Experts are requesting the government to make an effort to expedite the implementation of the newly announced tax reforms, in addition to putting in place incentives that will promote local start-ups. ALSO READ: Six key changes in proposed pro-poor income tax law Announced by a cabinet meeting that sat on Thursday, April 20, the tax reforms include the exemption of Value Added Tax (VAT) on rice and maize flour for both domestic trade and imports and reduction of corporate income tax statutory rate from 30 to 28 per cent. The government also announced changes in excise duty, where for instance, the excise tax on wine will be 70 percent of its value, with a cap of Rwf40,000. The property tax was also changed, where the new rate applied on land tax has been set between Rwf0 to Rwf80 per square meter, while second residential houses will be taxed 0.5 percent of their market value. In addition, under the new changes, businesses will now be given a single trading license that combines market and public cleaning fees. Speaking in a press conference on Friday, April 21, the Minister of State in charge of National Treasury, Richard Tusabe, said that except for the VAT exemption on food stuffs like rice and maize flour which will take immediate effect, the rest of the tax reforms will first go through the parliament for approval. In an interview with The New Times, Fidele Ukwishaka, a tax expert from BDO East Africa, an organisation that deals in audit and assurance, tax, and so on, said he hopes the approval process will be faster because such changes are needed by the society. ALSO READ: Gov’t to forego Rwf27b in tax following reforms “There are some laws that will need to be amended. I hope they will be changed fast. These reforms were needed by the people,” he said. He noted that such changes are aimed at broadening the tax base, improving tax compliance, and attracting investments. Zeroing in on the income tax changes, he said, its reduction from 30 to 28 percent is good for now, but the government should continue to pursue the target of going as low as 20 percent, picking a leaf from countries like Mauritius that have such measures in place and are attracting many investments. Talking about the VAT exemption on rice and maize flour, Ukwishaka the government should follow up to make sure that traders have reduced the prices accordingly. Pascal Murasira, the Managing Director at Norrsken East Africa, an entrepreneurship hub for start-ups based in Kigali, said that “while recent tax reforms are helpful to all businesses, we need special incentives for locals to buy from start-ups.” “Having in front of me hundreds of pitch decks from Rwandan start-ups and investor comments on each, the single biggest challenge for our ecosystem is - consistent traction, not the profile of the founders,” he noted. “Waiving VAT when purchasing from a youth-led start-up could be a great way to start. Start-ups can play a critical role in driving innovation, and job creation, and fundraising is essential to their growth, particularly in their early stages. By creating an enabling environment for investors to put money into these young ventures, we can stimulate economic growth and promote a more vibrant and diverse economy, which enables a wider tax base,” he added.
