Tax incentives to attract SMEs listing

In an effort to enable Small and Medium Enterprises (SMEs) and other companies to raise long term capital and savings, a number of tax code amendments on tax income and Value Added Tax (VAT) in regard to capital markets business are being worked upon.
Stockbrokers at the Rwanda Over-the counter (ROTC) market.
Stockbrokers at the Rwanda Over-the counter (ROTC) market.

In an effort to enable Small and Medium Enterprises (SMEs) and other companies to raise long term capital and savings, a number of tax code amendments on tax income and Value Added Tax (VAT) in regard to capital markets business are being worked upon.

According to the Capital Markets Advisory Council (CMAC), the SMEs do not need stringent regulations to participate on the capital markets.

“Its our initiative to help SMEs raise long term funds through SMEs segment market which seeks to raise funds through equity and debt markets,” said Olivier Kamanzi Deputy Executive Director of CMAC.

Some of the incentives designed for the SMEs include writing off all the costs that they will incur in the process of listing once they succeed in listing.

The corporate income tax for SMEs will also reduce from 30 percent to 20 percent if they sell 40 percent of their shares through capital market.

Kamanzi also added that the incentives have an overall objective of stimulating the market and increase the number of products, savings and savers as well as increasing the number of external investors.

The capital market to be effective in mobilizing savings efficiently as many sectors of the economy as possible should be represented in the capital market.

The incentives for the SMEs come at the time when the ministry of trade and industry is drafting the SMEs development policy which aims at their growth.

With these amendments, the capital market is expected to eventually propel the emergence of a comprehensive financial services sector.

“The adoption of higher disclosure policies and practices required by the capital market will enhance the level of disclosure and corporate governance in private sectors,” said Kamanzi.

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