Tenants are expected to dig deeper into their pockets as property owners start feeling the pinch of revised land rates imposed by a new law.
It is expected that property owners will pass increased costs to tenants to cushion their businesses from incurring losses.
According to the new law, property owners in urban commercial, industrial and residential areas stand to pay up to four times the existing land rates as decentralised entities finally get nod to review levies.
A ministerial order setting standard rates applicable to land in the country, which was released last week, show that the charges paid by landowners in the central business Kigali and secondary cities could more than double.
According to new rates, landowners who previously paid a maximum of Rwf80 per square metre will now pay between Rwf200 and Rwf300 for plots located in areas such as Gasabo, Kicukiro and Nyarugenge.
Land in the peri-urban and neighbourhood centres like those in central business district areas of the secondary cities are in the Rwf100 to Rwf200 per square metre bracket while lower rates between Rwf0 and Rwf80 is applicable on land in rural and sub urban areas, as well as those not serviced with basic infrastructures in urban centres.
Kigali city and district advisory councils are expected to revise their land levies, and pave the way for implementation of new property tax law enacted in January last year.
The law also introduced punitive tax on undeveloped land parcels and those beyond the standard plot size of 300 per square metre.
However, sections of the law on additional 50 per cent tax on land in excess of the standard plot size was successfully challenged in the Supreme Court which termed it unconstitutional in its November 29 judgement.
Bob Gakire, territorial administration and good governance director general at Ministry of Local Government said the districts advisory councils would, in addition to deciding the revised tax rates in their jurisdictions, make sure they abide by the supreme court ruling in the enforcement of the law.
“The judgement of the Supreme Court becomes a law and it will be respected in the implementation, especially when it comes to articles where the exemption was recommended,” he said.
Despite the new property law having been enacted in January last year, lack of a ministerial order determining the rate thresholds together with the court case challenging affected its enforcement.
Rwanda Today learnt that Rwanda Revenue Authority, which is in charge of collecting the decentralised taxes on behalf of the districts had to stick to the existing rates in the computing system being used in the declaration and payment of property taxes for 2019.
Erneste Karasira, deputy commissioner for regions and decentralised taxes department at Rwanda Revenue Authority told Rwanda Today that the new land tax rates to be decided by districts’ advisory councils will apply starting the next fiscal year.
“We have been using the existing rates in the ongoing property tax declaration and payment for 2019. The new rates are not expected to change anything at this stage but they will be applicable starting next fiscal year in July,” he said.
The taxman indicate that the property tax declaration and payment was being carried out alongside the property registration for some landlords, who are yet to do so for them to get in the database of the taxpayers, enabling them to declare and pay dues.
Besides, Rwanda Land Management and Use Authority indicated that there were close to 1 554 604 land plots without ownership information in the land registry, hence it was still difficult to collect taxes on the properties.