Press reports that a hotelier was this week arrested on suspicion that he had used forged documents to cheat the Rwanda Revenue Authority of more than over Rwf 100 million is cause for serious thought.
The possibility of anyone defrauding the Authority of such huge amounts of money raises doubts about its capacity to meet its mandate. Indeed, it raises the possibility that someone in the Authority could be sleeping on the job.
The business community as a rule seeks for every opportunity to maximise profit, and there are those who will look for weaknesses within the revenue collection to evade taxes.
While arresting and prosecuting those caught, it does not provide a long term solution. And some businesses may fail to pay the fines or accrued tax arrears forcing the business to shut down. This is an undesirable situation as people not only lose income, but the tax body also loses a potential tax payer.
RRA should embark on mass sensitization campaigns to encourage tax payers to fulfil their obligation accordingly. Once people understand the benefit of paying taxes, which is very evident as the government, through taxes, has financed various projects that have helped improve the wellbeing of the Rwandan people, they number of evaders will go down.
Additionally, the tax body should invest heavily in filling the loop holes and having officers who are constantly on the lookout for weaknesses within the system.
RRA should also listen to the grievances of tax payers and the challenges they face in doing business so that they don’t feel stifled by the tax body – one of the reasons they look to evasion.