Rwanda Revenue Authority has introduced a new taxation regime for businesses that earn less than Rwf 12 million a year in order to attract micro businesses into the tax net.According to RRA, micro businesses are an important component of the economy, yet nearly all of them evade or have no capacity to operate under normal procedures, such as keeping sales records and carrying out audits."Ninety per cent of Rwanda’s tax base is comprised of small and medium businesses as well as micro businesses that make less than Rwf12 million a year. After talks with the traders and the Private Sector Federation, we devised a new tax regime which is now imbedded in a new law to make it easy for the businesses to declare taxes,” Ben Kagarama, the Commissioner General of RRA, said at a news conference."Under the old tax regime, businesses that made Rwf 1.2 million- Rwf20 million were considered small and were paying a lump sum tax of four per cent of their income, which most of them considered high. Now, any business that makes Rwf 2 million or less will be exempted from taxation.”Other major changes Kagarama said, were businesses making Rwf 2-4 million a year will pay a flat tax of Rwf60,000 whereas those making  Rwf4-7 million will pay Rwf120,000 a year.Those that generate incomes between Rwf7-10 million will pay a total of Rwf210,000 while those earning Rwf10-12 million will pay Rwf300,000 annually."On top of that, they will be allowed to pay the flat tax rate in instalments of four months,” Kagarama added, saying that: "These categories will also help us in terms of administration because most times, we found ourselves spending more resources than the taxes we were running after.”He, however, warned businesspersons against under-declaring returns in order to be categorised into the above groups, citing legal repercussions against anyone wrongly aiming to benefit from a group they do not belong to."I will not go into the details of the penalties for under declaring, but what is on ground is that these new categories are meant to facilitate those micro businesses that were hampered by the old tax regime. If a company is placed in any of them and we later find out that it is making more than they declare, they will be punished according to the law,” Kagarama added."I beseech micro businesses, therefore, to come out and start paying taxes now that we have put in place what they asked us to do.”RRA also reduced the presumptive tax for businesses with an annual turnover of between Rwf12 million and Rwf50 million from four percent to three per cent.Statistics indicate that over 930,000 businesses register for taxation every year, out of which 897,000 are micro businesses.Last year, total domestic taxes surged to Rwf370.9 billion with small and medium companies as well as micro businesses contributing Rwf137.5 billion and Rwf1.7 billion, respectively.