On Friday a Budget Breakfast was hosted by Alliance Insurance Brokers and Ernst & Young to discuss the budget that was presented the day before. Business Times’ Berna Namata talked to a few executives and below are the excerpts.
Herbert Gatsinzi, Director Tax Advisory Services, Ernst & Young (Rwanda) SARL
First of all government is commended for harmonizing with the EAC budget calendar. This plays a bigger role in discouraging possible fiscal manipulation whereas if they maintain a harmonized tax rate it will discourage transfer pricing.
It should also be commended for the consistency in policy; not coming up with radical tax changes all the time. As a region EAC is trying to keep the tax regime predictable to avoid shocks and encourage business growth.
The other hand, the business community would like to see necessary tax reforms including taxation of international transport and the low threshold under the Pay As You Earn (PAYE) needs to be harmonized with the region.
Sanjeev Anand, Vice President Bankers Association/ Managing Director BCR
One of the good things about this budget is that not so many changes were announced. This reflects consistency of policy which makes it easy to do business.
Regarding taxes; I think the focus should be on widening the tax base rather concentrating on tax more the already existing compliant tax payers. Increasing the number of the tax base will also make it easy for banks to lend especially to Small and Medium Enterprises (SMEs).
Vijay Kumar S. Group Head of Enterprise, Risk Management Nakumatt
It was a good budget but everything depends on the improved performance of the economy though we have already seen the economy improving. We are happy with the increased spending the only drawback is on excise duty.
Richard Tusabe, MTN’s Chief Finance Officer
Regarding the increase of excise duty on airtime from 5 to 8 percent, taxation of the mobile industry increases the cost of mobile ownership and usage, therefore has a dampening effect on demand for mobile services. Whilst increasing excise duty will increase tax collections in the short run, it will reduce tax base in long run by affecting the demand for mobile services both in terms of the number of consumers taking mobile services and the usage of mobile services by existing customers.
Mubiligi Jean Pierre, Managing Director Alliance Insurance Brokers
It is a good budget considering where we are coming from as a country; the size of the budget has grown in the recent past years reflecting stable economic growth. But as an insurance brokerage firm we will continue to push for removal of Value Added Tax (VAT) on insurance premiums. Insurance firms in Kenya, Uganda and Tanzania do not pay VAT on collected premiums, which make their insurance products more competitive compared to those offered by Rwandan insurers.
Jack Kayonga, Managing Director, Rwanda Development Bank (BRD)
The budget is good as it addresses all the key issues; economic growth and poverty reduction. The biggest challenge now is to see government and the private sector boost economic growth to return to double digit economic growth.