KIGALI - Rwanda Revenue Authority (RRA) has intensified its crackdown of foreign-registered vehicles as a way of curbing tax evasion.
According to the Director of Taxpayer Services at RRA, Gerard Nkusi Mukubu, the operation targets foreign-registered vehicles belonging to Rwandans who claim to be foreigners, allegedly to evade taxes.
“We know some nationals who acquire permission (to drive foreign-registered cars) under the guise of being foreigners. This is illegal and will not be tolerated; only non-Rwandans are allowed to do so,” Mukubu said.
A sizable number of vehicles bearing foreign registration have been impounded by the National Police in conjunction with the Rwanda Revenue Authority.
The Traffic Police boss, Celestin Twahirwa told The New Times that they are cross-checking to identify the vehicles that are in the country illegally.
“We want to verify the documents of those who claim to have permission and take necessary measures on those who don’t comply,” Twahirwa said.
According to the law, a foreigner intending to drive their vehicle in the country is granted a 14-day pass, renewable upon request through the Commissioner of Customs.
Some of those affected by the move complained about how the operation is conducted.
“My wife’s car was impounded yet she lives in Uganda, and the 14-day pass was still valid,” Michel Karangwa, said.
Most of the cars impounded are registered in Uganda, Burundi and the Democratic Republic of Congo.
Mukubu noted that people looking to own cars opt to purchase them in neighbouring countries because they are cheaper.
“In Rwanda we only register cars with left hand steering wheels which are more expensive than the right hand cars,” Makubu said. “Right hand drivers are more common in other East African countries, which makes their cars cheaper.”
Meanwhile, Rwandan car importers say it’s the heavy taxes imposed on vehicles before registration, compared to other regional countries, that makes the cars more expensive.
“I bought a Toyota Ipsum from Uganda, last year, at an equivalent of about Rwf1.5 million, after taxes and an exactly similar car here was priced at Rwf5 million with taxes,” Sam Ruterana, an importer said.
However, in an interview with The New Times, a Rwandan Customs Valuation Officer, who preferred anonymity, explained that taxes charged on all finished goods, including vehicles are uniform in all the East African countries.
“A uniform 25 percent import duty on every car, 18 percent Value Added Tax, five percent withholding tax and between five and 15 percent construction tax is charged in all East African countries,” he explained.
However, Rwanda uses the Cost Insurance Flight (CIF) taxation system to calculate the tax, which is considerably higher than the alternative Free On board (F.O.B.) that other countries like Uganda employ.
Under CIF, a country adds up the vehicle’s factory price, its shipping costs and insurance on transportation, and deducts the total percentage of taxes from the total expense.
With FOB, the total percentage of taxes is calculated from the factory price of the car only, which cuts down on the taxes.
Mukubu said that Rwandans whose cars were impounded will repossess them after paying the total import duties required by the tax body and registering the car locally.
By press time, owners had begun reclaiming their vehicles while the hunt for other defaulters continued.