Business Procedures in Rwanda

Paying Taxes

Customs clearance

Obtain a TIN

Value Added Tax (VAT)

VAT declaration is due monthly, within the 15 days following the end of the month, whether there is an output tax to pay or the balance is in favour of the taxable person or is zero. However, taxpayers whose annual turnover is equal or less than Rwf 200,000,000 may declare VAT quarterly, within the 15 days following the end of the quarter.

Pay As You Earn (PAYE)

Pay As You Earn (PAYE) is the tax that must be withheld, declared and paid to Rwanda Revenue Authority (RRA) by any employer that makes available employment income to an employee; within the 15 days following the end of the month in which the employment income was paid. The law distinguishes three categories of employees (permanent employees, casual labourers and employees with second employer) with distinct tax rates. Still, a 0% rate is applied on the first RWF 30,000 employment income paid to permanent employees and casual labourers.

Withholding tax

Withholding tax is part of the direct taxes on income and reduces the amount of income tax liability on the annual declaration.

The law distinguishes three types of withholding tax:

15% withholding on other payments by resident individuals or entities including tax-exempt ones,
3% withholding tax on payments of Public Institutions, and
5% withholding tax on imports.

The first two are paid by the withholding agent within the 15 days following the end of the month in which the payments were made, while the latter is paid at customs before goods are released.

Consumption tax

Consumption tax is collected on imported and locally manufactured products determined by the law. Taxable export products are exempted from this tax. It is calculated on the Cost, Insurance and Freight (CIF) value for imported products upon arrival in Kigali while on locally manufactured products it is calculated on the selling price exclusive of taxes.

The tax is payable when taxable locally manufactured products are cleared out of the factory for consumer use, and when taxable imported products are due for clearing at the customs under the customs system.

The consumption tax on imports shall be paid concurrently with custom duties, while declaration and payment of consumption tax on locally manufactured products is due three times per month:

from 1 to 10 of the month: latest on the 15th of the same month;
from 11th to 20th of the month: latest on the 25th of the same month; and
from 21st towards the end of the month: latest the 5th of the next month.

Corporate income tax

Annual corporate income tax

Entities subject to corporate income tax include companies established in accordance with Rwandan or foreign law, cooperative societies and their branches, public business enterprises, partnerships, entities established by Districts, towns, municipalities and the city of Kigali to the extent that these entities conduct businesses. Business profit is taxable at a rate of 30%.

Quarterly prepayment of income tax

Personal income tax

Personal income tax is levied on income received by an individual. All resident tax payers are liable to income tax from all domestic and foreign sources. A non resident tax payer is only liable to income tax which has a source in Rwanda.