Taxpayers who declare due tax on time, but do not pay it in the prescribed period will be given three months to auction their preferred property to be able to clear tax arrears, according to a new law voted by Parliament on Monday, March 27.

Previously, the government was entitled to auction taxpayer’s property who delayed paying taxes, a move that is being reversed to among others facilitate taxpayers overcome hardships (assuming that the taxpayer declared tax on time).

The development is one of the changes proposed in the draft law amending the existing 2019 law on tax procedures.

Under the new law, administrative fines imposed on a taxpayer who declares tax due in the time limits provided by law, but who does not pay it in the prescribed time limits, will also be reduced by half.

"Fines imposed on a taxpayer should in no way be more than the principal tax. And that is why we are voting for this law,” said Omar Munyaneza, the Chairman of the Parliamentary Committee on National Budget and Patrimony.

"Another interesting bit is that people’s property will no longer be auctioned off by the government due to delay in tax payment, the debtor has the authority to auction the property themselves, and they are given three months to conduct the process.”

According to the tax procedures law of 2019, a taxpayer who has declared due taxes in the required time limits but did not pay them on time is subjected to a fine that is more than the principal tax.

Such a fine is 10 percent of due principal tax, when the taxpayer exceeds the time limit for payment for a period not exceeding 30 days; 20 percent when the repayment time is exceeded by 31 to 60 days; and 30 percent of due principal tax in case the repayment time is exceeded by more than 60 days.

All these fines are set to be halved, according to the new law.

The development comes at a time when the public has on several occasions decried high taxes, a concern that has since triggered the entities responsible for taxation policy and legislation to consider all possible ways that can address the high penalties.

In January, the Rwanda Revenue Authority (RRA) announced that a new proposal submitted to parliament could, among others, see a decrease on land taxes (immovable properties), as well as the current rates of the corporate income tax lowered.

Under the proposal, RRA said at the time, the government would maintain former land taxes of up to Rwf80, from the current Rwf300 per square meter (that were set under the property tax law enacted in 2018).

In an earlier interview, MP Munyaneza, also said that some taxpayers declare tax based on the value of their assets, but the deadline for paying it passes when they have not yet gotten the required amount.

"The reduction in administrative fines is a good development which is important for the taxpayers because there are instances where one would pay Rwf10 million in tax, but they are charged Rwf15 million, with Rwf5 million being fine,” he said.

Data from RRA indicates that Rwanda has about 400,000 registered taxpayers and around 300,000 pay one or more of the tax types administered in Rwanda.