MPs approve law that makes use of EBMs compulsory

An accountant during electronic tax declaration exercise. / File

Members of the Lower House on Thursday passed a new draft law on tax procedures, which will make electronic billing compulsory for all businesses among other changes.

The draft law will make the use of electronic invoicing methods, such as the use of electronic billing machines (EBMs), a legal requirement for all businesses except those exempted by the Government.

Currently the mandatory use of electronic invoicing is only required for businesses registered for Value Added Tax VAT).

RRA Commissioner General, Pascal Bizimana Ruganintwali, says that the new law aims at maximising the body’s ability to collect taxes.

“We want all people doing business to use technology. We want all of them to use EBM or any other software to manage their stocks and issue electronic invoices,” he told the media shortly after the bill was passed.

The proposed law states that a person who carries out any taxable activity must issue an invoice generated by an electronic invoicing system certified by RRA.

It also states that the Government shall give instructions to determine the modalities and conditions to be fulfilled in the use of electronic invoicing system as well as persons who won’t be required to use such a system.

Ruganintwali said that some businesses may remain exempted from using the electronic invoicing system depending on the nature of their transactions, singling out oil pumping stations as one of the the examples.

For the first time, the law will set sanctions for businesses that will fail to comply with the legal requirement of using electronic billing means.

RRA officials have argued that the current tax procedure law, which says that only VAT-registered taxpayers are required to use EBMs for their transactions, was not fair enough for purposes of tax administration.

They say that the formula has proven unfair for taxpayers whose businesses are routinely monitored by RRA because they are connected to the electronic billing system while those not using EBMs are not monitored.

The result is that RRA has found it difficult to determine when non-VAT registered taxpayers have reached the required turnover of at least Rwf20 million per year in order for them to qualify for VAT payment and use EBMs.

The RRA Commissioner General said that, out of 168,000 registered taxpayers in the country, only about 21,000 are registered to pay VAT.

He said that now that the proposed law making the use of electronic billing compulsory for all businesses has been passed, the revenue collection body will launch a campaign for businesses to comply with the new law.

The official said that initial plans for the campaign will see RRA distribute 1000 EBMs to traders for free while an electronic billing software will also be freely provided to traders who will not choose to use EBMs.

He said that the aim is to make tax collection more efficient but also help businesses be more professional.