The 2026/2027 financial year is expected to come with a new tax targeting digital services, both local and foreign. Services like Netflix, Amazon, and eBay are among those that may start paying taxes locally in Rwanda, as part of a new tax regime that the government announced on Monday, February 10.

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A number of services are expected to be liable to the tax, ranging from Business to Customer (B2C) services to Business to Business (B2B). B2C refers to any product or service that a business sells directly to individual consumers, while B2B involves one business selling to another.

Video and audio streaming platforms, ecommerce platforms, software updating technologies, and gaming platforms consumed by Rwandans are among the services that may start paying such taxes.

According to the Ministry of Finance and Economic Planning, a 1.5 percent tax will be levied on the revenue made by such companies in Rwanda.

How will it be implemented?

Between now and June, the finance ministry will work with relevant institutions to put in place a policy that will facilitate the collection of such taxes. Angello Musinguzi, a Senior Tax Manager at KPMG East Africa, an accounting organisation, suggests that a system of tax collection may for example, involve tax agents.

A tax agent is a person or institution authorised to act on behalf of a taxpayer in managing their tax obligations, including filing returns, making payments, and ensuring compliance with tax laws.

In the context of the digital service tax, agents can act as intermediaries between the foreign digital service providers and the Rwanda Revenue Authority (RRA), since such foreign-based companies like Netflix do not have a physical presence in Rwanda.

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Musinguzi suggests that such tax agents may include telecom companies or internet service providers working in Rwanda.

"Some of the (foreign digital service) companies may appoint tax agents who will be collecting revenue, withholding taxes and paying them to the tax administration, and then remit the profits,” he noted.

He pointed out that it is a good tax that can be a source of revenue, but said the local tax system needs additional investment in terms of technology as it moves to implement it.

Why 1.5 percent?

Commenting on whether 1.5 is not too little, Musinguzi said taxes should start low, and then increase progressively as time goes on.

A joint paper written by Rwanda Revenue Authority (RRA) and International Centre for Tax and Development (ICTD) in 2021, noted that "as the digital sector gains increasing prominence in the wider Rwandan economy, it must be taxed fairly and subject to the same requirements as other businesses.”

It added that, while levying taxes on the digital sector is important for equity and to raise government revenues, it must be weighed against the long-term benefits of becoming an ICT Hub.

Foreign digital services are enjoying a lot of clientele in various parts of the world and are generating billions of dollars that way.

For instance, as of February 2025, Netflix had over 300 million paid subscribers worldwide. The number includes subscribers in over 190 countries.