SMEs pinned on tax evasion

Rwanda Revenue Authority (RRA) says several small and medium enterprises (SMEs) deliberately fail to register their businesses preferring to work informally with the intention of evading taxes.While officiating at the launch of tax awareness campaign at Petit Stade in Kigali, yesterday, the Director of Tax payer service development, Drocella Mukashyaka, urged SMEs to formalise their business activities and fulfill their tax obligations to avoid inconveniences. The campaign is part of tax authority’s efforts to widen the country’s tax base targeting the potential but less compliant sector, SMEs.“It is paramount that business entities understand the importance and their obligation of contributing to the country’s economic development,”The campaign is jointly organised by RRA, Gasabo district and the International Finance Corporation. With the low level of tax compliance, RRA hopes that in the near future it would raise the compliance level to at least 80 percent, hence increasing the taxes to the national coffers.“Some only pay the license fee upon registration at the district level and our data does not match the taxable businesses in a certain district, meaning they abandon the exercise immediately after registration,” Mukashyaka said.Christopher Nshimiyimana, the assistant manager of Lemigo Hotel, concurs that majority of businesses evade taxes and even those who do pay do it not because they consider it as their obligation.“Many people pay taxes because they fear repercussions that go with non-compliance other than out of patriotism,” said Nshimiyimana.Nshimiyimana believes that since the tax laws and punishments for violation are clearly stipulated it would help enforce tax compliance by whoever is supposed to pay.

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SMEs pinned on tax evasion