The Rwanda Revenue Authority marked its 20th anniversary this year and the journey has seen adoption of modern technologies to ease the process of tax payment and increase tax compliance.
The govt targets to finance 67 per cent of its 2018/2019 budget — estimated at Rwf2.4 trillion — from domestic revenues; up from 58.3 per cent in the last fiscal year and 36.3 per cent in 1998. The RRA Commissioner-General Richard Tusabe spoke to RWANDA TODAY about the tax body’s achievements and plans.
Below are excerpts.
What would you regard as your biggest achievements so far as RRA?
A lot has been achieved as an institution. We have tried to improve compliance and we are seeing enormous improvement in compliance from taxpayers.
One of the key enablers we have been leveraging on has been Information Technology (IT) systems. In terms of the World Bank Doing Business Indicators 2018, I think we are currently number 31 on paying taxes because we have eased compliance.
You can declare, pay online without leaving your premises. At customs, we have invested in a system we call the Rwanda Electronic Single Window. It allows clearing agents to make declarations and pay without moving back and forth with paperwork. We now have locations in Dar es Salaam (Tanzania) and Mombasa (Kenya).
Under the leadership of our Heads of State within the Northern Corridor, we have eased clearance of cargo from the point of origin.
Our focus is not just on maritime cargo but also on intra-regional trade. Today you can buy goods from Rwanda to Uganda under the single customs territory, declare and pay for those goods without coming to Rwanda. We have invested in technology to ensure that we reduce non-tariff barriers.
We invested in a common electronic cargo tracking system. So, you can now track your cargo from point of origin to the destination.
We have also invested in Electronic Billing Machines.
We recently launched the unified declaration on pension funds and taxes and this is another initiative aimed at easing the burden on the taxpayer.
We have also improved on governance. In 2015, we went through a very comprehensive audit at the Office of the General. In the same year, we went through what we call TADAT — a tax administration diagnostic assessment tool by the IMF — and those two assessments enabled us to gauge where we stood in terms of efficiency and effectiveness.
We got good recommendations from those assessments, and we have tried to work to implement the recommendations with a focus on making sure that we are efficient and using our resources appropriately.
We are trying to be more efficient because we believe that building a strong institution is the only way to support our economic ambitions.
To what extent has tax compliance improved due to penalties?
I think the penalties play a very minimal role. What has played a bigger role is the social contract between the government and citizens in terms of giving back to the community.
If you look at what the government is doing in terms of inclusive growth, the development that you see in Kigali is the development that you will see in Rusizi.
People are realising that by giving this money to the government they invest it on their behalf. This has made our work much easier.
For instance, roads and schools have been constructed and healthcare is improving. But, our laws also cater for financial distress as there are measures for taxes to be waived.
Going forward, what measures are you putting in place to widen the tax base?
There are two issues: There are people who are in the tax net but who are not complying. Our strategy is to get people to use Electronic Billing Machines.
Another key change that will be coming up in the procedure law is that the Ministry of Finance will have a right to decide which sector should be using EBM.
We are moving away from EBM, as a VAT tool, to EBM as a national invoicing system. The only invoice that we shall be accepting at some point in the next 12- 18 months will be a national invoicing system.
We also plan to widen the tax base through exchange of information. We are working with data scientists from The African Institute for Mathematical Sciences and Carnegie Mellon University. We are also working on a data strategy plan for five years with support from the United Kingdom’s Majesty's Revenue and Customs.