You are now entitled to better reward if you report tax evasion

Individuals who report tax evasion will now be entitled to a reward equivalent to five per cent of the principal tax recovered by the government, under a new ministerial order. The ministerial order forms part of a broader package of tax reforms aimed at improving compliance and modernising tax administration. The incentive is among several measures recently approved by the Cabinet, alongside the establishment of a permanent Tax Policy Committee and reforms to the Electronic Billing Machine (EBM) system. ALSO READ: Inside RRA's plan to raise Rwf4.6tn According to the Ministry of Finance and Economic Planning (MINECOFIN), the changes are designed to strengthen tax administration, simplify compliance for businesses, and encourage greater public participation in fighting tax evasion. Previously, the reward was based on 10 per cent of the penalties collected from offenders rather than the actual tax recovered. The ministry says the revised system is intended to make the incentive more meaningful while encouraging more people to report tax fraud. ALSO READ: How RRA achieved a record Rwf3.2 trillion in revenue “The award mechanism for reporting tax evasion has been improved. Under the new framework, any person whose information leads to the recovery of evaded taxes will be entitled to a reward equivalent to five per cent of the recovered principal tax amount, as opposed to the current 10 per cent of recovered penalties, the Ministry said in a statement to The New Times. EBM changes The new ministerial order also updates Rwanda’s Electronic Billing Machine system, introduced in 2013, to reflect changes in the economy, including the growth of digital technologies and evolving business models. Among the reforms is the introduction of buyer-initiated invoices, allowing purchasers to generate an EBM invoice when a supplier fails to issue one. The measure will help businesses claim deductible expenses and input value added tax (VAT) when they are unable to obtain valid fiscal invoices from suppliers. ALSO READ: RRA launches nationwide campaign to promote EBM usage The order also introduces delivery note invoices for the movement of goods between branches or warehouses, eliminating the need to issue tax invoices where ownership of goods has not changed. Businesses are also expected to benefit from improved integration between EBM systems and accounting, point-of-sale and enterprise resource planning software, making compliance easier and reducing administrative costs. As part of the reforms, businesses with an annual turnover below Rwf2 million will no longer be required to use EBM, a move the Ministry says is intended to simplify compliance for very small enterprises. This is expected to encourage consumers to request EBM invoices whenever they purchase goods or services, strengthening compliance and making it harder for businesses to conceal sales or underreport turnover. “The enhanced reward mechanism reinforces the culture of requesting EBM invoices. Consumers have a greater incentive to ensure that businesses issue fiscal invoices for every taxable transaction,” MINECOFIN said. The increased use of EBM invoices is expected to improve VAT compliance, protect the tax base and promote fair competition by ensuring businesses meet the same tax obligations. New tax policy committee The reforms also establish a permanent Tax Policy Committee to guide the development of future tax policies. Although the committee was introduced under the 2023 Law governing tax procedures, the new ministerial order formally establishes its operations and membership. The committee will institutionalise consultations that were previously conducted on an ad hoc basis by bringing together government institutions, the private sector, civil society, and technical experts to assess tax policy proposals before they are submitted for approval. According to the ministry, the Committee was established to strengthen dialogue and the tax policy-making process, with an emphasis on evidence-based tax policy reform, and to ensure that the tax system remains responsive to the country's evolving economic and fiscal priorities. The committee will evaluate proposed tax measures, assess their economic impact and recommend reforms that improve efficiency, fairness, competitiveness and domestic revenue mobilisation while ensuring proposed policies can be effectively implemented. According to the ministry, every proposal will be assessed based on its likely impact on businesses and households, administrative feasibility, investment competitiveness and consistency with national development priorities. Taxpayers should therefore expect future tax reforms to be increasingly well-consulted, and targeted at improving the overall tax environment, the Ministry noted.

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You are now entitled to better reward if you report tax evasion