Rwanda’s 2025 tax reforms generated more than Rwf131.7 billion within the first six months of implementation, surpassing government targets and underscoring the growing role of domestic revenue mobilisation in financing national development, according to Rwanda Revenue Authority (RRA). Speaking to The New Times, Roy Valence Gasangwa, the Assistant Commissioner for Planning, Research and Statistics at RRA, said that the reforms introduced new taxes and adjusted rates on selected goods and services, including beer, airtime, cigarettes, fossil fuels, ICT equipment, tourism services and hybrid vehicles. ALSO READ: Proposed tax changes set to rake in Rwf300bn annually by fifth year Collectively, Gasangwa said, the measures were projected to raise Rwf248.5 billion in the 2025/26 fiscal year, equivalent to 1.1 per cent of Rwanda’s tax-to-GDP ratio. By the end of the first semester (July–December 2025), the reforms had generated Rwf131.7 billion—exceeding the projected Rwf129.3 billion and achieving 101.9 per cent of the target, he indicated. “The strong performance was mainly driven by VAT on fossil fuels, which accounted for 46.9 per cent of total revenue and exceeded its target; [and] fuel levy, VAT on ICT equipment, and excise duty on beer, which together contributed 24.3 per cent of total revenue and also outperformed their targets,” Gasangwa told The New Times. ALSO READ: What you need to know about Rwanda’s new tax reforms However, Gasangwa said, some measures underperformed largely due to compliance challenges. VAT on road transport of goods, VAT on mobile telephones and the tourism tax recorded lower-than-expected collections, mainly because of low registration rates, limited use of electronic billing machines (EBMs), informality and underreporting. RRA indicated that registration compliance for VAT on road transport of goods stood at only 20.3 per cent of expected taxpayers, while tourism tax compliance was 47.6 per cent. In the ICT sector, non-issuance of EBM invoices and mobile phone smuggling undermined VAT collection. To address these challenges, RRA said it has intensified taxpayer sensitisation, particularly in the transport and hospitality sectors, and strengthened enforcement through closer collaboration with field officers and Rwanda National Police to curb smuggling and improve invoicing compliance. Gasangwa also provided an update on gaming tax reforms, which took effect in September 2025. Under the revised regime, tax on gross gaming revenue rose from 13 per cent to 40 per cent, while withholding tax on gaming winnings increased from 15 per cent to 25 per cent. “Since implementation commencement, the reforms have generated Rwf3.1 billion in gaming tax and Rwf1.2 billion in withholding tax on gaming, demonstrating the positive impact of the new measures,” Gasangwa said. ALSO READ: Digital services tax: How Rwanda plans to collect it The tax reforms are part of Rwanda’s broader strategy to increase the tax-to-GDP ratio from 14.6 per cent in 2023/24 to 19 per cent by 2029, in line with financing needs under the second phase of the National Strategy for Transformation (NST2), according to the Ministry of Finance and Economic Planning. ALSO READ: Unpacking Rwanda’s five-year development strategy: Here are the 14 goals Key taxes and what changed under Rwanda’s 2025 reforms VAT on fossil fuels An 18 per cent VAT was introduced on petrol and diesel, becoming the single largest contributor to revenues from the reforms. Fuel levy on vehicles The fuel levy shifted from a fixed charge of Rwf115 per litre to 15 per cent of CIF value to support road maintenance. VAT on hybrid vehicles Hybrid vehicles became subject to VAT and age-based excise duty, while electric vehicles remain fully exempt – at least until 2028. The Ministry of Finance and Economic Planning expressed concerns over the aging fleet of imported hybrid vehicles, which it said weakens their environmental benefits. As per the ministry, 45 per cent of hybrids imported between July 2021 and July 2024 were aged between 10 and 14 years. Under the new tax 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 excise duty, while vehicles older than eight years incur a 15 per cent excise duty. Hybrids have been exempted from VAT since 2021. RRA data showed that of the 7,172 hybrid and electric vehicles imported between 2020 and 2024, only 512 (about 7 per cent) were fully electric, while more than 92 per cent were hybrids, most of them imported after 2021. ALSO READ: Inside surge in hybrid cars in Rwanda’s automotive market VAT on selected ICT equipment and mobile phones VAT exemptions were removed on mobile phones and selected ICT equipment, though some strategic devices remain exempt. Beer excise duty Excise duty on beer increased from 60 per cent to 65 per cent of factory price. Airtime excise duty Excise duty on airtime rose from 10 per cent to 12 per cent, with a gradual increase planned in the medium term. Cigarette excise duty The fixed excise duty increased from Rwf130 to Rwf230 per pack, in addition to 36 per cent of the retail price. Tourism tax A new 3 per cent levy was introduced on accommodation charges to support tourism sector development. ALSO READ: Treasury chief Kabera defends new 3 per cent tourism levy VAT on road transport of goods VAT was extended to road freight services, though compliance remains low. Gaming taxes Tax on gross gaming revenue increased from 13 per cent to 40 per cent, and withholding tax on winnings rose from 15 per cent to 25 per cent to encourage responsible gambling. Environmental levy on plastic-packaged imports Rwanda introduced an environmental levy on imported goods packaged in plastic materials and other single-use products, announced in February 2025 and effective from July. The levy, set at 0.2 per cent of the total value of imported goods, is collected at a customs point in accordance with the East African Community (EAC) Customs Management Act and paid into a dedicated Public Treasury account for the management of the resulting waste. It also reinforces Rwanda’s ban on single-use plastics. It applies to consumer goods packaged in plastic, with exemptions for qualifying items under the EAC Customs Management Act and pharmaceutical products.
