In this article, we shall look at who should register for VAT and what the requirements and obligations for a VAT registered taxpayer are.

Value Added Tax (VAT) was introduced in Rwanda in January 2011. VAT is generally designed as tax on final consumption of goods and services. All persons who buy taxable goods or services pay VAT.

You can only avoid paying this tax when you do not consume. The goods or services subject to VAT may be imported or locally produced. Whether imported or locally produced, the tax rate is 18 per cent.

All enterprises are required to register for VAT if their turnover is above Rwf20m for any period of 12 month or Rwf5m in three consecutive months in the last quarter of the year. 

Persons or enterprises whose turnover is less than this amount may opt to register for VAT voluntarily. They have to apply to the Commissioner General of Rwanda Revenue Authority (RRA) and registration is granted.

The registered person must collect and accounts for VAT. In this case, he/she is the tax agent of RRA.

A registered VAT person has certain obligations. Upon registration, a certificate is issued by RRA. This must be conspicuously displayed at the business premises of the taxpayer.

This is a legal requirement that registered taxpayers underscore and may attract fines if not displayed. In addition, it is a legal requirement for a registered taxpayer to issue a VAT invoice. Some tax payers do not issue VAT invoices or first ask their clients whether they need invoices. This is absolutely wrong.

In other cases, taxpayers become happy when the clients do not request for invoices. This is equally wrong. You should give your client invoice even if he/she does not ask for one.

You should as well remember that the invoice should be a genuine invoice indicating all the requirements including VAT registration number and the VAT amount charged or indicate that VAT is inclusive in the total amount of the invoice.

Another important requirement for VAT registered persons is that they must file monthly VAT returns. The deadline for return is 15th of the following month.  It is however recommended that you make your return earlier to avoid long queues or risks of filing your return late.

The 2001 VAT law was amended  and now taxpayer whose annual turnover is equal or less than Rwf200.000.000 may opt to file quarterly VAT returns and the deadline for this category  is  fifteen (15) days after the end of the quarter to which the VAT is referred. However, voluntary declaration on a monthly basis by any taxpayer is still admissible for VAT taxpayer whose turnover is equal or less than Rwf200,000,000. You cannot alternate two options. You either opt for quarterly declaration or monthly declarations but not alternating both.

It is also a VAT requirement to be available at all times to receive VAT officers in the event they would like to verify your records and the taxpayer must make available to the RRA officers books of accounts ascertaining to the business. When you request for a VAT refund, in most cases, as we shall see in the subsequent articles, RRA verifies whether the refund requested is genuine. Books of accounts include income statement, balance sheet, profit and loss account, lists of creditors and debtors, trial balances, fixed assets schedule, ledgers and all supporting documents. Some times RRA auditors would require looking at the physical invoices and other supporting documents.

The author is a Tax Manager at KPMG Rwanda

E-mail: amusinguzi@kpmg.com

Tel: +250252579790/ 0788507675.