Government is losing a lot of tax revenue through smuggling in Rubavu District with many traders reportedly evading Value Added Tax (VAT), Rwanda Revenue Authority (RRA) has disclosed.

According to the tax body, smuggling is done through a porous section of the border with the Democratic Republic of the Congo.

Statistics from RRA show that VAT collection from Rubavu District slid to Rwf170m in 2009, down from Rwf203m in 2008, and increased slightly to Rwf197m last year.

"Under normal situations, VAT should increase as development increases but in Rubavu District, VAT collection has reduced regardless of the economic development of the district,” said Patrick Gayawira, RRA’s Regional Coordinator.

The revelation was made, Monday, at the district headquarters, during a quarterly meeting between RRA officials and the district leadership. The meeting is aimed at offering advice on tax issues to district officials.

Gayawira pinpointed players in the booming hotel industry, bakery and other service providers as the main culprits. Generally, revenue collections in Rubavu District are impressive. In 2008, the district collected Rwf1.7b, Rwf2.6b and Rwf2.2b in 2009 and 2010, respectively.

While the decline in VAT collections in the region is largely blamed on illicit trade, some traders lack receipt books, and can hence not control and document their business activities making it hard for RRA to evaluate them.

"We also have a scenario where many traders use one receipt book on various occasions thus eluding VAT since we don’t have the records,” added Gayawira.

RRA called upon all local leaders to collaborate more in fighting smuggling as well as sensitising the general public about the importance of paying taxes.

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