If you are a business manager or own and run your own Small Medium Enterprise (SME), you need to take tax seriously, if you are to succeed in your business. Tax planning and good tax management for the business or company should be at the top of every business manager’s list of priorities.

With proactive tax management and careful tax planning there are significant savings that a business can make, which would go straight to the bottom line. Below are some easy tax management and tax planning ideas which, if properly applied, would result in great savings to the business.

Every business must prepare and maintain proper records. The current system of self assessment allows RRA to devote more time to carrying out tax audits, enquiries and investigations on tax payers perceived to be of high risk.

If they launch an enquiry, audit or tax investigation into your business, having good records will help you deal with it quickly and easily, saving you time and professional fees. Lack of proper business records could lead you into paying more tax than you need to, and even worse, being liable for interest and penalties which can be very punitive.
Carry out a regular review of your tax compliance systems and procedures to ensure that they are in line with the ever changing tax law.

Pay As You Earn (PAYE) and Value Added Tax (VAT) audits and investigations by the RRA are now a regular occurrence for all businesses, and most of them result in additional tax, interest and penalties, as well as wasting valuable management time. Are you prepared for RRA’s next tax audit?

This may be a good time to engage the services of a tax advisor to carry out a tax health check to ensure that you correct any errors of the past period just filed and start off the new tax period on a clean slate. The other alternative is for you to wait for the taxman to do it for you; surely you do not want that!

You should review your overall tax burden each year. In a fast-changing environment business owners should review their businesses’ tax position each year, including benchmarking against their peers operating in the same businesses or industry sectors.

This would give the company a very good indication of how effective its tax strategy is, as this can have an impact on the company’s competiveness.

Aim to minimise the tax you pay by deferring or accelerating taxable income, bringing forward revenue expenses and maximising capital allowances on planned capital expenditure. All these are lawful and legitimate ways of actively managing the tax cost to your business.
Observe the statutory tax payment and filing deadlines to avoid late payment and late filing tax penalties and interest.

It would be ironic, if having saved tax through careful tax planning and business tax management, you were to incur tax penalties and interest due to late filing.

This can be avoided by complying with all legal requirements, and ensuring that all tax returns, forms and payments are dealt with inside the time limits laid down by the tax law. 

Finally, reduce your tax burden by proactively managing your business taxes. Have regular meetings with your accountant, tax and business advisor. And if you do not have an accountant, get one now.

A qualified accountant can probably save your business money in many ways, and saving tax is just one of them.

Paul Frobisher is a Tax Manager with PwC Rwanda

Contact: frobsiher.mugambwa@rw.pwc.com