Government’s move not to increase taxes in next years’ budget has been welcomed by investors.
Stakeholders say if the decision is maintained; it would boost business and attract more investment in the country.
Finance and Economic Planning minister James Musoni while presenting the 2008 budget on October 15 said that government decided not to change taxes’.
The move was to wait for recommendations from the ongoing study on widening the tax base in the country and the fiscal implications of Rwanda joining the East African Community (EAC).
“This is very good. I wish government could cut the taxes to zero,” Paul Mugemangango, MTN’s head of the Legal department said.
Several businessmen in Kigali were also upbeat and echoed similar response with MTN management.
“This is the best decision government has taken. It will protect consumers in Rwanda,” Denis Ndoli, a businessman in Kimironko said.
Management of MTN said if taxes are reduced or scrapped, then the move would deepen rural telephone connectivity.
“This is in line with government’s policy to promote ICT in rural areas,” Mugemangango added.
However, British American Tobacco’s publicist declined to comment.
Patrick Habyarimana said, “I cannot discuss tax matters on phone.”
Many Rwandans complain that call tariffs in the country are high. But MTN justifies the high costs citing infrastructure and the 10 per cent on airtime,
Government collects Frw250 million monthly from MTN alone.
BAT and Bralirwa companies pay 120 and 60per cent excise duty on cigarettes and beer respectively.
The New Times recently reported that private investors also complain that a large amount of their business capital is held up in VAT refunds, thereby constraining cash flows and operations.
Manufacturers claim the current excise duty of 39 per cent on juices and lemonades including those locally processed makes them uncompetitive in the East Africa Community.
Kabuye Sugar Works, the only sugar factory in the country, supplies only 13 per cent of the total local demand.
The rest is imported.
Kabuye claims the surcharge of 25 per cent on sugar is still levied even on unprocessed sugar imported.
Tobacco industries also claim the ad-valorem tax on cigarette discourages the industrial growth.
They prefer specific tax to an ad-valorem tax.