Rwandan taxman turns to the church for help in tax compliance

Tuesday June 27 2017

The culture of demanding EBM generated invoices

The culture of demanding EBM generated invoices has not picked up yet. PHOTO| CYRIL NDEGEYA | NATION  

JOHNSON KANAMUGIRE
By JOHNSON KANAMUGIRE
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Take it to the Lord seems to be the path Rwanda Revenue Authority has chosen in its bid to get more citizens meet their tax obligations.

“We need your contribution because we believe your place and influence as opinion leaders can give us a boost among over 95 per cent of the population who belong to your churches. 

"You could suggest how we co-operate in this, if you may include tax compliance in what you teach,” Drocella Mukashyaka, RRA Deputy Commissioner in charge of taxpayer services told a group of faith leaders recently.

According to RRA, many church-run profit-making businesses like shops, hotels and schools among others that are taxable under the law are evading tax.

“We urge you to consider defaulting tax as a sin and a hindrance to faith. This is where we need your help. If all people can be faithful, we can collect more taxes,” said Pascal Ruganintwali, RRA Deputy Commissioner General.

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Influence

Ruganintwali appealed to faith leaders to use their influence to raise awareness among business owners and the buyers who make up the majority of their followers.

A section of church leaders however said there could be hidden factors compelling businesses to resort to tax evasion.

Ephrem Karuranga, the legal representative of the Association of Pentecostal Churches of Rwanda, cited the hiking of rent for business premises, and rentals for stalls in new and old markets as pushing most traders to evade tax in a bid to break even.

“I would advise you to intervene and stabilise rent prices. They keep going up so traders tend to engage in those malpractices as the remaining option for them to make profit,” he said.

Pressure is rising on the tax collector to raise more revenue as the country prepares to finance the bulk — about 66 per cent — of its budget with domestic revenues in fiscal year 2017/18.

Fraudulent practices

RRA officials say tightening existing measures as well as devising new ones to boost tax compliance, a factor blamed for most collection shortfalls registered in the past, was going to be key to meeting the steep targets.

RRA officials say the government continues to lose tax revenue through fraudulent practices like mispricing, issuance of fictitious EBM invoices as well as systems manipulation by individual businesses.

Other cases involve late, non-filing and payment of actual tax due. Mukashyaka also indicated that there are many businesses still hiding under the informal sector to dodge value added tax while there is a section of those who are registered but don’t remit taxes.

Figures indicate that even after more than 16,000 businesses adopted the use of Electronic Billing Machines (EBMs) with the government planning to add another 10,000 machines customised to different business operations and complexity, the culture of demanding EBM generated invoices has not picked up yet.

RRA said the buyers are not mobilised to always ask for EBM invoices while in other instances businesses do understate prices, eventually evading taxes.