Penalties on late tax payment could be slashed by 50%

The Government of Rwanda has proposed, in a new bill, to reduce by half the fines imposed on a taxpayer who declares due tax on time, but does not pay it in the prescribed period. This is one of the changes proposed in the draft law amending the existing 2019 law on tax procedures. It is proposed in the bill that “administrative fines imposed on a taxpayer who declares tax due in the time limits provided by law, but who does not pay it in the prescribed time limits, were reduced by half to facilitate taxpayers overcome hardships (assuming that the taxpayer faithfully has declared tax on time)”. The bill is being analyzed by the Parliamentary Committee on National Budget and Patrimony. According to the tax procedures law of 2019, a taxpayer who has declared due taxes in the required time limits but did not pay them on time is subjected to a fine on top of the principal tax. Such a fine is 10 per cent of due principal tax, when the taxpayer exceeds the time limit for payment for a period not exceeding 30 days; 20 per cent when the repayment time is exceeded by 31 to 60 days; and 30 per cent of due principal tax in case the repayment time is exceeded by more than 60 days. All these fines could be halved once the proposed bill is enacted into law. RRA Commissioner General, Pascal Bizimana Ruganintwali, said on Wednesday, January 11, that they realised there is progress in the taxpayers’ mindset and a corresponding decrease in tax fines. “As we register improvement in how people understand the importance of paying taxes, we also should reduce fines,” he said. Speaking to The New Times, Junis Mukanyandwi, owner of Everything Art – a shoe-making company – said that the proposal to reduce fines charged on late payment of tax “can be a relief for taxpayers.” “Sometimes you find that the tax you have to pay is a huge amount because of accrued fines, yet, you do not have the capacity to pay it at once,” she said. MP Omar Munyaneza, chairperson of the Parliamentary Committee on National Budget and Patrimony said that some taxpayers declare tax based on the value of their assets, but the deadline for paying it passes when they have not yet gotten the required amount. “The reduction in administrative fine is a good development which is important for the taxpayers because there are instances where one would pay Rwf10 million in tax, but they are charged Rwf15 million, with Rwf5 million being fine,” he said. Data from RRA indicates that Rwanda has about 300,000 registered taxpayers, of which only 50,000 – or almost 17 per cent – pay taxes, and that there is a need to devise innovative strategies for expanding the tax base.

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Penalties on late tax payment could be slashed by 50%