The Government of Rwanda has made various changes in taxes including business and real estate taxes.
These tax changes were approved by the Cabinet meeting on Thursday, that approved revised taxes based on the direction given by President Kagame in January 2023 and the tax reform plan ( Medium Term Revenue Strategy MTRS) that was approved in May 2022.
This reform focuses on taxes including: Corporate Income Tax (CIT), Value Added Tax (VAT) and Excise Duty. This reform is aimed at simplifying taxes, increasing the number of taxpayers, compliance with tax payments and attracting investors. All these reforms are expected to increase the Gross Domestic Product by 1% in 2025/2026.
This reform also reached the taxes and other fees that the local authorities charged to the citizens for various documents and services.
Those are some tax changes approved:
The Cabinet meeting decided that the land tax is set between Frw 0 and Frw 80 per mter square (m²) , from ranges between Frw 0 and Frw 300.
It further stipulates that a second residential house will be taxed at 0.5 percent of the combined market value of the house and land while the tax rate for commercial buildings is reduced from 0.5 percent to 0.3 percent of its market value on both building and land.The tax on commercial buildings is limited to the value of 30 billion Rwandans.
Real estate tax will be calculated at 2% of the property’s value in case of sale by a registered dealer, and 2.5% in case of sale by a non-registered dealer. However, property less than 5 million Rwandans will be exempted.
Among these changes, the Government removed the payment of VAT on rice and maize flour whether purchased domestically or imported. The Ministry of Finance and Planning explained that this is aimed at reducing food prices in the market and supporting the program of feeding students at school.
Corporate Income Tax has been reduced from 30% to 28% with the aim of further lowering it to 20% in the near future. Minecofin says “This will make Rwanda one of the best African countries to invest in”. In order to promote investments based on tourism and hotels, the Government took steps to change the taxes on certain products, including beverages. For example, in the new tax system, the sales tax on wine will be 70% but the tax will not exceed 40,000 Frw per bottle.
The government has also reformed the Patents Act ( Trading License Tax), which means that retailers will pay a patent tax that includes market and general cleaning fees. Businesses with more than one branch will only pay one Trading License Tax in each district they operate in. In these changes, some of the fees that used to be charged by local authorities for documents or services they provide to the public will be removed.
Medium Term Revenue Strategy ( (MTRS) aims to implement all existing reforms, in order to improve the role of taxes in the sustainable development of the country, internal taxes will be collected at the appropriate level, and modern, transparent, and efficient methods will be used.
The National Tax Collector , Rwanda Revenue Authority (RRA) in the tax year that ended on June 30, 2022, managed to collect 1907.1 billion Frw, while it was requested to collect 1831.3 billion Frw. This means that the RRA exceeded the target by 75.8 billion Frw. This is a 15.3% increase over the 2020/21 collection.