New system to help tax body meet revenue targets

Sunday July 23 2017

VAT remains the largest contributor of tax in

VAT remains the largest contributor of tax in Rwanda. PHOTO | CYRIL NDEGEYA | NATION  

KABONA ESIARA
By KABONA ESIARA
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The Rwanda Revenue authority is switching to an upgraded version of the electronic billing machine to help meet value added tax (VAT) targets for fiscal year 2017/18.

The tax body is banking on the new version of electronic billing machine to improve tax compliance — a key aspect of increasing revenues to fund 66 per cent of the country’s budget.

Analysts at Rwanda Revenue Authority (RRA) hope the new system will boost VAT collection from Rwf354.1 billion ($423.5 million) last fiscal year to Rwf393.5 billion ($471.2 million) in 2017/2017 fiscal year.

RRA has a target to collect Rwf120 billion ($143 million) more in the new fiscal year.

While VAT remains the largest contributor of tax in Rwanda, according to Richard Tusabe, commissioner-general of RRA, the challenge is that many people are not complying with tax obligations.

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As a result the tax body is not collecting as much, as people sell more but declare less.

“The first electronic billing machine system has some challenges such as lack of communication between devices used by one taxpayer and the device along the value chain,” said Emmanuel Kayigi commissioner for Domestic Taxes at RRA.

The upgrade of the electronic billing machine was funded by the Korean government through Korea International Corporation Agency at a cost of Rwf2 billion ($2.5 million).

The roll out of electronic billing machines will also be expanded while Tax Inspectors Without Borders will be hired to audit multinational companies.

The VAT law requires all registered taxpayers in the country to acquire and use the electronic billing machine. Failure to comply is a crime that attracts penalties.