A big number of small-and-medium businesses evade or avoid taxes every year, according to the Rwanda Revenue Authority (RRA). However, small business owners always claim that it is difficult for them to declare taxes on time or even to declare them, due to a number of constraints. 

This will soon change once RRA launches a new platform, M-Declaration, next week to improve tax collection from micro-businesses. 

According to the tax body, the platform will make tax declaration easy for over 50,000 micro-businesses, most of which often slip-through the tax net year after year.

Through the M-Declaration platform, micro-businesses with annual turnover of between Rwf2m and Rwf500m will declare taxes using their mobile telephones.

"This system will solve the problem of tax-payers spending hours in queues at our offices waiting to declare taxes. In fact, tax-payers will be able to declare their returns from wherever they will be using their mobile phones,” Celestine Bumbakare, the RRA commissioner for domestic taxes, said.

All that a business needs, according to Bumbakare, is a mobile phone, an identity card number, for nationals, or a passport number, for foreign investors, and a tax-payer identification number. 

"The system will match these three requirements and enable the client to declare taxes by following prompts on their phone. All they will have to do is type *800# and follow instructions,” Bumbakare explained.

The system will be a great relief to small business owners, who insist that bureaucracies in tax collection affect their compliance.

"Tax officials always warn us against evading taxes and yet many times we face terrible delays when we try to declare. Some other platforms that were introduced only favour large businesses because they require computer knowledge, which we do not have,” Ngoboka, a shop owner in Nyabugogo told Business Times.

Ngoboka’s argument is supported by statistics from RRA, which show that, whereas electronic tax payment has been embraced by all large taxpayers with annual turnover of Rwf1b and above, only 5.8 per cent of small taxpayers were using it by May this year.

Bumbakare acknowledges that electronic filling of taxes does not favour small businesses because "they neither have the capacity nor the knowledge to use it”.

"This is why M-Declaration is being introduced. Small businesses will now be able to declare their previous year’s turnover and taxes, after which, they will pay through several options available, including  mobile money services, over the counter or through Internet banking facilities,” Bumbakare explained.

The initiative will go a long way in easing compliance with tax requirements among small tax-payers who are estimated to be over 80,000 and mainly operating as informal businesses.

It will also compliment other initiatives such as the electronic single window for customs, electronic cargo tracking and the gold card scheme.

Tax-payers with annual turnover between Rwf2m and Rwf12m are charged flat tax rates of between Rwf60,000 and Rwf300,000. Those making between Rwf12m and Rwf50m per year are charged 3 per cent of their turnover.