The government has stepped up its efforts to attract Turkish and UAE investors into the country as the country moves to maintain growing Foreign Direct Investment.
The latest move toward the goal was evidenced in the approval by cabinet last week of the draft law for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income in the two countries.
Double Taxation Avoidance Agreement is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries.
This is important to ensure that businesses from the two countries operating in Rwanda are not obliged to pay taxes twice in (in Rwanda and their home countries) on taxable gains. It is not unusual for a business or individual who is resident in one country to make a taxable earnings in another.
With the agreement firms that pay taxes in Rwanda may not be required to pay the taxes on the same earning back in their home countries.
This is important as Rwanda seek to increase foreign investments with the agreement serving to provide clarity on how the cross - border transactions will be taxed which will encourage foreign investors.
Rwanda Development Board Chief Executive Clare Akamanzi, told The New Times that the agreement are meant to facilitate investments. She said that the government often signs such agreements to attract investment.
“Avoidance of Double Taxation Agreements are meant to facilitate investments between signatory countries by providing a framework where companies are not taxed twice in their country and investing country. So the government signs these type of agreements with countries it’s attracting to invest here, she said.
The two countries have in recent years made sizable investments in Rwanda with projections of further growth. Recent investments from UAE include $35M for the inland cargo handling facility by Dubai Ports World (DPW) Group.
Another UEA firm Enviroserve runs, manages and operate the E-Waste dismantling facility in Bugesera Industrial Park. Cheikh Rakadh Group, another UAE based firm in 2017 committed to invest $50 million (about Rwf41 billion) in the Rwanda Smart City Master Plan.
Turkey on the other hand as been increasing its investment on the African continent in the last decade especially in manufacturing and infrastructure.
Over the last two decades, it is estimated that Turkish Investors have increased their portfolio in Africa from $2B 15 years ago to $17 billion today as of 2017.
In Rwanda, Turkish firms have shown interest in varied sectors, including energy and agriculture.
Total investments in Rwanda stood at $2.006B in 2018 from $1.675B recorded in 2017. 47 per cent of the total investment were foreign direct investments.