Tax defaulters risk being denied access to credit if they do not meet their tax obligations on time following a new agreement between Rwanda Revenue Authority (RRA) and TransUnion Rwanda, a leading global credit and information management provider.
Under the deal, signed in Kigali on Wednesday, TrustUnion will share data and information regarding the compliance and credit worthiness of tax payers with the tax body.
RRA shall ensure that it has all the necessary equipment to gain access to the services, including computer hardware, communications equipment and Internet access facilities, under the terms of the MoU.
TransUnion compiles data on banks and other business clients, making it easy for the financial institutions to better assess the risks of borrowers before giving them credit.
It also means that both RRA and banks will be able to track those complying or defaulting on taxes.
Richard Tusabe, the Commissioner General of RRA, said the agreement will enhance tax compliance and enable credit institutions make informed decisions on whom to lend.
Our main focus will be on those with tax arrears and how to compel them to comply, Tusabe explained.
He urged the public not to be wary of the initiative, saying the agreement takes care of the issue of taxpayers’ confidentiality.
Tusabe, however, emphasised that it is the tax body’s responsibility to ensure total compliance.
Aimable Nkuranga, the chief executive officer of TransUnion Rwanda, said the move would reduce cases of defaulting and help small and medium entrepreneurs access credit if they are in good books with RRA.
“We have used the same system to try and bring down the level of non-performing loans among banks and, therefore, hope the same will apply with RRA,” Nkuranga noted.
TransUnion has managed to collect data from more than three million credit accounts.
According to the National Bank of Rwanda, banks registered an improvement in non-performing loans (NPLs) declining to 5.9 per cent as at the end of June, compared to 6.6 per cent recorded in the same period last year.
The tax body is expected to mobilise enough resources to fund this year’s national budget by at least 66 per cent.