More business operators have called for value added tax (VAT) waiver, saying the levy is hurting their operations. Agro-processors, and bread makers say the waiver will help make them more competitive.
They also want Rwanda Revenue Authority (RRA) to scrap VAT on raw materials, noting that charging VAT on agricultural produce, like maize, has made the industry less competitive.
“We are appealing to RRA to waive VAT on locally-processed goods because it is hurting the sector and making it less competitive,” Jean Paul Mutalikanwa, the managing director of MINIMEX Rwanda, an agro-processing firm, said.
He said when one buys maize from farmers and processes it, RRA should consider taxing the finished products and not the raw material.
This comes on the heels of recent complaints by the logistics sector players about VAT levied on spare parts. The transporters also say that besides a 10 per cent import tax on trailers, they pay VAT, which they said makes local transporters less competitive in the region.
Trucks of 20 tonnes and above, cross-border public buses and tractors are duty free.
According to Christian Ishyaka, the secretary general of the Rwanda Bread Bakers Association, the challenges of bakers and agro-processors are often compounded by high cost of production.
“High utility bills coupled with high taxes make it hard for us to operate profitably,” he said.
He was speaking during the recently-concluded public-private sector dialogue hosted by RRA in Kigali.
The association also says though they are entitled to VAT refund on raw materials as per the law, the process usually takes long.
The bread makers also complained about unregistered players, who they claim do not pay taxes and, “yet sell their products in the same market”.
They urged the tax body to apprehend such operators to help end the unfair competition.
Speaking at the event, RRA officials assured the business community it would look into the issues raised and continue to engage them to find lasting solutions.
Government recently scrapped VAT on processed animal feeds and inputs following sustained complaints from local processors and millers.
In addition, the VAT law was amended and approved by parliament last month, providing for lesser penalties for tax defaulters. The move followed a long-standing public outcry over heavy penalties related to failure or non-compliance with usage of electronic billing machines (EBMs), among others.
The legislation seeks to lessen administrative fines extended to business people, especially for small taxpayers, and to adopt new lists of goods meant for tax exemptions as government intensifies campaign for Made-in-Rwanda products.