A five-day mock assessment exercise conducted by the Global Forum secretariat kicked off on Monday, July 31, in Kigali, in a move that aims at, among others, gauge the level of readiness of the legal and regulatory framework to implement the Exchange of information on request standard (EOIR).

During the assessment, officials are expected to undertake an on-site mission ahead of the much anticipated EOIR peer review, slated for October 1 through December 31.

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The outcome, or "Rating” by the OECD/GF will send a signal to investors on Rwanda’s position vis a vis the standards. This will play a huge role in investors&039; decision making especially when deciding where to invest.

Basically the peer reviews are carried out against the three major requirements including ensuring that all reporting financial institutions apply due diligence procedures, jurisdictions should also exchange information with all interested appropriate partners, in a timely manner, ensuring it is sorted, prepared, validated and transmitted.

Equally important, according to the requirements, is that jurisdictions should keep the information exchanged confidential and properly safeguarded, and use it in accordance with the agreement under which it was exchanged.

The Global Forum is a group of over 160 jurisdictions that includes all G20 countries, financial centers, and the majority of its members are developing countries.

Together they work on an equal footing to put an end to offshore tax evasion.

"This mock assessment comes at a crucial moment, providing Rwanda with an opportunity to showcase the progress made towards improving tax transparency standards following the country’s recent tax reforms intended to broaden the tax base and improve compliance,” Uzziel Ndagijimana, Minister of Finance and Economic Planning said.

The assessment is inline with the International Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI), and according to Ndagijimana, Rwanda, being the ninth African country to do so, made a commitment in September 2021 to adhere to the standard.

Nearly three quarters (74 percent) of the Global Forum members are now committed to start automatic exchange. The standard draws extensively on earlier work of the OECD in the area of automatic exchange of information.

It incorporates progress made within the European Union, as well as global anti-money laundering standards, with the intergovernmental implementation of the Foreign Account Tax Compliance Act (FATCA) having acted as a catalyst for the move towards automatic exchange of information in a multilateral context.

Note that Rwanda was admitted to the Organisation for Economic Co-operation and Development (OECD) Development Centre as its 55th member during the OECD Forum in Paris, France in May 2019.

Officials said then that this was a transformational development path, and the country’s commitment to sharing the lessons learned, and willingness to enhance cooperation with other member States, while accessing best practices of development from other OECD members.

"Tax transparency and exchange of information is helping African countries reduce illicit financial flows so as to increase their domestic resource mobilization,” said Pascal Ruganitwali, Commissioner General of the Rwanda Revenue Authority (RRA).

He added, "Rwanda in the same respect, is taking bold actions to protect its tax base and some of the measures include; ensuring enough accessibility to tax information on cross-border transactions, strengthening its internal capacities for raising domestic taxes and significantly reducing tax evasion or avoidance arising from base erosion and profit shifting schemes. All aimed at boosting Rwanda's domestic resource mobilization efforts.”

In 2021, Rwanda signed and ratified the Convention on Mutual Administrative Assistance in Tax Matters (MAAC), an international convention on tax matters, used by countries to exchange information for tax purposes to better enforce their domestic laws.

At the time, the treaty enabled Rwanda to exchange tax information with 141 countries that were signatory to the MAAC and boost cooperation in tax matters with regard to countering international tax evasion and avoidance.

By signing MAAC, signatories commit to comply with international standards on tax transparency and exchange of information as observed by the European Union and Organization for Economic Cooperation and Development (OECD).

According to officials, however, the treaty also enables Rwanda to increase its tax revenue mobilization using different standards. These include all forms of Exchange of Information (EOI), namely exchange of information on request (EOIR), automatic exchange of information (AEOI), spontaneous exchange of information (SEOI) as well as simultaneous tax examinations, and tax examinations abroad, the assistance in recovery of tax claims and the assistance in the service of documents.