Rwanda is proposing major changes to the taxes on juices through a new excise duty bill under consideration by Parliament, with a view to overhaul the current tax regime. The bills seeks to boost local juice production with lower tax rates as imported juices will pay more, according to the Ministry of Finance and Economic Planning. Here are five things to know about the proposed changes. New tax rate structure Currently, natural juices are subject to 5 per cent tax rate, which is far lower than 39 per cent charged on non-natural juices, as per the 2023 excise duty law which the new bill seeks to amend. ALSO READ: Why some juice consumers will soon have to pay more The new bill proposes a tax rate of 10 per cent for juices with at least 30 per cent locally sourced ingredients, among them water, and 39 per cent tax rate for juices that do not meet the raw material threshold. This change is designed to support local producers, according to the Ministry of Finance and Economic Planning. The New Times understands that some imported juices categorised as “natural” enjoy a lower tax rate of 5 per cent. However, most locally produced juices are taxed at a higher rate of 39 per cent because they are “non-natural,” according to the government. Local juice producers argue that the move will help boost domestic production and lower the costs for consumers. ALSO READ: What you need to know about Rwanda’s new tax reforms Local content rule To qualify for the 10 per cent tax rate, juices must contain at least 30 per cent local content – by weight. This includes domestically sourced raw materials like fruits, vegetables, and water. Juices not meeting this threshold will be subject to the higher rate of 39 per cent. Ending natural juice classification Natural juice provided for by the law referred is the product resulting from the pressing or blending of fruits, vegetable or any other plant without adding any chemical or industrial product or ingredient. This means that even the use of preservatives to ensure a longer shelf life for juices means such products are not natural – despite being made from natural fruits or vegetables. Previously, there were disputes over the definition of natural juices, with some manufacturers trying to exploit the situation to qualify for the lower 5 per cent tax rate, it has emerged. In response, the government is shifting the focus to local content criteria. Overall, the proposed rate implies that juices that meet the locally sourced content prerequisite will enjoy a 29 per cent reduction in tax – from 39 per cent to 10 per cent rate. 4. Labelling requirement As part of the new policy, all locally produced juices will be required to display the percentage of local content on their labels. This will allow consumers to easily identify which juices qualify for the 10 per cent tax rate, and help ensure transparency in the process. 5. Expected impact on imported juices If the proposals are approved and the bill is enacted into law, imported juices will very likely be taxed at 39 per cent. This is because they are normally made with raw materials sourced from other countries, which doesn't meet the local content requirement. This might also affect their prices.
