The tale of taxation on Rwandan cars

Kigali City’s magnificent view is sometimes attributed to the cleanliness of its roads and absence of traffic congestion. Limited traffic on the other hand relates to the limited number of cars in the city, compared to any other East African capital. Alfred Akina, a car owner and resident of Kigali’s suburb Remera, blames the high cost of Rwanda’s cars on low numbers. He says that his kind of Corona Premio would be three times cheaper in his home country, Uganda. “I bought this exact kind of car in 2008 in Uganda at a much cheaper price than in Kigali,” he says. “The taxes on cars here also make it more difficult to own one.” Like Akena, most people blame the high cost of cars to import duty tax paid by the car dealers or private importers. These taxes ultimately push the prices higher. Gerald Mukubu is the Director of Tax Payers Services (TPS), a branch in Rwanda Revenue Authority (RRA). He maintains that the several taxes levied on the cars make consumers imagine them as a burden. “There are different taxes like TVA of 18% on cost, 5% tax on delayed payers, which makes their sum look high to people who don’t discern the details of the taxes,” he said. Mukubu further explains that the tax valuation depends on the factory prices of vehicles and their expected contribution to the society. A public transport minibus is taxed lower than a posh luxury Mercedes Benz, owing to its transport services to the society. While some countries rely on the honesty of car owners to estimate the cost of their cars, Rwanda has a more effective tax valuation system which makes it difficult for tax evaders. And while the owner of an ordinary car, like a Benz 125 can have its number plate installed after paying Rwf250,000, a personalized number plate costs up to Rwf2million. This brings back the expenditure on registration alone to the buyer’s choice of number plate. In light of this, the tax system of Rwanda is considered to be even more customer friendly with a one-stop clearing bureau. The limited number of cars should thus be blamed on other reasons, other than the tax burden. Ends