Business community urged study tax laws to avoid penalties

The business community has been challenged to study and understand the country’s tax laws and procedures to avoid tax penalties. According to Angello Musinguzi, a tax expert at KPMG Rwanda, it is essential for business operators to enhance their understanding of the various tax laws, procedures and the new reforms in the taxation regime “to know which taxes they are supposed to pay and accurately file their tax returns”.
Use of ICT-based tools like EBMs has helped to ease and improve tax compliance. (File photo)
Use of ICT-based tools like EBMs has helped to ease and improve tax compliance. (File photo)

The business community has been challenged to study and understand the country’s tax laws and procedures to avoid tax penalties. 

According to Angello Musinguzi, a tax expert at KPMG Rwanda, it is essential for business operators to enhance their understanding of the various tax laws, procedures and the new reforms in the taxation regime “to know which taxes they are supposed to pay and accurately file their tax returns”.

Musinguzi noted that most companies have little knowledge about tax procedures in the country, a situation that has contributed to tax avoidance or late filings, which attracts penalties.

“It is, therefore, important to equip businesses with the necessary information on the existing tax laws and procedures to avoid penalties that arise out of ignorance of the law,” said the KPMG official, a global audit, tax and advisory services firm.

Musinguzi was speaking during the tax compliance training workshop organised by KPMG Rwanda in Kigali on Thursday. The workshop brought together more than 50 companies and tax experts.

The business community has in the past complained of high tax penalties emanating from late tax filings which, according to tax experts, could be attributed to lack of knowledge of taxes they are supposed to pay or the procedures to follow when filing their returns.

However, the tax experts believe enhancing efficiency in tax administration by building the capacity and competency of officials as well as the monitoring systems will enhance tax compliance across the board.

Musinguzi also urged businesses and companies to strengthen their recordkeeping and seek professional support from tax advisors before filing returns to ensure they are in order.

“We have to be ahead of the game in terms of understanding tax matters to be able to avoid and minimise penalties which are avoidable,” said
Andrew Nekuse the KPMG Rwanda director, called on the business community to build a “better working relationship with revenue authority, noting that this will enable them to get the necessary advice and enhance tax compliancy”.

There is also need to reduce the information gap between Rwanda Revenue Authority (RRA) and the business community, he added. “This can only be achieved through tax education and interaction with the tax body,” he said.

Olivier Bugingo, the chief accountant RSwitch, said understating the various tax laws and procedures fosters compliance and accurate tax filing. The tax authority is currently undertaking countrywide public and taxpayer training and sensitisation campaigns to promote compliance. The revenue body has a target to collect Rwf1, 215.1 billion this fiscal year (2017/2018).

Speaking at the workshop, the RRA deputy commissioner in charge of taxpayer services, Drocella Mukashyaka, urged the business community to take advantage of the new innovations designed to ease tax filing and enhance tax compliance.

Mukashyaka is, however, optimistic that the ongoing tax education campaigns will help reduce cases of non-compliancy.

The tax body collected Rwf1,103 billion in tax revenue during the last fiscal year 2016/2017, surpassing its target by Rwf8.7 billion.

It attributed the growth in revenue collections to recent tax reforms, particularly automation, which RRA says has enhanced efficiency and boosted tax compliancy.

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