Rwanda Revenue Authority (RRA) yesterday launched a campaign to sensitize the business community about registering for Value Added Tax (VAT) and issuing VAT invoices in a bid to increase tax compliance.
The exercise also involves cracking down deliberate VAT defaulters among the business community.
In an interview, RRA’s Director for Tax Payer Services, Gerard Nkusi Mukubu, noted that while many traders and entrepreneurs are aware of VAT registration procedures, there is still need for more sensitization to increase compliance.
“We have launched this operation to specifically educate traders on the importance of paying VAT, as well as to penalize those we deliberately default it,” Mukubu said.
The operation which began in Nyarugenge central business area will be rolled out countrywide in the next few weeks.
Mukubu also said double registration of Tax Identification Number (TIN Numbers) has been singled out as a key issue affecting VAT payment.
“There are traders who have two tax identification numbers, which is causing confusion in VAT payment. We have given them advice on how to retain so that they can pay VAT in a clear manner.”
According to tax law No25/2010 of 28/05/2010 on VAT payment, taxpayers with an annual turnover of Rwf200, 000,000 and below will file their VAT declarations and pay after three months.
“If someone defaults; we panelize them according to the tax laws - For example, someone who evades VAT of Rwf5 million is panelized to pay up to Rwf 10 million,” Mukubu said.
One of the traders operating a retail shop in the centre, Betty Uwimana, highlighted the benefits that proper filling for VAT brought to her business, notably, saving her unnecessary penalties.
“I make sure I the monthly VAT in order to avoid penalties which range from Rwf 100,000 and above. I believe it is every citizen’s responsibility to pay all taxes in order to contribute to the country’s development,” Uwimana said.
VAT which comprises of 33 percent of tax collections is paid by every business that has an annual turnover of Rwf 2 million must be registered for VAT.
So far, over 3,000 businesses operating within Kigali City have registered for this tax.