Rwanda Revenue Authority to change system of taxation on commercial vehicles

The Rwanda Revenue Authority (RRA) is to change its system of taxing commercial vehicles. This was announced yesterday during a consultative meeting with the heads of commercial transport companies at the RRA Headquarters in Kimihurura. Previously, the criterion of taxation included a charge on the driver and profits gained from the commercial activities. In this case, a tax equivalent to four percent payable every month was charged on the profits and a charge on the drivers, where these were to be paid separately and failure to pay within the set time would result into a penalty of Frw100, 000. In the new system, the driver’s tax and the 4% tax on profit will be merged and paid at the same time on a Quarterly basis or per year depending on the payers’ convenience. Another unique change that has come with this system is that the amount of taxes will be dependent on the vehicle’s capacity thus number of passengers a car accommodates, for the case of passenger vehicles, or tonnes in the case of lorries. “This change is aimed at bringing fairness in tax collection whereby a car will pay taxes according to its capacity or the number of passengers it accommodates,” said Pierre Celestin Bumbakare, the Commissioner for Domestic Taxes Department. In the previous system, all buses were taxed the same amount without considering the fact that some buses have less capacity than others. The same applied for lorries where they all paid the same tax yet they carried varying tonnes. The new system also aims at reducing the time tax payers and RRA personnel have been taking in the processes of paying every month. “In addition to fairness, this system is going to be cost effective whereby the hustle of paper work every month will be no more and it will save time for both tax payers and RRA staff,” said Bumbakare. When The New Times talked to some of the transporters present, divergent reactions were expressed. Sotra Tours representative Jean de Dieu Ndagijimana appreciated the system, saying it is less stressful and time saving. On the other hand, the Association of Long distance Vehicles and Trailers in Rwanda’s Secretary General, Theodore Murenzi, was skeptical about the new system. “The principle is good but the calculations are wrong,” he said. He argued that in a way it is unrealistic because they are charging per tonne per day, and in a week RRA charges four days not considering the fact that a vehicle at times takes a whole week without working. He also said that this system is unfair to the long distance transporters, who at times take two weeks loading, and off loading, in which case RRA charges them, yet they are not working. In response, the Commissioner said in such cases, the transporter is supposed to get a document from their insurance company as proof that the car is not working or to bring the number plate to RRA in order to be exempted from taxes. This system is starting with effect from September, the first quarter of 2008. Ends

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Rwanda Revenue Authority to change system of taxation on commercial vehicles