The new tax reforms announced by the government will see a number of changes ranging from exempting Value Added Tax (VAT) on processed cereals such as maize flour and rice, as well as the reduction of corporate income tax statutory rate from 30 to 28 per cent. ALSO READ: Tax reforms: Experts call for swift enforcement, special incentives for local start-ups Here are four things you should know about the new tax reforms: 1. They were informed by a country-wide assessment According to the Minister of State in charge of the National Treasury, Richard Tusabe, an assessment was carried out in all 30 districts of the country before coming up with the reforms. “We visited all the districts of the country and we had discussions with the private sector,” he said. The assessment was sparked by President Kagame’s speech, in January, where he called for tax reforms to ensure that people are not burdened. 2. VAT exemption on foodstuffs already in force Though some reforms will have to pass through the parliament so that relevant laws are first amended, the implementation of the VAT exemption on foodstuff will take place immediately. In a press conference held on Friday, April 21, Tusabe said the issues related to food could not wait for even a week. 3. The VAT exemption will last for “a long time” The Minister of Trade and Industry, Jean-Chrysostome Ngabitsinze, said the VAT exemption on foodstuffs like rice and maize flour will last for a long time. However, he noted that the maximum prices that the ministry recently set for food may be reviewed in accordance with how the harvest season will go. 4. New changes will promote investment, broaden the tax base According to the Ministry of Finance and Economic Planning, the reforms will reduce tax rates, broaden the tax base, and improve tax compliance. The Commissioner General of Rwanda Revenue Authority (RRA), Pascal Ruganintwali, noted that the exemption of VAT from some products, for example, is expected to increase the purchasing power of Rwandans and with this, businesses will make more sales and pay more taxes. In addition to this, the reduction of income tax rates is expected to encourage investments, both local and those that may come from outside of Rwanda.
