Civil society outlines changes to consider in new tax law

An accountant during tax declaration. Civil society wants more friendlier policies. Emmanuel Kwizera.

The Rwanda Civil Society Platform has presented its wish list to consider for changes regarding at least 20 articles in the proposed Tax Law that is currently being reviewed by the parliamentary Standing Committee on Budget and Patrimony. 

The civil society’s appearance comes a day after one made by the Private Sector Federation (PSF) on Tuesday before the same committee, where it appealed to the Government to ease pressure on taxpayers by applying flexible penalties to its members who delay to declare their taxes.

Presenting the proposal, the Legal Aid Forum’s Senior Capacity Building Officer, Clarisse Umunezero, said that after reviewing the draft, they had some changes that would in the long-run benefit both the tax body and the tax payer.

Understatement of tax fine

According to Umunezero, the 10 per cent penalty levied on anyone who a tax administration audit or investigation discovers has understated the amount of tax they are required to pay is still very high.

“Article 78 in this proposal indicates that the offender is liable to a ten per cent fine of the amount of the understatement if the understatement is equal to or more than five per cent but less than 20 per cent of the tax liability they ought to have paid. We feel that this fine should at least be reduced to 5 per cent,” she said.

Value Added Tax violations

Munezero also told the MPs that they should consider revising the penalties stipulated in article 82 of the proposed law imposing fines on persons who do not comply with provisions of Value Added Tax because they were ‘too high’.

“In the event of operation without VAT registration where VAT registration is required, 50 per cent of the amount of VAT payable for the entire period of operation without VAT registration; we propose that it is brought down to at least 10 per cent,” she said.

She also appealed to the lawmakers to consider slashing the penalties for an incorrect VAT invoice or failure to issue a VAT invoice from 100 per cent of the amount of VAT for the invoice or on the transaction; to 30 per cent.

Closure of business

LAF Legal Advisor Gilbert Ndayambaje told the MPs that there was need to scrap the article that gives the Commissioner General of Rwanda Revenue Authority (RRA) the powers to close a business for a period of 30 days since it was unfavourable to both sides.

“For anyone to pay taxes, or penalties, they must be open for business. Closing a business for this long, especially for small taxpayers, is problematic and could end up into shutting it down permanently. Yes, the offenders should be punished, but there should be an alternative that is beneficial to everyone involved,” he said.

The consultations continue today with the appearance of the RRA Commissioner General.

editor@newtimesrwanda.com

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