2. 2
LOCAL REVENUE NEW LEGAL FRAMEWORK
Law No 59/2011 of 31st
December 2011 establishing the sources
of revenue and property of decentralized entities and governing
their management.
Presidential order No 25/01 of 09/07/2012 establishing the list of
fees and other charges levied by decentralized entities and
determining their thresholds.
Ministerial order No 005/12/10/TC determining the modalities for
the implementation of law No 59/2011 of 31/12/2011.
3. 3
LOCAL TAXES AND FEES
DECENTRALIZED TAXES
FEES AND CHARGES LIVIED BY
DECENTRALIZED ENTITIES
4. 4
PART I. DECENTRALIZED TAXES
1. FIXED ASSET TAX ( Law nº59/2011 of
31/12/2011, art. From 6 to 38)
2. TRADING LICENSE TAX ( Law nº59/2011 of
31/12/2011, art. From 39 to 47)
3. RENTAL INCOME TAX ( Law nº59/2011 of
31/12/2011, art. From 48 to 56)
5. 5
I.1. FIXED ASSET TAX(GENERAL PROVISIONS)
WHO HAS TO PAY :
The owner of fixed asset
the holder of the fixed asset whose the legal owner is unknown for a
period of at least 2 years;
the holder of fixed asset if the freehold land title is not yet registered in
the name of the owner;
the proxy who represents the owner who lives abroad;
a usufructuary.
6. 6
I.1.FIXED ASSET TAX(GP) – cont’n
FIXED ASSET TAX BASE
Market value of the fixed asset for which the owner or the proxy
obtained the freehold land title.
TARIFF OR TAX RATE
1/1000 of the taxable value.
7. 7
I.1.FIXED ASSET TAX(GP) – cont’n
EXEMPTIONS :
fixed assets used for medical purposes, vulnerable
groups, educational and sporting activities;
fixed assets intended for research activities;
fixed assets belonging to the Government,
Provinces, decentralized entities;
fixed assets used for religious activities;
fixed assets used for charitable activities;
8. 8
I.1.FIXED ASSET TAX (GP)– cont’n
EXEMPTIONS (cont’n) :
fixed assets belonging to foreign diplomatic missions
in Rwanda;
land in use for agriculture, livestock or forestry if is
not more than 2 hectares.
fixed assets used for residential purposes, if the
assessed value does not exceed 3,000,000Rwf.
9. 9
I.1 FIXED ASSET TAX(GP) – cont’n
POINTS TO NOTE
Co-ownership of fixed asset
Valuation cycle
The methodologies of fixed asset valuation.
• Exercises
10. 10
I.1 FAT: PROCEDURES APPLICABLE
Legal reference :
Law No 59/2011 of 31/12/2011 establishing the
source of revenue and property of decentralised
entities and governing their management;
Ministerial order Nº005/12/10/TC of 22/06/2012
determining the modalities for the implementation of
law Nº 59/2011 of 31/12/2011.
11. 11
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Tax declaration
Not later than 31 March of the tax year
12. 12
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Tax payment:
Not later than March 31st
of the tax year, in case of
the self assessment tax;
Within 1 month from the day the tax assessment
notice is received by the taxpayer, in case of re –
assessment done by decentralised entity;
Within 6 months, in case of deferral of tax payment;
Within 12 months, in case of tax payment in
instalments
13. 13
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Interest and fines:
Late submission of tax declaration:
10 % if the delay is less than one month;
20 % when the delay is not more than two months;
30% in case the delay is not more than three
months;
40 % if the delay is more than three months.
14. 14
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Interest and fines:
Incorrect or absence of tax declaration with
intention of evading tax:
20% of tax due for the first time
40% of tax due if the offence is repeated.
15. 15
1.1 FAT: PROCEDURES APPLICABLE (cntd)
Interest and fines:
Late tax payments
Interest of 1.5% per month
Surcharge of 10% of the tax due. However, such a
surcharge must not exceed an amount of 100,000
Rwf.
16. 16
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Audit and investigations procedures
For the 4 years of the assessment cycle, the tax declaration can be reviewed
within a period of 6 months after the date of filing the tax declaration.
Taxpayer; Third parties and Persons bound to professional secrecy have to
provide information within 15 business days.
The decentralized entity may any time correct the tax declaration submitted by
the taxpayer, if he has not done properly his tax declaration.
After audit and investigation, the tax assessment is done and sent to the
taxpayer within 6 months after the date of tax declaration was submitted.
17. 17
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Tax recovery procedures
Warning letter
Access to money owned to or held by third parties
on behalf of the taxpayer
Seizure and sale of movable and fixed assets
Write off of the due tax.
.
18. 18
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Appeal procedures
The taxpayer can submit his objection, within 30
days, to the decentralized entity.
The entity have to reply within 60 days.
If he is not satisfied with the decision, he can appeal
to the competent court within30 days.
If he wins the case, he is refunded within 1 month
19. 19
I.1 FAT: PROCEDURES APPLICABLE (cntd)
Roles and responsibilities of Decentralised entities:
To avail tax declaration forms no later than January 31st
of
every year;
To review the tax declaration within a period of six months;
To appoint a proxy in case of co-ownership when the co-
owners have not appointed him;
To respond to the appeal of taxpayer within two (2) months;
To reply within fifteen (15) days when the taxpayer requests to
pay in instalment;
To follow all recovery procedures if necessary.
21. 21
I.2 TRADING LICENSE TAX- GENERAL PROVISIONS
WHO HAS TO PAY
Any person who deals with a profit – oriented activity in Rwanda.
TRADING LICENSE TAX BASE
It is applied to the profit – making activities.
22. 22
I.2 TRADING LICENSE TAX(GP) - contd
Tariff for taxpayer registered for VAT :
Turnover Tax due in Rwf
From Rwf 1 to Rwf 40,000,000 60,000
From Rwf 40,000,001 to Rwf 60,000,000 90,000
From Rwf 60,000,001 to Rwf 150,000,000 150,000
Above Rwf 150,000,000 250,000
23. 23
I.2 TRADING LICENSE TAX(GP)- cntd
Tariff for taxpayer not registered for VAT :
Type of Activity Rural area
Rwf
Towns area
Rwf
City of Kigali
A) Vendors without shops, small scale technicians who do
not use machines and Sewing machine
4,000 6,000 8,000
B) Transporters of people and goods on motorcycles 4,000 6,000 8,000
C) Traders and technicians who use machines 20,000 30,000 40,000
D) All other vehicles besides bicycles 40,000 on each vehicle 40,000 on each
vehicle
40,000 on each
vehicle
E) For transport activities by motor boat 20,000 on each boat 20,000 on each boat 20,000 on each boat
F) Others profit - oriented activities 20,000 30,000 40,000
24. 24
I.2 TRADING LICENSE TAX (GP)- cntd
Exemptions :
The Government entities are exempted from
trading license tax.
25. 25
I.2 TRADING LICENSE TAX(GP)-cntd
Points to notes :
if a taxpayer operates branches offices, the
trading license tax is declared and paid for
the head office as well as for each branch;
when several activities are carried out by the
same company or a individual in the same
premises, only one trading license tax is
declared and paid;
26. 26
I.2 TRADING LICENSE TAX(GP)-cntd
Points to notes :
The trading license tax certificate must be
displayed clearly at the entrance of the
business premises or affixed to the car, boat
or any other vehicle for which the tax was
paid;
In case the taxpayer stops his activities
during the taxable year, and if the trading
license tax was paid, he must be refunded
depending on the remaining months;
27. 27
I.2 TRADING LICENSE TAX(GP)- cntd
Points to notes :
if taxable activities start after January, the
trading license tax must be paid for the
remaining months including the one in which
the activities started until the end of taxable
year;
for the taxpayer conducting seasonal or
periodic activities, the trading license tax
must be paid for a whole tax year.
29. 29
I.2 TRADING LICENSE TAX-PROCEDURES APPLICABLE
Legal reference :
Law No 59/2011 of 31/12/2011 establishing the
source of revenue and property of decentralised
entities and governing their management;
Ministerial order Nº005/12/10/TC of 22/06/2012
determining the modalities for the implementation of
law Nº 59/2011 of 31/12/2011.
30. 30
I.2 TRADING LICENSE TAX (PA)- contd
Tax declaration is done :
Not later than 31 March of the tax year
If the activity starts after 31 March, within 30
business days following the beginning of the
activity.
31. 31
I.2 TRADING LICENSE TAX (PA)- contd
Tax payment
The tax payment is made at the bank as follows:
not later than 31st
March of the tax year for existing
activities or when they start before 31st March;
within 30 business days in case the activities begin
after 31st March of the tax year.
32. 32
I.2 TRADING LICENSE TAX (PA)- contd
Interest and fines:
Late submission of tax declaration:
10 % if the delay is less than one month;
20 % when the delay is not more than two
months;
30% in case the delay is not more than three
months;
40 % if the delay is more than three months.
33. 33
I.2 TRADING LICENSE TAX (PA)- contd
Interest and fines:
Incorrect or absence tax declaration with
intention of evading tax:
20% of tax due for the first time
40% of tax due if the offence is repeated.
34. 34
I.2 TRADING LICENSE TAX (PA)- contd
Interest and fines:
Late tax payments
Interest of 1.5% per month
Surcharge of 10% of the tax due. However,
such a surcharge must not exceed an
amount of 100,000Rwf.
35. 35
I.2 TRADING LICENSE TAX (PA)- contd
Audit and investigations procedures
An authorised decentralized entity officer can conduct investigations in
order to :
be sure on the category of the business;
verify if the trading license tax certificate is displayed at business
premises.
The decentralized entity gets from RRA no later than 31st
January of
every tax year the information for Value Added Tax of registered
taxpayers in order to:
classify the taxpayers in categories according to their respective
turnover;
cross check the information with self assessed tax declaration.
36. 36
I.2 TRADING LICENSE TAX (PA)- contd
Tax recovery procedures
Warning letter
Access to money owned to or held by third parties
on behalf of the taxpayer
Seizure and sale of movable and fixed assets
37. 37
I.2 TRADING LICENSE TAX (PA)- contd
Appeal procedures
The taxpayer can submit his objection, within 30
days, to the decentralized entity.
The entity have to reply within 60 days.
If he is not satisfied with the decision, he can appeal
to the competent court within30 days.
If he wins the case, he is refunded within 1 month
38. 38
I.2 TRADING LICENSE TAX (PA)- contd
Roles and responsibilities of Decentralised entities:
To determine which areas are considered as urban or
rural;
To issue an official trading license tax certificate for
year paid;
To refund, within ninety (90) days, tax paid when a
taxpayer stops his activities before the end of the tax
year, basing on the remaining months of the tax year.
To get the information from RRA about the turnovers
of VAT registered taxpayers not later than 31st
January
of every tax year.
40. 40
I.3. RENTAL INCOME TAX- GENERAL PROVISIONS
WHO HAS TO PAY :
Any individual who earns income from renting out the fixed
assets located in Rwanda.
RENTAL INCOME TAX BASE :
The rental income tax is charged on the total amount of rental
income earned during the previous tax year.
41. 41
I.3. RENTAL INCOME TAX(GP)- cntd
TARIFF OR TAX RATE :
0% on the bracket lower than 180,000 Rwf ;
20% from 180,001 Rwf to 1,000,000 Rwf ;
30% above 1,000,000 Rwf.
42. 42
I.3. RENTAL INCOME TAX(GP)- cntd
POINTS TO NOTE:
Deducting from the gross rental income 50% or 30%
if the tax payer has proof of paying bank interest;
The copy of the rental contract has to be submitted
to the decentralized entity within 15 following the
date the contract was signed;
When a rental contract is expired or is amended, the
taxpayer has to notify the decentralized entity within
30 days.
44. 44
I.3.RENTAL INCOME TAX- PROCEDURES APPLICABLE
Legal reference :
Law No 59/2011 of 31/12/2011 establishing the
source of revenue and property of decentralised
entities and governing their management;
Ministerial order Nº005/12/10/TC of 22/06/2012
determining the modalities for the implementation of
law Nº 59/2011 of 31/12/2011.
45. 45
I.3.RENTAL INCOME TAX (PA)- cntd
Tax declaration is done :
Not later than 31 March of the year following
the tax year. The tax declaration form has to
be accompanied by a copy of the rental
contract.
46. 46
I.3.RENTAL INCOME TAX (PA)- cntd
Tax payment is made at the bank as follows:
Not later than March 31st
of the following tax year, in
case of the self assessment tax;
Within 1 month from the day the tax assessment
notice is received by the taxpayer, in case of re –
assessment done by decentralised entity;
Within 6 months, in case of deferral of tax payment;
Within 12 months, in case of tax payment in
instalments
47. 47
I.3.RENTAL INCOME TAX (PA)- cntd
Interest and fines:
Late submission of tax declaration:
10 % if the delay is less than one month;
20 % when the delay is not more than two
months;
30% in case the delay is not more than three
months;
40 % if the delay is more than three months.
48. 48
I.3.RENTAL INCOME TAX (PA)- cntd
Interest and fines:
Incorrect or absence tax declaration with
intention of evading tax:
20% of tax due for the first time
40% of tax due if the offence is repeated.
49. 49
I.3.RENTAL INCOME TAX (PA)- cntd
Interest and fines:
Late tax payments
Interest of 1.5% per month
Surcharge of 10% of the tax due. However,
such a surcharge must not exceed an
amount of 100,000 Rwf.
50. 50
I.3.RENTAL INCOME TAX (PA)- cntd
Audit and investigations
procedures
An authorised decentralized entity officer
can conduct investigations in order to verify if
the self assessed tax declared is actual tax to
be paid.
51. 51
I.3.RENTAL INCOME TAX (PA)- cntd
Tax recovery procedures
Warning letter
Access to money owned to or held by third parties
on behalf of the taxpayer
Seizure and sale of movable and fixed assets
Write off of the due tax.
52. I.3.RENTAL INCOME TAX (PA)- cntd
Appeal procedures
The taxpayer can submit his objection, within 30
days, to the decentralized entity.
The entity have to reply within 60 days.
If he is not satisfied with the decision, he can appeal
to the competent court within30 days.
If he wins the case, he is refunded within 1 month
52
53. I.3.RENTAL INCOME TAX (PA)- cntd
Roles and responsibilities of Decentralised entities:
To avail tax declaration forms no later than January
31st
of every year;
To respond to the appeal of taxpayer within two (2)
months;
To reply within fifteen (15) days when the taxpayer
requests to pay in instalment;
To follow all recovery procedures if necessary.
53
