The Rwanda Revenue Authority (RRA) has been given an “ambitious revenue target” to collect Rwf3,628 billion from tax and non-tax revenue, representing 53 per cent of the current fiscal year national budget – which is more than Rwf7 trillion, according RRA Commissioner General Ronald Niwenshuti. The target is Rwf587 billion or 19 per cent higher than the Rwf3,041 billion for the previous fiscal year – 2024/25 – which RRA stated it slightly surpassed by 1.3 percentage points. Niwenshuti said that the 2024/25 target was exceeded by Rwf38 billion—thanks to stronger anti-smuggling enforcement, taxpayer incentives, and robust economic growth. He was speaking on Tuesday, July 8, during a press conference on the tax administration’s performance for the last financial year, and compliance improvement plan for the current year, which commenced on July 1. ALSO READ: RRA exceeds 2024/25 revenue target by Rwf38bn The revenue collected by RRA contributed at least 52.9 per cent of the country’s over Rwf5.8 trillion approved for the previous fiscal year. To achieve the new year target, Niwenshuti said that RRA is focusing on the general improvement across the core aspects of the taxpayer obligation, which are: registration, filing, payment, complete and accurate reporting. 1. New tax reforms expected to generate Rwf255 billion For instance, Niwenshuti said RRA has started administering new tax policy changes, some of which took effect on July 1 this year, and others at the end of May. He cited the 3 per cent tourism tax targeting the hospitality sector, particularly for accommodation services; and 18 VAT applied on ICT equipment, fuel, and domestic transport. ALSO READ: Parliament passes bill setting tourism tax Similarly, he said, motor vehicle owners will be paying a levy for road maintenance based on the vehicle category, and this payment must be made at the end of the year, which is December. Others include different taxes now imposed on hybrid vehicles, for which they previously enjoyed exemptions – since 2021. ALSO READ: Rwanda reintroduces VAT on hybrid vehicles to spur e-mobility The applicable taxes include 18 per cent VAT, 5 per cent withholding tax, and an excise duty based on the year of manufacture – with hybrid vehicles with older batteries attracting higher rate, the intention being to discourage the importation of older hybrids which tend to have shorter battery life, according to the government. Under the approved structure, vehicles not exceeding three years from manufacture are subject to 5 per cent excise duty, those aged over three but not exceeding eight years face a 10 per cent rate, while vehicles older than eight years will incur a 15 per cent charge. “So, we are working with all stakeholders to ensure that everyone required to register for these new taxes is registered and files accurately. We have conducted workshops, and we shall continue to do so on all sectors that are concerned with these new policies,” he stated. “The recent amendments to the tax laws align with Rwanda's medium-term revenue strategy, and these tax reforms are expected to generate an additional tax of Rwf255.6 billion in this fiscal year that we have started,” he said. Niwenushuti said that RRA identified some specific sectors that require specific compliance interventions, both in domestic and customs. 2. Domestic tax compliance: Sectors under scrutiny This year, under the compliance improvement plan, he said, “we will be focusing on the manufacturing sector, construction, professional services, real estate, short-term and other accommodation services, sale and maintenance of motor vehicles and motorcycles, as well as spare parts, and non-government organisations (NGOs).” For instance, he said that in the construction sector, there are many materials for which invoices are not issued – after purchase – and people who do business in the sector but are not formally known. 3. Customs: Risk-based monitoring and high-risk imports On the customs side, Niwenushuti said, “we will use a risk-based approach, focusing on importers dealing in high-risk commodities, importers of goods from high-risk origins or countries, selectivity criteria with the highest hit rate, particularly among importers and customs brokers – normally called clearing agents.” He expressed concern that there are some customs brokers who clear products with wrong value declaration, and dealers who counterfeit invoices. 4. Taxpayer education, VAT rewards, and expanded EBM On the approach RRA is going to employ, Niwenshuti said that it will leverage its strong collaboration with stakeholders and lessons learned. A number of strategic interventions aimed at enhancing global compliance were developed, he said, citing to engage taxpayers in high-risk sectors to discuss issues affecting their compliance behaviours, continuing to use modern risk management tools and data analytics to detect non-compliance, and strengthening media outreach to educate taxpayers on services, obligations and risks. ALSO READ: Consumers entitled to 10% VAT reward for their purchases Others are organising tax education seminars and advisory visits, identifying and registering unregistered taxpayers, conducting audits and reinforcing recovery of tax arrears, as well as expanding EBM usage and VAT reward incentive. “We shall put a lot of effort in VAT Reward and monitoring of the usage of EBM,” he said. “We want to expand the benefits on VAT reward so that consumers not only get 10 per cent which was allowed by the government, but also they are able to even get more benefits and rewards.” 5. Tougher anti-smuggling efforts Again, he said, RRA will continue enhancing its systems and also introduce new technologies in the Customs and Domestic Tax Department (DTD) to deter smuggling and tax avoidance. In 2024/25, RRA indicated that measures it deployed, in collaboration with its partners, to combat smuggling to collect over Rwf14.6 billion that would otherwise be evaded, adding that it stopped 1,430 cases of smuggling. Smuggling was mainly observed in used clothes, alcoholic drinks, and cosmetics imports, Niwenshuti said. To deter smuggling and tax avoidance, he indicated that the tax administration will continue enhancing its systems and also introduce new technologies both in customs and domestic tax “So, we are dedicated to improving compliance and relying on media collaboration to eradicate practices that obstruct this goal, such as smuggling, fraud and tax evasion. These tax-related offenses are akin to other criminal activities as they weaken our economy and negatively affect domestic resource mobilisation,” he stated. With the thriving collaborative spirit that RRA has with its stakeholders, he concluded, “we are confident that we will meet our goals and continue to advance towards a fair and efficient tax system.”
