Tax revenues up by 20%
Rwanda Revenue Authority (RRA) has announced a 20 per cent rise in tax collection for the last nine months, compared to the previous year, on the back of strong economic growth and easy payment system.
Addressing a news conference, yesterday, the Commissioner General of RRA, Ben Kagarama, said the institution collected Rwf 419 billion between July 2011 and March 2012.
Total revenues, including non tax revenue collected exceeded the target by 7.8 per cent to Rwf 428.4 billion
Higher revenue collections are also attributated to better business environment and reforms to facilitate the business community.
He noted that effective next month, customs offices at Gikondo, at the SDV bonded warehouse, Kabuye, Gatsata will begin working 18 hours a day. These will be supplementary offices that will operate for more hours after border posts close.
However, Rwanda’s revenue to GDP ratio is still at just 13.8 per cent compared to an average of 18 per cent in Sub-Saharan Africa.
The challenges identified include narrow tax base and high level of informal sector, making it hard to establish the tax base and that of small and micro enterprises, leaving the burden on the few formal enterprises.
“We should have performed even better, but informal sector businesses or non professional tax advisors are a big challenge,” he noted.
Kagarama said strategies are in place to increase the tax base and tax compliance to trim down the huge number of informal enterprises.
Among strategies mentioned is a draft law to introduce a flat tax regime where all small and micro businesses will incur the same tax rate regardless of their income bracket as the treasury seeks to widen the tax base and increase domestic revenues.
RRA hopes that the new tax regime would attract local businesses, especially micro businesses, to voluntarily register for tax.
The Director of Advocacy in the Private Sector Federation, Gerald Mukubu, is optimistic that such initiatives would boost business enterprises and ensure the sector’s growth.
He cited the electronic single window and increased working hours as key elements of business growth.
“More operational hours and easy clearance of goods will be reflected in the number of trade volumes, hence more money would be saved,” Mukubu explained.
The electronic single window system is a project that aims at facilitating international trade by speeding and simplifying information flows between traders and government institutions.
Contact email: gertrude.majyambere[at]newtimes.co.rw