The government has promised to address the persisting value-added tax (VAT) refund delays, which the members of the private sector said is a major challenge for cash flow and business growth. The issue of delayed VAT refunds was raised on Friday, December 12, in Kigali, during the Taxpayers Appreciation Day, which was attended by Prime Minister Justin Nsengiyumva. ALSO READ: PM hails rising tax revenues amid drop in foreign grants The Chairperson of the Private Sector Federation (PSF), Jeanne Françoise Mubiligi, said that VAT refund challenge is one of the major issues that were expressed by the PSF members. “The issue of delaying on not getting VAT refund on time, especially for importers or those who have broad investment who have investment certificates but have not yet started trading or making income, is still a recurrent issue that is raised to us by PSF members,” she said. “These investors are investing heavy investment in buying products in bulks, infrastructure and basic factory equipment, and major projects. The delay of the refund disrupts project cash flow, many projects delay to start being operational and discourages those who want to continue investing in the country,” she said. According to the 2023 law establishing VAT, if the input tax exceeds output tax, the surplus tax is refunded to the taxpayer as provided for by the law. Indeed, when traders buy VAT-taxable goods or services to use in their business, they pay input tax – which is different from output VAT that is levied on goods and services (subject to such a tax) that they sell to their customers. ALSO READ: Private sector wants VAT refund delays solved in new bill Though there is progress made by Rwanda Revenue Authority (RRA) in improving service delivery in line with tax administration, Mubiligi said that this issue continues to affect investment. “PSF appeals for an improvement and fast-tracking of the VAT refund processes,” she said. Mubiligi said special, well-defined procedures should be put in place for projects that have not yet started generating profits or income but that hold investment certificates. “This will improve the country’s image in terms of investment and make it easier for investors to implement development projects in the country,” she stated. “PSF is ready to work closely with the relevant institutions—MINECOFIN, Rwanda Revenue Authority, RDB, MINICOM, and others—to ensure that this issue is resolved in a sustainable and practical manner.” ALSO READ: Govt pledges to address VAT refund delays Prime Minister Nsengiyumva said the government will also continue to review and update tax policies in a fair and timely manner, strengthen taxpayer guidance and education, and improve mechanisms for resolving tax-related disputes. All these efforts aim to build a simple and modern tax system, he said. “We will also continue to do everything possible to help the private sector grow in your businesses, operate more effectively, and achieve greater profitability, because as you grow, the country’s economy also continues to expand,” he told the business community. “You create new jobs, and the government in turn collects more tax revenue to use in providing better services to citizens.” For this reason, the premier reaffirmed government commitment to dialogue with the private sector and to doing everything possible to address the challenges business people or taxpayers face. He said that the government is aware of most of those challenges. “There are serious concerns your representatives raised regarding VAT, and I would like to assure you that, as the government, we have not forgotten this issue,” he said. “In fact, I can tell you that it is among the issues that keep us awake at night. I therefore assure you that we will work together with you to find a solution to this problem.” He also said that the government is committed to addressing other issues that affect the private sector so as to improve its performance and increase its output. These include access to reliable electricity services, securing funding for business operations, and collaborating with private sector operators to support technical and vocational schools in preparing youth with the skills and knowledge needed in the labour market.
