Over 77% register on e-tax platform despite hurdles

Over 77 per cent of the targeted tax-payers have already started using the e-tax platform despite the low enthusiusim that has characterised the exercise at the beginning. Celestin Bumbakare, the RRA commissioner for domestic taxes, said all the targeted big tax-payers and small-and-medium enterprises (SMEs) had registered on the e-tax platform, while 30 per cent of the very small businesses (those with less than Rwf50m annual turnover) have got e-tax accounts.Bumbakare said in an interview with Business Times yesterday that the remaining 70 per cent of the very small tax-payers, who have not yet regsistered on the platform would use the mobile application mode, the tax body has rolled out.RRA implemented the electronic platforms last year to boost revenue collection and strengthen tax administration. The 77 per cent compliance rate is a great improvement from last month, where just 400 big tax-payers and 1,800 SMEs were already using the e-filing system despite the June 30 deadline for all tax-payers to have secured e-tax payment accounts, according to Samuel Toyota, the RRA senior ICT advisor. Bumbakare said the June 30 deadline was intended to ensure compliance “because people were registering at a slow pace”. “The system has been in place for a year, but traders had shown little interest in using it. Mid this month, people were registering for e-tax and e-filing tax returns. That’s why there were long queues,” explained Bumbakare.He warned those who will have not yet registered on the e-tax platform they will be penalised for using the old system. The government announced the deadline to phase out paper filing three months ago, but most small-SMEs were caught unaware. Many did not know how the system works, according to a mini-survey conducted by Business Times mid this month. Like many other SME operators, Shafiq Mugiraneza, a stationery shop owner, spent a whole day at RRA offices trying to register and declare his tax returns on July 14 so he could beat the deadline.“The government should have given us more time to understand how the system operates...We have tried to use the system, but it keeps teasing us. Many traders camped at RRA offices on July 15 because if you miss the deadline, you pay a 60 per cent fine of the assessed tax,” Mugiraneza said.Mugiraneza and other very small business people are the ones RRA is targeting with mobile application method. Domestic tax declarations are always filed on the fifteenth of each month. This month, people were expected to file using the e-filing system as the paper filing deadline had already expired.Toyota said although e-tax payment system has been operational for over a year, small business people were still insisting on using paper declaration forms to file tax returns. “This is double work for us as we have to re-do it electronically for them. So, we want this to end,” he explained.He said though RRA has been training business persons and Internet cafe operators on how to use the system, the turn up has been disappointing. The result was the last minute dash to register and file tax returns online as witnessed on July 15, he added. “I always get a lot of people around the deadline time... Though I usually request clients to give me the information early, they never comply,” said Dan Ntagugura, a tax consultant at Car Deals.“When I went to RRA offices on July 15, I found long queues. Even the banks like Bank of Kigali were experiencing the same situation with people trying to make over-the-counter payments,” explained Ntagugura.All commercial banks, apart from Kenya Commercial Bank, had by this month installed e-tax platforms.“Most banks can handle both online and over-the-counter e-tax payments. Some of the banks, like Commercial Bank of Rwanda and Equity Bank, have mobile e-tax platforms,” Toyota explained.This month, when the tax body was overwhelmed by the huge numbers of people waiting to register on the e-tax platform, some of the people were asked to use the old method.Francine Umulisa, the corporate communication manager at Access Bank, is optimistic tax-payers would adjust to using the e-tax system with time and support, saying the electronic tax payment system was efficient and easy to use.Angello Musinguzi, a tax manager at KPMG Rwanda, said traders should be given more time to appreciate the system. Other experts said there was need for an intensive campaign to encourage people to register for e-tax, noting that some tax-payers were not aware they are supposed to get e-tax accounts. Rwanda projects to raise Rwf994.9b from domestic revenue this fiscal year, which is 60.2 per cent of the Rwf1.6 trillion total budget. Finance Minister Amb. Claver Gatete, while reading the 2013/14 financial year budget last month, revealed that RRA would deploy new electronic mechanisms to plug loopholes in the tax system and improve tax collections. “These initiatives will reduce compliance costs for both tax administration and tax-payers,” Gatete said as he re-enforced the importance of the electronic system.In Kenya, when the hi-tech system was introduced, the country was able to increase tax collections by 30 per cent in the last five years.

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Over 77% register on e-tax platform despite hurdles