Government is set introduce a flat tax regime where all small and micro businesses will incur the same tax rate regardless of their income bracket as the treasury seeks to widen the tax base and increase domestic revenues.The proposal is contained in the tax law which is under review with micro enterprises taxes composed of four categories. Under the new structure, which is still subject to parliamentary approval, businesses with an annual turnover of between Rwf2 and Rwf4 million per year will pay Rwf60,000 per year including VAT and Pay As You Earn (PAYE), while those with a turnover between Rwf4 and 7 million per year will pay Rwf120,000 per year. The other category between Rwf7 and 10m is set to pay Rw210,000 while companies with an annual turnover of between Rwf10 and 12m will pay Rwf300,000.Rwanda Revenue Authority (RRA) hopes that the new tax regime would attract local businesses, especially micro businesses to voluntarily register for tax, hence increasing compliance which is vital for treasury’s plans to increase domestic revenues to finance the country’s budget.   "We realised this category of taxpayers need special treatment to reduce anxiety that leads to compliancy costs,” Ben Kagarama, the Commissioner General of Rwanda Revenue Authority pointed out last week.More than three quarters of businesses eligible to pay taxes in Rwanda are small businesses that generally operate in the informal sector and not registered with RRA.As at the end of last year, RRA registered 83,600 taxpayers with 351 comprising large taxpayers, 1,800 medium enterprises and 80,452 small enterprises. Moreover, less than 30 per cent of small enterprises paid taxes, according to RRA.RRA figures indicate that in the last three years, micro-enterprises managed to pay Rwf864m and under the new proposed tax regime, the authority targets Rwf1, 680b. "Government has been losing money in collecting taxes, it will reduce on our costs of collecting taxes,” Kagarama, adding that stability and tax compliance heavily depends on the tax structure in the country.Under the current regime, small and medium enterprises with an annual turnover of between Rwf12m and Rwf50m have been paying four per cent of their annual turnover which has been reduced to a lump sum of three percent.The law will not involve large and medium taxpayers because this category had no hitches in their expenditure in relation to business growth.As categorised by RRA, any firm/enterprise with a revenue base of Rwf200million per year is considered small. Government is expecting higher revenues as a result of certainty and compliance level.