Government launches new VAT law for public tendering

The government has introduced a new value added tax (VAT) law, where all public institutions are now obliged to record VAT on all public tenders at the time of payment and declare it to the Rwanda Revenue Authority (RRA) within 15 days after collecting it.This makes the filing of declarations and paying of VAT on public tenders no longer a responsibility of the suppliers.“We believe this will reduce challenges the business community has been facing, where some contractors at times had to pay VAT bills that were supposed to be footed by government,” Ben Kagarama, the RRA Commissioner General, said at a dialogue between tax payers in the private sector and the tax body in Kigali last week. Kagarama added that public institutions that would not adhere to the new law would be penalised. “The VAT on public tenders is withheld by a public institution that awarded the tender,” states Article 10 of the law No. 38/2012. Pierre Celestin Bumbakare, the commissioner for domestic taxes, said the change would be a relief to contractors who usually paid VAT late due to payment delays by government bodies. “Some business people had to apply for bank loans to pay VAT when they had won big public tenders,” said Bumbakare.“This is a good way of facilitating the business people as far as paying VAT is concerned,” said Laurent Mwenzangu, the Private Sector Federation representative in Nyarugenge District.

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Government launches new VAT law for public tendering