RRA exceeds tax revenue by 120%

KIGALI - Rwanda Revenue Authority (RRA) the national revenue collection body in 2008 recorded an increase in its targeted collections surpassing it by 120.4 percent. This was revealed by the RRA Deputy Commissioner General Eugene Torero in an exclusive interview. Whereas the tax body hoped to collect Rwf281.4billion it collected Rwf338.8billion of which the biggest percentage came from domestic taxes on goods and services which pooled Rwf58.4billion into government coffers. Torero attributes the impressive performance to the improved compliance by taxpayers and recent realignment of systems and procedures to serve the taxpayer better. He however underscored that although the tax body is doing well in terms of domestic revenue collections, the actual number of people paying taxes remains low considering that only less than the 72,000 registered businesses in Rwanda paid taxes —according to the recent business operators census done by Private Sector Federation (PSF). This, he acknowledges, concentrates the tax burden to a few taxpayers, but was quick to say that this year, RRA plans to work with districts and other private sector institutions to reorganize the business sector to ensure that more taxpayers are brought on board. In a related development, Torero divulged that this year RRA may start collecting workers’ Social Security Fund on behalf of the Social Security Fund of Rwanda (CSR). Although this may seem a quite unique system in Africa, CSR Director General Henry Gaperi says it won’t be the first in the world. “For us we have decided and are ready…how soon this year? That will depend on RRA’s preparedness,” said Gaperi in an interview. He says CSR has a big network throughout the country, which will require RRA to increase its capacity to take up the task. Asked why CSR opted for this move, Gaperi said: “We want to make it easier for the taxpayers who are at the same time employers to remit both taxes and social security fund under one roof,” Investors speak out Bralirwa’s Managing Director, Door Plantenga maintains that her company, the country’s leading brewer, is number one contributor to government coffers; paying Rwf35billion annually which is between 10 and 12 percent of total domestic revenues collected. She’s however not happy about the 60 percent and 39 percent excise duties charged on beer and soda respectively. She says this puts Bralirwa in a lesser competitive situation with its competitors in the other EAC member states who have seriously started tapping into the Rwandan market. RRA’s Torero however downplays this as a major issue, clarifying that excise duty is domestic tax, thus whoever trades on Rwandan market pays the same rate; including Bralirwa competitors like East African Breweries. “If Bralirwa chooses to export to EAC member states, they will not pay the excise duties levied in Rwanda; they’ll instead pay excise duty rates in those respective countries”. But on the possibility of reducing the rates, the deputy CG says that can be looked into holistically with investors in the sector. Sulfo Rwanda, another local company manufacturing an assortment of household commodities, thinks the ground is not level with some of its competing imported products on the market; among others citing highly demanded type of soap called Gold Star. For instance, separate investigations carried out by The New Times; indicate that a similar type of soap imported from Burundi is grossly under declared at only Frw100 when entering Rwanda at the RRA “Rutete” declaration point. But the wholesale price for the same product in the city centre is between Frw500 and Frw600. And Sulfo also sells it at about the same price…meaning an importer from Burundi under-declares by over Frw300 per piece. Mary Baine, the Commissioner General says it is possible that some importers under-declare, and was quick to promise a thorough investigation in the entire distribution chain. She also attributes inflating consumer prices to lack of strong and efficient consumer protection associations in the country. “Rwanda’s economy is liberalized; we cannot influence any price on the market” she said. But as a tax collector she is more concerned about the huge sums the government loses due to under declaration. Ends

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RRA exceeds tax revenue by 120%