The issue was raised yesterday by the chamber of deputies during discussions with staff from the Ministry of Trade and Industry on Budget resources for Fiscal Year 2018/19 and Budget Framework Paper 2018/19-2020/21.
A research done by the National Institute of Statistics in 2014, established that 50% of new businesses in Rwanda collapse in their infant stage.
Members of Parliament wanted to establish what MINICOM is doing to solve the problem of collapse of new businesses in Rwanda, asking whether the ministry could not find a simplified and less costly tax regime that would encourage small businesses to grow into formal bigger entities.
“Individual persons start businesses with anticipation they will be supported to flourish, expand, create more jobs, only to, after investing their hard-earned resources and efforts, have their businesses squeezed back to zero as all their money is taken away from them through taxes,” wondered MP Théobald Mporanyi.
“We are usually asked by members of the public whether MINICOM and Rwanda Revenue Authority cannot find a way of making it easier for startups to flourish,” he considered.
Mporanyi pointed out how locals invest money which in turn ends ups in tax payment. He requested for measures to be taken so to facilitate them.
“They need to be given incentives to encourage them to focus and strive. The actual tax costs should also be reviewed to reduce the actual tax burden to facilitate their growth,” he appealed.
“Another thing is how you tax informal businesses. One would even wonder how you even categorize them in the same class as formal entrepreneurs. There are many taxes that people are failing to understand,” observed Mporanyi.
Responding, the Minister of Trade and Industry, Vincent Munyeshyaka, acknowledged the challenges faced by business startups and announced that law concerning taxes is being revised.
“The tax law is being revised. We expect to have come to new decisions by the beginning of next year,” Munyeshaka promised.
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