Tax receipts exceed target by Rwf8.7bn

Rwanda Revenue Authority (RRA) collected Rwf1,103 billion in tax revenue during the last fiscal year 2016/2017, surpassing its target by Rwf8.7 billion, officials revealed yesterday. Richard Tusabe, the RRA Commissioner General, said the tax body had targeted to collect Rwf1,094.3 billion. Commissioner for customs services, Raphael Tugirumuremyi listens to a question from a journalist during the press briefing. / Timothy Kisambira He was presenting the 2016/2017 tax revenue performance report in Kigali on Wednesday. The revenue body attributed the growth in revenue collections to recent tax reforms, particularly automation, which it said has enhanced efficiency and increased compliance among taxpayers. “The introduction of more unified declarations for Pay-As-You-Earn (PAYE) and strong verification mechanisms for value added tax (VAT), among other measures, played a key role in improving the revenue collections across the country,” Tusabe said. Commissioner General Richard Tusabe speaks to Journalists in Kigali. / Timothy Kisambira “These measures helped reduce tax leakages, especially in VAT collections, and eased the refund process.” This strong performance confirms the tax body’s potential to effectively and optimally mobilise the revenue needed to finance Rwanda’s development goals, he added. RRA says, with this stellar performance, it will be easy for the country to raise funds for the Rwf2 trillion national budget this year. Sixty-six per cent of the total finance required for this year’s budget will be raised domestically, up from 62 per cent last financial year. Tusabe said the taxman will devise new ways to widen the tax base. It will also continue its tax education programmes to encourage taxpayers to meet their obligations, which “will increase compliancy”.Growth in local government taxes Meanwhile, local government taxes and fees collected by RRA totaled Rwf47.9 billion, which is an achievement of 98% of Rwf49.1 billion target, resulting in a shortfall of Rwf1.2 billion. Compared to 40.5 billion collected in 2015/16, this represents year-on-year growth of 18.6%. The below target performance in local government taxes is a result of not selling off some properties/assets of districts worth Rwf1.4 billion of some yet this informed the basis of their targets for FY 2016/17. Journalists cover the press briefing at the Rwanda Revenue Authority headquarters. / Timothy Kisambira While there was an increase in local government taxes collects, it was still slightly short of the target. RRA had set a target of collecting Rwf 49. 2 billion and fell short by 1.3 billion. Tusabe said that the target would have been met hadnt some districts failed to sell off some properties worth Rwf1.4 billion, which had formed the basis for setting targets for local government collections. Impact of slow economic growth Experts agree that a slowdown in the general economic performance had a negative impact on tax collections. They say the effects of the drought on the productivity of the agriculture sector have a bearing on the performance of the economy. This was visible as revenue from domestic excise duty decreased by 7.2 per cent or Rwf5.2 billion in nominal terms as high food prices “left consumers with less money to spend on non-essential goods”. “This reduced consumption thus affects tax collections, especially VAT,” David Baliraine, the EY (formerly Ernst&Young) associate director for tax services, said. RRA officials follow proceedings during the press briefing. / Timothy Kisambira He advised the RRA to find ways to raise revenue from income tax, especially PAYE and profit tax “since indirect taxes are declining due to the exemptions originating from the EAC region.” Other factors that had a negative effect on tax performance include the slowdown in cost, insurance and freight (CIF) growth of imports, especially in non-EAC imports and lower taxable sales as a proportion of turnover because of increases in exempt sales and exports. Angello Musinguzi, a tax expert at KPMG Rwanda, said focusing on local production and consumption through Made-in-Rwanda campaign will help increase revenue collection going forward. editorial@newtimes.co.rw

News

Tax receipts exceed target by Rwf8.7bn