Rwanda Revenue Authority (RRA) collected more than Rwf3.2 trillion in tax and non-tax revenues during the 2024/25 fiscal year, up from Rwf2.7 trillion the previous year. According to newly released data in the eighth edition of the country’s tax statistics, this represents an increase of nearly Rwf478 billion, or 17.5 percent, compared to 2023/24.

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The tax-to-GDP ratio rose slightly from 14.1 per cent to 14.3 per cent, while RRA collections financed 55.1 per cent of the national budget, compared to 53.3 per cent the previous year. Tax-to-GDP ratio measures how much tax a country collects relative to the size of its economy, indicating revenue capacity, fiscal health, and the ability to fund essential public services and guide economic policy. Higher ratios generally reflect greater fiscal space and development.

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Roy Valence Gasangwa, the Assistant Commissioner for Planning, Research and Statistics at RRA, told The New Times that central government revenue for 2024/25 totalled Rwf3,099 billion, exceeding the target of slightly over Rwf3,041.2 billion and achieving 101.9 per cent performance. This is a surplus of Rwf57.8 billion.

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Gasangwa said "this positive performance was driven by a combination of compliance initiatives, enforcement measures, and sustained economic activity,” pointing to various contributing factors.

These contributing factors included expanded use of Electronic Billing Machines (EBMs), with 147,700 deployed (up from 117,631), and 44,000 users registered for VAT (up from 32,529). The VAT reward scheme continued to grow, recording 83,356 consumers claiming rewards worth over Rwf1 billion.

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A voluntary disclosure scheme helped 5,328 taxpayers regularise their obligations, recovering Rwf15.8 billion. Tax arrears recovery reached Rwf240.2 billion through improved compliance support, while 1,430 anti-smuggling operations yielded Rwf14.6 billion. A sustained economic growth of 6.3 per cent in 2024/25 also contributed to the overall performance.

RRA further collected local government taxes and fees on behalf of districts and the City of Kigali, amounting to Rwf107.5 billion, or 104.6 per cent of the target. This, Gasangwa indicated, marked a 19.8 per cent increase from the previous year’s Rwf89.8 billion, largely due to increased real estate transactions and improved compliance with property taxes.

VAT still top contributor

Value Added Tax (VAT) was the leading revenue source, accounting for 31.4 per cent of total collections. VAT revenue rose from Rwf792 billion in 2023/24 to more than Rwf962 billion in 2024/25.

Profit taxes (CIT and PIT) contributed 22.8 per cent, increasing from Rwf585 billion to more than Rwf701 billion, while PAYE accounted for 20.8 per cent after rising from more than Rwf570 billion to more than Rwf639 billion. The three categories made up 75 per cent of total tax revenue – with the rest coming from other tax types.

Growth in registered taxpayers and declarations

RRA recorded increases in taxpayer registrations and declarations. Companies declaring business income rose from 67,377 in 2023 to 72,133 in 2024. Firms declaring income between Rwf400 million and Rwf1 billion increased from 1,901 to 2,264, while those declaring above Rwf1 billion grew from 1,874 to 2,290.

The number of employees registered for PAYE rose from 766,146 in 2023/24 to 811,518 in 2024/25, with incomes ranging from Rwf60,000 to over Rwf1 million per month.

According to Angelo Musinguzi, the Tax and Regulatory Partner at Garnet Partners Ltd, the rise in collections was anticipated, citing administrative improvements, including wider EBM use and nationwide sensitisation campaigns.

"Incentives like VAT rewards for consumers requesting receipts strengthened compliance, while digital tools – including electronic filing and online audits – reduced the need for physical interactions and boosted efficiency,” he said.

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Musinguzi also cited administrative improvements, including wider EBM use and nationwide sensitisation campaigns.

Incentives like VAT rewards for consumers requesting receipts strengthened compliance, while digital tools – including electronic filing and online audits – reduced the need for physical interactions and boosted efficiency.

Improved VAT performance, he said, resulted from more VAT registrations and stronger compliance.

PAYE performance also improved through enhanced coordination between the Rwanda Social Security Board (RSSB) and RRA, with both systems now sharing information seamlessly.

Rwanda’s economic growth increased consumption and purchasing power, which further boosted VAT revenue, he observed.

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Regarding the growing number of companies declaring over Rwf1 billion in income, Musinguzi explained that while some tend to avoid being classified as "large taxpayers” to face less scrutiny and pay lower taxes, technology is increasingly closing those gaps.

With improved technology – especially stronger VAT monitoring –RRA can now accurately track turnover and reclassify such businesses, making it harder for them to hide their true size, he indicated.

"Because of technology, you can’t hide,” he said, noting that digital systems have significantly strengthened compliance.

Performance implications

According to Gasangwa, the latest revenue results demonstrate growing tax compliance among Rwandans.

"Every receipt requested, every voluntary declaration, and every timely payment is helping Rwanda grow,” he said.

As the country prepares for the 23rd Taxpayers’ Appreciation Day, on December 12, the results highlight the crucial role taxpayers play in national development, he said.

"This day is therefore about celebrating and thanking the individuals and businesses who play their part in building our country,” he observed.

Regarding tax-to-GDP ratio, Musinguzi held that the current 14.3 per cent remains a low rate compared to the Economic Co-operation and Development (OECD) average of more than 30 per cent. He said the country should target at least 16–18 per cent in the medium term, and gradually increase the ratio as the economy expands.

According to the ministry of finance, the country aims to raise its tax-to-GDP ratio to 19 per cent by 2029 to accelerate socio-economic transformation.