The Government will forego Rwf27 billion this year as the government eases the current tax rates in ongoing reforms, the Rwanda Revenue Authority (RRA) has pointed out.

High tax rates in the country recently attracted public outrage, a concern that President Paul Kagame said should be addressed with immediate effect. Kagame noted that while tax collections remain crucial for development, there should be strategic ways to ease the burden on taxpayers.

Reacting to the concerns, RRA Commissioner General, Pascal Bizimana Ruganintwali, said that the revenue body had decided to forego at least Rwf27 billion to ease the current burden.

"We have teams that have been deployed to assess the current tax policy, and other changes will be communicated in due time,” said Ruganintwali.

While appearing before a televised talk show, Ruganintwali pointed out that there are several incentives proposed by the revenue body, should parliament approve the bill.

The proposal comes after parliament recently passed a new law establishing taxes on income which, among others, provides for the increase of the taxable monthly income cap to Rwf60,000 from the previous Rwf30,000 set in 2005.

Asked whether there are any studies being conducted to lower the rates of various taxes, Ruganintwali said that the Medium-Term Revenue Strategy (MTRS) approved by Cabinet in May 2022 proposes a set of other tax policy reforms that are expected to boost revenue collection, as well as fuel economic recovery.

"We are also prioritizing raising the quality of our tax payers as part of the new strategy,” Ruganintwali said.

To put things into context, he said, there are roughly more than 300,000 registered taxpayers in the country, and only 375 of whom are large taxpayers. The latter account for 58 per cent of the total collected revenues annually. Second to them are medium taxpayers (845) who account for 12 per cent of the total revenues.

"The other 30 per cent of the total revenue collected comes from a larger group of our registered taxpayers.”

"So actually the number is not solely proportional to the revenues collected, but rather we need extraordinary measures of increasing the quality of our taxpayers especially those who are in the large taxpayers category,” he added.

Marie-Immaculee Ingabire, Chairperson of Transparency International-Rwanda (TI-Rwanda), noted that more should be done to address the current tax burden.

She is convinced that Rwandans are not against paying tax, but just don’t want excessive or too high tax rates.

"We are all Rwandans and also witnesses to why tax is important for the country, but that should also not leave our pockets empty,” she said.

Ingabire also reiterated concerns on Valued Added Tax (VAT) rates, citing that they were directed to her by several citizens.

Crackdown on construction, hotel industry

On the challenge of tax evasion, Ruganintwali said that there are various sectors which have been mapped to be followed up closely, particularly looking at the way they handle operations.

For instance, he said, the construction and hotel sectors are among industries which have not digitized their mode of payment, making it difficult for the revenue body to collect taxes.

"We need to adapt to the cashless factor for us to be able to have real data that should facilitate taxation,” he said.