NYARUGENGE - The government has banned the operations of a controversial company, QuestNet, in Rwanda.
According to a ministry of Finance and Economic Planning statement released last evening, the business practices of QuestNet contravene the companies and tax laws.
The directive follows a National Bank of Rwanda (BNR) declaration that the company was operating under a shadowy pyramid scheme.
The company describes itself as a direct marketing entity that uses network marketing but
BNR last week revealed that QuestNet could also be involved in money laundering.
Citing article 4 of the Companies Act, the statement goes on to reveal that it is compulsory to register a company in the Registrar General’s office.
The company says it conducts its business operations in Rwanda through Independent Representatives (IRs) and its eCommerce based business model that does not need a physical office.
“Any person who sets up a business or other activities that may be taxable is obliged to register with the tax administration within a period of seven (7) days from the beginning of the business or activity or establishment of the company,.” reads the statement citing article 10 of the law on taxation.
According to the statement, pursuant to article 9 of the law on direct tax on income a resident tax payer is liable to income tax per the tax period from all domestic sources and foreign sources.
“Basing on the provision of the laws cited above and in order to protect and safeguard interests of the public, the Government of the Republic of Rwanda hereby instruct QuestNet and its representatives to stop immediately all its activities in the Republic of Rwanda,” read the statement signed by James Musoni, the Minister of Finance.
He added that QuestNet was using illegal commercial transactions through its representatives in the country which consists of enticing the public to buy their products, including skin and body care products, telecommunication solutions, watches and jewelry, and using the pyramid or chain referral scheme in acquiring more customers from the public.
The closure comes at a time the Hong Kong-based company had told The New Times that it was planning to open shop in Rwanda.
However, the ministry said that it has realized that the marketing and advertising techniques used by QuestNet lead to individuals contributing their meager resources expecting to earn more profits and in the end lose what they have contributed, thereby destabilizing their families economic status and welfare.
Government says that the collected money from the sold products is transferred out of the country in uncontrolled and unsupervised manner.