EAC taxes should be uniform to counter tax evasion

The Rwanda Revenue Authority (RRA) over the weekend mounted a crackdown on foreign registered vehicles and netted close to 100. Of late, the country has been teeming with cars registered in Burundi, Uganda, DRC, and to a lesser extent, Tanzania, but owned by Rwandans, yet they are only permitted to be in the country for a limited period of time.

The Rwanda Revenue Authority (RRA) over the weekend mounted a crackdown on foreign registered vehicles and netted close to 100.

Of late, the country has been teeming with cars registered in Burundi, Uganda, DRC, and to a lesser extent, Tanzania, but owned by Rwandans, yet they are only permitted to be in the country for a limited period of time.

Owing to the prohibitive price tag on locally registered vehicles, people resort to illegal ways to drive cheaply, by way of crossing the borders where cars are relatively cheaper.

The trick has been to bring in a car, and when the given deadline for it to remain in the country approaches, drive across the nearest border and drive back. This is done to avoid the import duties, and at the end of the day, it is the RRA that loses out.

The debate as to why goods are relatively more expensive in Rwanda than in our neighbours’ shops has been going on endlessly and the answer lies with the RRA. 

One school of thought is that transport costs from the Indian Ocean ports is high; but if that was the case, then goods in Burundi would be more expensive, and they are not.

The most plausible argument is that the incorruptible system in Rwanda leaves fraudulent businessmen little or no room to evade paying taxes.

One would, however, have thought that with the harmonisation of the Customs Union in the East African Community, taxes would by now be uniform. But this remains a fleeting illusion, and as long as the status quo remains, crooked businessmen will always come up with ingenious ways to defraud the system.

RRA should, therefore, revise mechanisms to ensure that “Tax tourism” is brought to an end.

This can only be achieved if these foreign registered vehicles are issued a three-month non-renewable temporary permit after which they compulsorily pay the taxes.

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