A Cabinet meeting chaired by President Paul Kagame on Monday, February 10, approved new tax reforms, which are meant to support Rwanda’s economic growth. These reforms include increments on existing taxes and levies and new taxes on services that were previously exempted . ALSO READ: Understanding centralised taxes in Rwanda The Cabinet approved the tax reforms, which are in three categories, according to the Minister of Finance and Economic Planning, Yusuf Murangwa. “First, we have existing taxes, like VAT (value added tax) and there are certain products and services that had previously been exempted from these taxes,” Murangwa said in an interview with national broadcaster RBA. “For example, telephone sales had been exempted from VAT in order to encourage uptake of telephones among Rwandans, and today about 80 per cent of Rwandans have phones.” VAT in Rwanda is 18 per cent. ALSO READ: How Rwanda plans to raise Rwf3tn taxes in 2024/25 He added that ICT equipment had also been exempted from VAT. “Another category of tax reforms we discussed includes tax increases on different products, such as tobacco and beers,” the minister said. “The third category of the tax reforms is about new taxes, including a digital services tax. Many Rwandans use tech services from outside the country, such as Netflix, Amazon and similar services and we have now imposed a tax on them,” Murangwa said. The minister said the new tax reforms were meant to drive economic growth and strengthen domestic resource mobilization. ALSO READ: Rwanda shows progress in tax transparency: report He said the reforms will be implemented progressively until 2029. “We are currently in the first year of implementation of the Second National Strategy for Transformation (NST2), which needs financial resources,” he said. Rwanda’s Gross Domestic Product (GDP) was Rwf3.1 trillion in the third quarter of 2024, according to the National Institute of Statistics of Rwanda (NISR). ALSO READ: Rwanda’s tax revenues grow 38-fold The country’s GDP per capita is projected to increase from the current $1,000 to $4,000 in 2035. The government targets a higher middle-income status by 2050, when GDP per capita should be $12,000. Rwanda’s tax-to-GDP ratio is about 14.5 per cent. For Rwanda to move from one level of economic development to another, Murangwa said, it will need resources, which are taxes. “After much consideration, we have decided to make these tax reforms. And these reforms are feasible,” he said. The minister said there would be engagements with tax payers to explain the details of the reforms and the reasons behind them.
