One of the most stressful events that can happen to any business is the prospect of a tax audit. It is believed that tax officers have aggressive targets to meet. 

Some accountants say that for every three to five years in business, you should expect a tax audit from Rwanda Revenue Authority (RRA).  Actually for some big multinationals, it is annual.

Here is an easy guide to prepare your business now, and handle a Tax audit:

The most obvious step is to ensure your tax affairs are totally in order. It is advisable that you employ a suitably qualified accountant or bookkeeper to help you keep track of tax and ensure your returns are not late. Even if you feel competent to do this yourself, it is a good investment to pay a professional to take an overview for you – they will ensure you stay within the law.

Even innocent mistakes can be costly, so a business should take professional advice as soon as an error is detected to work out the best course of action. There are firms that specialise in helping businesses declare errors while managing their liability. Your accountant or tax consultant will be able to give advice on the best course of action for your circumstances.

The RRA normally writes to companies, informing them of the intended audit and the proposed start date. If you need time to get your records in order, then politely offer some alternative dates. You should pick a date when all your staff will be in, and your accountant or bookkeeper is available to attend to the tax audit.

Ensure your staff are aware that the business is being investigated and that it is a routine event you are prepared for. There is nothing more worrying than seeing the boss stressed while a stranger roots through the paperwork. It is also advisable that the tax auditors are allocated staff who should respond to their queries therefore it is worth telling your staff that if the officer asks them any questions, they should direct them to the responsible people rather than attempt to answer them.

On the day, get in early, make sure you have the records requested for, and your bookkeeper or accountant is readily available – ideally in person.  Be polite and professional when dealing with the Tax officer.  Give them plenty of room to work in, and keep them comfortable with tea and coffee as appropriate.  But also ensure you stay in control.

It is vital that you or your representative keep careful notes of what is said to you by the tax officer. Get copies of their interpretations of the tax law in writing; this will help you apply their ruling consistently and deal with any future challenges. Refrain from futile arguments with the officers. If a problem develops with the officer, discus it first with them and if you believe the officer is clearly wrong ask to speak with their immediate supervisor. 

Do not panic! If you use professional advice or support, keep your tax up-to-date and deal with any enquiries promptly, you really have little to worry about. An investigation won’t necessarily find anything wrong, and you do have rights, including the right of appeal. The most extreme option is to appeal to a tribunal.  A tax specialist will be able to advise you on this.

Paul Frobisher Mugambwa is Tax Manager with PwC Rwanda.

Contact: frobisher.mugambwa@ke.pwc.com