaid taxes on rental income from properties in Gatsibo District. He applied for the scheme after finding undeclared rental income taxes through a self-review.
"I built these properties on land designated for forestry, but after discussions with the district and land authorities, we were permitted to build rental properties there. I didn’t initially think rental income taxes applied here,” he said.
Upon review, he discovered he owed over Rwf 1.5 million in taxes for 2021 and 2022, excluding penalties and interest on overdue amounts.
"Adding the penalties, this would have increased to over Rwf 2.68 million. I consulted with RRA and used the voluntary disclosure scheme and paid only Rwf 1.5 million, saving almost half of what someone outside the scheme would pay,” he continued.
Ndahiro praised the government for introducing this initiative, urging other taxpayers with undeclared taxes to participate before the deadline, as the process is simple.
"If your unpaid taxes are discovered, you’ll pay the same amount plus additional penalties and interest. This could become a financial strain as payment will be enforced, unlike when there’s voluntary compliance,” he added.
Emmy Mbera, Assistant Commissioner in charge of Tax Control and Operational Support Division, emphasised that the extension was initially based on requests from taxpayers who needed ample time to review their records, disclose, and pay the unpaid taxes.
"This is a rare opportunity they should seize, without assuming that the government will extend the period or bring back the program in the next year, or within two or five years,” he said.
According to data from Rwanda Revenue Authority, more than 3,200 taxpayers have voluntarily disclosed previously undeclared taxes. These disclosures resulted in over 19,000 tax declarations, amounting to a total value of over Rwf 15 billion.
After this voluntary disclosure opportunity, the RRA will have sufficient information to help identify other taxpayers who have not paid their taxes. These individuals will then be required to pay, along with fines and interest for late payments.
Those wishing to disclose voluntarily can use the RRA website https://www.rra.gov.rw/en/home or visit the nearest office for assistance before any audits uncover unpaid taxes.
According to the RRA Commissioner General directive of September 3, 2024, taxpayers who disclose and pay voluntarily within 30 days will not incur penalties or interests. Taxpayers with valid reasons can request payment in instalments.
The tax procedures law of 2023 stipulates that a taxpayer who fails to declare and pay taxes within the legal time frame must pay the tax and an administrative penalty of 20% of the tax due if the deadline is missed by no more than 30 days.
This penalty increases to 40% if the payment is made between the 31st and 60th day after the deadline, and to 60% if it exceeds 60 days from the deadline.