Private sector, trade unions upbeat about new tax reforms

The Private Sector Federation (PSF) and trade unions praised the recent tax reforms, saying they will reduce the tax burden on both business people and workers. ALSO READ: Tax reforms: Experts call for swift enforcement, special incentives for local start-ups Announced by a cabinet meeting on Thursday, April 20, the tax reforms include the exemption of Value Added Tax (VAT) on rice and maize flour, as well as the reduction of the corporate income tax statutory rate from 30 to 28 percent. Speaking to The New Times, Eric Nzabandora, the president of COTRAF, an inter-professional group of trade unions in agriculture, industry, and banking, among other sectors, said such changes will not only boost the “take-home” income of the workers but will also encourage more investments from the business community, which will provide jobs to more people. “The PSF has been calling for tax reductions for the traders, and we think it is good. With reduced taxes on businesses, more people will open businesses and create more jobs. This will reduce unemployment,” he noted. His counterpart, Africain Biraboneye, the Secretary General of CESTRA, the umbrella of 16 trade unions from different sectors, said workers are some of the people that are often burdened with taxes, and thus, the new reforms are a good move for them. “If there is any reduction in taxes, it is welcome because it eases the life of the workers which is usually difficult,” Biraboneye said. He called for more reforms, specifically in regard to increasing the worker’s non-taxable income from Rwf 60,000 to at least Rwf 100,000. “That would be a good development that covers a big number of workers, especially women and young workers employed in less-paying jobs,” he noted. ALSO READ: Increase cap on taxable income – labour unions Walter Rubegasa, the Spokesperson of the PSF, weighed in on the advantage of the new tax reforms on the business community. He praised the changes in the property tax, which set the land tax rate between Rwf0 to Rwf80 per square meter, while the tax on second residential houses was set at 0.5 percent of their market value. “The law that was in place required people to pay between Rwf0 to Rwf 300, but it was never implemented. We thank the government for that. We often talked to the government, challenging this law,” he noted. The new reforms also reduced the tax rate for commercial buildings from 0.5 percent to 0.3 percent of their market value, and capped the taxes on such buildings at Rwf30 million. The government also scrapped land taxes on plots where commercial buildings are located. “These changes will benefit the businessperson. They come as a partial solution to the problems that we pointed out to the government continually, in regard to how burdened the taxpayers were,” Rubegasa noted. “There has been a 50 percent reduction of taxes on commercial buildings, which is good. But we can still say there is a problem facing investments in the country if a person with commercial buildings forks out billions of Francs in taxes yet their counterparts who have lots of money on their bank accounts are not taxed,” he noted. Commenting on the VAT exemption on rice and maize flour, he said, it will make such products easier for Rwandans to purchase but also means that manufacturers and traders will make more sales.

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Private sector, trade unions upbeat about new tax reforms