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Tax collection improves as technology uptake pays off

Tuesday December 10 2019
rra

Rwanda Revenue Authority headquarters in Kimihurura. The body has recorded 13.6 per cent of the increase in revenue collection this year compared with last year. PHOTO | FILE

By LEONCE MUVUNYI

Adoption of modern technologies to ease the process of tax payment and increase compliance has increased revenues in line with government plans to raise tax contribution towards GDP.

According to Rwanda Revenue Authority (RRA), following the introduction of the second version of the Electronic Billing Machines, tax collection has become easier and efficient.

RRA figures indicate that a better economic outlook and increased compliance, revenues for the financial year 2018/2019 reached Rwf1,422.9bn against the target of Rwf1,392.1bn, representing an excess of Rwf30.8bn.

Targeting self-reliance

“We have achieved this thanks to the reinforcement of an online-based tax declaration and payment system as well as introduction of the second version of the electronic billing machines among other reforms,” said Pascal Ruganintwali the Commissioner General of RRA, during the recent Tax Appreciation Day.

Government officials indicate that under the National Strategy for Transformation, Rwanda’s tax-to-GDP ratio has grown to 16.5 per cent as of last financial year with the intention of increasing its contribution by up to 20.4 per cent by 2024.

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“The move is to ease value-added taxes declarations and boost compliance by taxpayers as part of the country’s plan to ease the cost of doing business, and attain our self-reliance target,” Ruganintwali added.

According to Ruganintwali, the body has recorded 13.6 per cent of the increase in revenue collection this year compared with last year, the year in which the second version of the Electronic Billing Machines was rolled out.

Under the aegis of ensuring self-reliance and increasing domestic revenues, the RRA has set a target of increasing its revenue collection at Rwf157 billion in the 2019/20 financial year.

The revenue body had targeted hitting Rwf1,579 billion from both tax and nontax revenue compared with Rwf1,422 billion collected last financial year.

Also, the RRA has collected over Rwf60.6 billion in taxes and non-statutory revenues on behalf of the districts. However, the agency still faces the challenge of people failing to register their income-generating businesses, evading the use of EBM invoices and involvement in the smuggling of goods.

Immediate feedback

“We will continue with campaigns to educate taxpayers, reforming tax laws and enforcing the use of EBMs and streamlining our technology in service delivery by introducing the My RRA System.

It is a platform that will enable taxpayers to raise concerns and receive feedback immediately and link them to information relating to taxation,” said Ruganintwali.

The Ministry of Finance and Economic Planning indicates that the contribution of locally collected revenues is expected to cover 68.3 per cent of the government’s spending during this financial year from 65.6 per cent in the 2018/2019 fiscal year.

The government has since indicated that despite shortcomings, some positive developments have been realised in revenue collection, and that greater compliance in tax payment is still sought in order to attain budget targets.

Widen export base

“Though the government has put in place some measures that include easing of doing business, streamlining the collection of revenue, increasing and rehabilitating physical infrastructure, increasing the number of products made in Rwanda, widening the export base, we encourage taxpayers to comply and continue invoicing using EBMs,” said the Prime Minister, Eduard Ngirente.

At the 17th occasion of Taxpayers’ Appreciation Day, an initiative meant to encourage taxpayers to remain tax compliant, 36 taxpayers, mainly from industry, banks and projects were recognized based on their performance in paying taxes in 2018/19 financial year.

Though the Private Sector Federation (PSF) lauded the reform in the laws, they called for ease in processing of refunds and harmonising of invoice values at Customs.

“Under current law, traders are required to pay Customs taxes of their supplies based on the value at the source market but the law is not always up to date to enforce this,” said Robert Bapfakurera, the PSF chairperson.

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