The government’s move to scrap tax holidays on imported building materials has been received with mixed reactions with some investors saying it will stifle their investment output and volumes.

The incentives had been formerly instituted as a way to attract investment in the construction sector.

In the previous law, the government had extended a number of incentives to foreign and local investors as a way of boosting the country’s investment base.

However the move to cancel some of them at this point, has left many wondering whether the government is correcting a costly oversight.

The law, which is already in parliament awaiting review by the commission, previously gave tax exemptions on imported building and finishing materials to investors implementing construction projects worth at least $1,800,000.

Although the review is not complete, some investors claim that its contents are already being effected.

Thadeo Twagirimana, a property developer in Kigali, said that it is unfortunate that tax holidays on imported materials are being removed now at a time when prices for construction materials are skyrocketing.

“This is a bad time for us, transportation and construction materials are very expensive, it shouldn’t have come at this time” he said.

Clare Akamanzi, the chief operations officer at Rwanda Development Board (RDB), said the review is only intended to improve the investment environment.

“The new investment code under review is meant to bring clarity to a number of issues, for instance the issue of capital gains, it is still under review but when its out, I am sure it will make things better. It will be out before the year ends,” said Ms Akamanzi.

She added that among the changes being introduced in the new law is one regarding incentives in line with employment creation.

“Most incentives were not producing results, for instance one given to investors with an expectation of creating jobs, did not see the creation of jobs and we had to review this,” said Ms Akamanzi.

She said the review is also based on feedback received from different stakeholders including investors.

“We are introducing incentives in new areas and deepening others, but generally the new code is intended to boost new investments in the economy” she said.

READ: Rwanda private sector pushes for tax reforms

When asked whether they are taking into consideration investors who are affected by the changes especially the cancellation of tax holidays on imported materials, Ms Akamanzi said they are in discussions with investors regarding import duties.

“We are discussing the import duties with investors and we are reviewing this with them to see that the new changes are balanced.” said Ms Akamanzi

When we interviewed Emmanuel Nyamurangwa the head of customer service at the Kigali City One Stop Centre, to see whether there has been any visible changes in investor turn up as a result of the new law, he said nothing has significantly changed so far.

“Investors are still coming and we have not been affected yet,” said Mr Nyamurangwa.

In recent reports that show a decline in the country’s total revenue collection, some of the generous tax incentives given to foreign investors by the Rwanda Development Board have been attributed for the decline.

The Rwanda Revenue authority estimated that 16 per cent of total revenue collection is lost through tax incentives extended to investors.