A new Ministerial Order on VAT for online goods and services, published in the Official Gazette on April 29, marks a significant shift in how Rwanda taxes the digital economy while also refining incentives for the industrial sector. It brings digital goods and services squarely into the VAT net and signals a more structured, rules-based approach to taxing the online marketplace. ALSO READ: Digital services tax: How Rwanda plans to collect it The introduction of this 2026 Ministerial Order aligns with the OECD’s destination principle, which provides that VAT should be collected where consumption occurs. This means that whether you purchase a software license from a company in Kigali or a multinational based in Silicon Valley, tax treatment remains equitable. ALSO READ: Rwanda imposes tax on Netflix, Amazon, other foreign digital services For the first time, Rwanda provided a definition of goods and services provided online that are subject to VAT. These include software programmes and remote maintenance, electronic gaming and online media databases, streaming or downloading of music and films, distance learning and standardised online education programmes, and intermediation platforms that connect suppliers to users, such as ride-hailing apps. Recognising that it is difficult to compel foreign companies to comply with VAT obligations for goods and services supplied online, the 2026 Ministerial Order requires that where a foreign supplier is not registered for VAT in Rwanda, the bank or payment processor facilitating the transaction must withhold and remit the VAT. Moreover, the 2026 Ministerial Order formalises invoice adjustments as a distinct process from cancellations. This allows businesses to correct invoices due to price changes, damaged goods, or partial returns without the administrative burden of a full cancellation, provided the adjustment is made before the VAT return is filed. The new ministerial order replaces and repeals the Ministerial Order on VAT exemption eligibility for industrial machinery, capital goods, and raw materials of 2017, as amended in 2019. While the 2017 Ministerial Order initiated the process of tightening industrial requirements, the new one further raises the threshold for manufacturing eligibility. The 2019 amendment introduced, for the first time, the requirement for industries to demonstrate that the value added to raw materials is at least 30%. The 2026 Ministerial Order maintains this threshold while introducing additional operational requirements to ensure greater compliance and accountability. In particular, the 2026 Ministerial Order introduces new requirements that were not provided for under the 2017 Ministerial Order. These include the obligation to demonstrate proper business management through detailed records of revenues and expenses, as well as the requirement to maintain a recognised head office. Assembling industries must now ensure that all components to be assembled are clearly separated in order to qualify for VAT exemptions. Under the 2017 Ministerial Order, this requirement was less specific, focusing primarily on a general direct link between imported materials and industrial activity. A key departure from the 2017 Ministerial Order, which allowed for recurring two-year renewals, is the introduction of a fixed expiry of eligibility. The 2026 Ministerial Order provides that renewal of VAT exemption eligibility will not be granted beyond June 30, 2026. Non-resident digital suppliers must now utilise the three-month compliance period to register for VAT or appoint a local representative before financial withholding mechanisms take full effect. Manufacturers must audit their production lines to ensure they can mathematically demonstrate the 30% value-addition threshold and prepare for the June 2026 cutoff for exemption renewals. At the same time, banks and payment processors must prioritise the integration of their systems with Rwanda Revenue Authority’s designated portal within the next three months to facilitate automated tax remittance. The writer is a Corporate and Legal Services Lead at Andersen, a tax, legal, and business advisory firm in Rwanda.
