RRA intercepts billions in fictitious refund claims

Officials at the Rwanda Revenue Authority (RRA) have said they thwarted attempts by some taxpayers to defraud the government of billions of Francs by using Electronic Billing Machine Invoices to claim Value Added Tax inputs on fictitious sales.
Ruganintwali speaks to journalists at the news conference in Kigali yesterday. (Photos by Timothy Kisambira)
Ruganintwali speaks to journalists at the news conference in Kigali yesterday. (Photos by Timothy Kisambira)

Officials at the Rwanda Revenue Authority (RRA) have said they thwarted attempts by some taxpayers to defraud the government of billions of Francs by using Electronic Billing Machine Invoices to claim Value Added Tax inputs on fictitious sales.

The tax body says it is also battling attempts by some businesses to evade taxes by underestimating the prices of items on the EBM receipts.

 

RRA officials say the false claims were discovered when some firms were applying for VAT refunds from the institution.

 

Ordinarily, when traders claim for VAT refunds, RRA compares VAT input incurred when they purchased products and VAT output of revenue after sales.

 

If the input is higher than the output, the traders can apply for a refund when filing their tax returns.

But sometimes businesses claim VAT refunds using fictitious receipts to indicate high input and a lower output, officials said yesterday.

Explaining the process that led to the unearthing of the fraud attempts, Commissioner for Domestic Taxes, Aimable Kayigi Habiyambere, said that when submitting VAT returns, traders are expected to show their sales, the input tax relating to purchases, both imports and local purchases.

By cross matching the two, they then identify fictitious invoices.

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Emmy Mbera,  EBM project coordinator at RRA speaks to journalists in Kigali. 

Speaking at a news conference at the RRA offices in Kigali, Kayigi said that, so far, 25 EBM machines had been found to be engaging in such malpractices and had generated invoices worth Rwf38 billion.

“If you calculate the VAT that comes out of the Rwf38 billion, the fictitious claims amount to Rwf6.8 billion,” he told journalists.

The 25 firms linked to the fraudulent activities were found to have issued invoices to about 700 taxpayers, he said.

RRA deputy commissioner general and commissioner for corporate services, Pascal Ruganintwali, said that taxpayers who have claimed or declared the invoices from the 25 firms will not be considered eligible for tax refund.

He noted that the cases were being referred to law enforcement authorities for prosecution while investigations into other similar actions are ongoing.

The list of 25 firms, seen by The New Times, includes household products suppliers, hardware stores and trading companies.

Other fraudulent practices cited are instances where traders underestimate the prices of the EBM receipts in order to pay less tax.  

Ruganintwali called on members of the public to always ask for an EBM receipt for every transaction and to ensure that it reflects the exact prices.

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Journalist follow proceedings during the press conference. 

He also urged members of the public to report any illegal use of EBMs to RRA or the nearest police station.

Currently, there are 13, 867 EBM machines in use across the country.

In the current fiscal year, the government aims to finance its budget, by 62 per cent, through domestic avenues, amounting to Rwf1.2164 trillion, up from Rwf40.9 billion in last fiscal year.

EBMs were adopted as one of the key tools to help improve tax efficiency.

editorial@newtimes.co.rw

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