Rwanda Revenue Authority has recovered at least Rwf1.6 billion from tax fraud in the financial year 2019/2020 as it steps up efforts to mobilise domestic resources.
The most common goods in tax fraud are cigarettes, spirits and wines, second hand clothes and Movit products.
“I would say tax fraud is a pressing issue right now because before Covid-19 disruption, it was rising despite committed effort to address it,” said Jean Paulin Uwitonze, Deputy Commissioner for Taxpayer Services.
His point was echoed by Angello Musinguzi, Senior Manager Tax and Regulatory Services at KPMG.
Mr Musinguzi said tax fraud is a concern that is driven by an anti-tax culture that has been pinned in society for long.
“It is considered heroic when someone successfully evades tax. It is a longheld culture that needs to be addressed before any other embargoes through awareness campaigns and enforced penalties,” Mr Musinguzi noted.
The law stipulates that “a taxpayer who commits fraud is subject to an administrative fine of 100 percent of the evaded tax. With exception to the penalty, the tax administration refers the case to the Prosecution service if the taxpayer uses false accounts, falsified documents or any other act punishable by law.
In case of conviction, the taxpayer can be imprisoned for a period between six months and two years.” Minister’s order determines an award given to any person who denounces a taxpayer who engages in tax fraud. The law defines tax fraud as an activity that occurs when an individual or business willfully and intentionally falsified information on a tax return to limit the amount of tax liability.
Tax fraud essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation.
The taxman said it has put in place mechanisms to address fraud including a recently launched phone application used by businesses to scan products and tell whether they have paid all taxes applicable or not.
“The application decentralises the fight to tax fraud to the public. Business owners are encouraged to use the app to inspect their products through awareness,” said Jean Paulin.
He added that the institution has invested in custom inspection with innovative technologies to unmask fraudsters and their tricks.