Import levy model should be limited to EAC and AU, says Rwanda Revenue Authority

Rwanda Revenue Authority Commissioner General Richard Tusabe has advised that import levy revenue generation model should be limited to the East African Community (EAC) and the African Union to avoid over burdening taxpayers and tax administration. Rwanda made commitments to the two bodies to contribute funds to their activities through an import levy. Tusabe however cautioned that commitment to fund more bodies using the same model would not be ideal for taxpayers and authorities. Rwanda is a member of East African Community which has an import levy of 1.5 per cent, whereby proceeds are earmarked for joint infrastructure projects. Rwanda is also subject to the recently proposed African Union 0.2 per cent levy on eligible imports through which they expect to raise about $1.2 billion every year. The funds are earmarked for operational costs, part of programme costs as well as a section of peacekeeping costs. And, following its readmission into the Economic Community of Central African States (ECCAS), Rwanda is also expected to be subject to a 0.4 cent levy on all imports from outside the region to raise contributions toward the bloc. But the government has since commenced negotiations with ECCAS to be left out of the import levy model, citing other commitments with the import levy model. In its proposal, Rwanda has requested for a budget line contribution so as to avoid fatigue from the model. Speaking to The New Times, yesterday, Tusabe said that a budget line approach for ECCAS would be ideal for both the tax administrator and taxpayers. He said that other than the AU and EAC import levies, any regional financing mechanisms should be by an alternative model. “I would opt for a contribution model for any other commitments other than those made for EAC and AU. Tomorrow, we may have another levy coming up and further burden taxpayers,” Tusabe says. Other than the financial burden to taxpayers, he said, it could also burden the tax administrator. “An ideal situation is where they let us know the gap they are trying to fill and we know how much the country will pay. That would be a fair deal. It also should have a timeline depending on what you are trying to address,” he added. He said that the option of having multiple levy agreements would cause unnecessary burden which can easily be avoided if partner states have a goal they are working towards. He said that import levies, especially imposed by regional blocs, may not be the best options considering that countries are working towards a preferential tariff rates where member states do not charge taxes on goods from the same region. There have been concerns that as various trade blocs move to finance their agenda through imposing levy, it could significantly push prices of imports upward. Tusabe noted that the EAC import levy would go a long way to finance the region’s infrastructure gaps which will serve to boost trade in the region. Speaking at a news conference earlier, Tusabe had said that to further reduce imports, the bloc has moved to position EAC as non-net importers by reviewing rules of origin criteria in promotion of industrialisation and substitute imports. editorial@newtimes.co.rw

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Import levy model should be limited to EAC and AU, says Rwanda Revenue Authority