The Rwanda Revenue Authority (RRA) says it will refund consumers a 10 per cent share of the 18 per cent value-added tax levied on taxable goods and services, as part of the efforts to encourage the use of technology (EBM) in tax administration.
The development was confirmed by Jean-Louis Kalingondo, the Deputy Commissioner General of RRA.
Kalingondo told The New Times in an exclusive interview that the bill proposing the changes had been submitted to parliament, citing
that plans to enact it into the law had reached advanced stages.
"For us at RRA, we have already developed a platform (MY RRA), on which we will be encouraging customers to create accounts on. Depending on their preference it could be an account on their mobile wallet or even banking account,” he said.
He went onto explain that a consumer will be required to share details of their account with the platform, to allow for refunds every time they purchase any taxable goods.
VAT is consumption tax on goods and services that is charged at each stage of the supply chain where value is added, from initial production to the point of sale. Experts argue that digitization of tax is an enormous topic that means different things to many people.
But in Rwanda’s case, Kalingondo believes that digitization, including the use of electronic billing machines introduced in 2013, has been changing all aspects of taxation for some time.
This, he said, ranges from tax collections and compliance down to the tax base itself. "There are rich areas to explore in regards to the digitization of tax, but first we need to capitalize on the incentives in place such as the usage of EBM. We see this incentive increasing its uptake.”
Data from RRA indicates that at least 90,000 registered tax payers use the EBM, a number that could be doubled if the bill is enacted.
VAT accounts for 34 per cent of the total tax collection in Rwanda.
MP Jean-Damascène Murara said in an earlier interview that there are some traders who sell products but do not give receipts to buyers, which hinders VAT collection.
"When they do not provide the receipts, the VAT is lost. What are the strategies to address that issue for the country to be able to maximize tax collection?” he asked RRA officials.
The New Times understands that the revenue body has previously faced issues where traders have been involved in under-reporting (inaccurate receipts.)
EBM system came to replace manual invoicing, chiefly for VAT registered taxpayers – those having at least an annual turnover of Rwf20 million.
Normally, the EBM system eases tax collection with electronic receipts that help revenue collectors to monitor businesses’ sales and how much tax they have to pay.
Consumers’ take
Ram Cyuzuzo, a student based in Kigali, welcomed the move saying that Rwandans ought to feel part of tax administration.
As a student, he pointed out, "I spend most of my income on consumption, meaning that for every cash spent I will be able to get a portion of it. I believe that this is the same with my colleagues.”