People who report tax evasion in Rwanda will now receive 5 per cent of the principal tax recovered, but the reward cannot exceed Rwf10 million, under new rules that also give buyers a greater role in ensuring businesses issue valid tax invoices. The changes are contained in a ministerial order signed by the Minister of Finance and Economic Planning on September 24 and published in the Official Gazette on September 25. The order sets out new rules on electronic invoicing, tax waivers and rewards for reporting tax evasion. ALSO READ: You are now entitled to better reward if you report tax evasion The reward is calculated on the principal tax recovered, rather than on penalties or interest. The change builds on reforms announced earlier this year to encourage greater public involvement in detecting tax evasion. In July, the Ministry of Finance and Economic Planning said the revised system was intended to make the reward more meaningful by linking it to recovered principal tax. The order also strengthens the role of consumers and other buyers in the electronic invoicing system. ALSO READ: Can Rwanda increase domestic revenues without raising taxes? Where a seller fails to issue an invoice, the buyer can initiate the invoice process. The seller is then required to approve the invoice initiated by the buyer in accordance with procedures set by the tax administration. Businesses required to use electronic invoicing must also display a visible notice telling customers not to pay if an invoice is not issued. The system must display key taxpayer information, including the taxpayer's name, address and Tax Identification Number, as well as the Sales Data Controller serial number. The arrangement gives consumers a more direct way of creating a tax record when a seller does not issue one, potentially reducing the ability to leave taxable transactions outside the invoicing system. RRA to use data to detect non-compliance The order also gives the tax administration a stronger data-driven compliance role. The tax administration can take measures to monitor compliance with the electronic invoicing requirements, including through inspections where necessary. ALSO READ: Inside RRA's plan to raise Rwf4.6tn The electronic invoicing system captures information about transactions, including the seller’s TIN, buyer identification, place of sale, goods or services sold, prices, tax rates, payment method and discounts. This provides a broader digital trail of transactions than a simple paper receipt. Businesses using enterprise resource planning systems to generate invoices are also required to integrate those systems with the electronic invoicing system in a manner prescribed by the tax administration.
