Small taxpayers have expressed willingness to embrace Electronic Billing Machines (EBMs), saying the machines would help them easily manage their businesses and monitor performance.

Rwanda Revenue Authority (RRA) introduced the machines for all value added tax (VAT) registered businesses about four years ago as one of the initiatives geared at enhancing tax administration.

However, in October last year, the tax body announced it would make use of EBMs compulsory for all taxpayers (large and small taxpayers).

The old VAT law establishing the use of EBMs had exempted taxpayers who do not issue 30 invoices annually, thus giving many micro and small taxpayers a window to use other modes of tax payment.

The tax body said the move will help them to easily identify non-VAT registered taxpayers that have reached the required turnover of at least Rwf20 million per year to qualify for VAT payment and, therefore, use EBMs.

"The machines are important and will improve business management for small tax payers,” said Felix Habinshuti, a businessman in Gasabo District.

For Ernestine Mukarwema, a trader, EBMs will help small enterprises that have been using them to address challenges associated with tax declaration, as well as streamline the entities’ operations.

"We will no longer have to line up at RRA branches or banks to pay taxes and we will also be able to easily know the amount of tax for every transaction made. Besides, manual invoicing increases cost of operations and takes a lot of time,” Mukarwema said during a small taxpayers sensitisation seminar in Kigali last week.

Why e-billing of VAT?

The machines were introduced in 2013 to facilitate and improve tax administration in the country. They also enable traders and service providers to record stock and manage their inventories. The machines have also, largely, reduced tax evasion by dishonest taxpayers who were not issuing clients invoices.

According to Emmy Mbera, the electronic billing machine project co-ordinator at the RRA, all small taxpayers will be required to use the machines by the end of this fiscal year. This means that all businesses will soon start using EBMs, regardless of their turnovers.

Mbera, however, encouraged business operators to embrace the use of EBMs to "modernise their business and manage well their stock”.

"When EBMs were introduced some traders had a perception that they were just for tax payment purposes, but many have since appreciated them. That’s why we are now seeing an increased number of EBM users. This clearly shows that traders have realised that the machines help them manage their businesses in a more transparent and organised manner,” Mbera said.

Businesses using EBMs have increased over time, with the number of machines growing from 500 at the beginning to 15,646 machines used by 13,299 operators, according to RRA.

Challenges

These achievements are however not without challenges. The tax body says the low culture of asking for invoices among consumers and traders is one of the key challenges affecting implementation of the project. In addition, some users, especially restaurants, bars and supermarkets, are not issuing EBM invoices, while others give invoices indicating wrong, usually lower, prices and some fake invoices, Mbera said.

He said RRA conducts public campaigns in schools, markets and public and private institutions to educate consumers on the importance of asking for invoices whenever they pay for a product or service.