The tax reforms focus on Corporate Income Tax (CIT), Value Added Tax (VAT), Excise Duty, property tax, and land rates. The government aims to increase tax revenues by 1% of GDP by FY 2025/26 while ensuring that the tax system promotes economic growth and improves the welfare of Rwandans.
One of the key changes to the tax code is the exemption of VAT on rice and maize flour for both domestic trade and imports. The move is expected to enhance food security and support the school feeding program.
Additionally, the government has reduced the corporate income tax statutory rate from 30% to 28% with a target of 20% in the medium term. This change will improve Rwanda’s competitiveness and position the country as a preferred African investment destination.
To boost Rwanda’s tourism and MICE industry, the government has adopted changes on taxation of high-end products, especially beverages. Under the new reforms, wine will be taxed up to Rwf50,000 of value, meaning that the excise duty cannot exceed Rwf35,000 per liter (70% of Rwf40,000). These changes will help to create a more business-friendly environment and attract investors to the country.
Moreover, the tax reforms also include changes to property tax and rates on land tax. The new rate applied on land tax has been set between Rwf 0 to Rwf 80 per square meter from the initial Rwf 0 to Rwf 300 rate.
A second residential house will be taxed at 0.5% of the combined market value of the house and land. The tax rate for commercial buildings is reduced from 0.5 % to 0.3% of its market value on both building and land. Tax charges on commercial buildings are capped at Rwf30 billion. The government has also introduced a tax on the sale of immovable property, which will be applied at 2% of the property value for registered taxpayers and 2.5% on non-registered taxpayers. The first five million of the sale of every immovable property will be tax exempt.
The government has also waived some fees previously charged by decentralized entities on documents or services. This change will help to reduce the cost of doing business in Rwanda and make the country more attractive to investors.
Among others, the Rwandan government has put in place measures to ensure that the proposed changes lead to stable revenue growth in the medium term. These measures include enhancing tax compliance through the use of technology, improving taxpayer education, and strengthening tax administration.
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