The Electronic Billing Machine (EBM) was introduced in Rwanda in 2013 to improve the Value Added Tax (VAT) compliance, promote transparency in business and ease doing business.

EBM came to resolve identified weaknesses of manual invoicing such as the vulnerability aspect of the paper-based invoicing system, the forgery of invoices resulting into unreported sales and undue VAT refund claims; parallel sales invoices books with an effect on the cost and time taken during tax audits, lack of transparency in business transactions to name a few.

On taxpayer’s perspective, EBM being an IT-based tool helped the taxpayer as an internal control too, served for accounting purposes, keeps safely taxpayers sales and purchases information, and reduced time to file and declare VAT from 45 hours in a full year to 5 hours only.

The choice of VAT in Rwanda is first based on the fact that this tax is the main contributor to government revenues, counting between 33 and 36% of the total tax revenues. Secondary, the nature of this tax pushed the government of Rwanda to implement a mechanism that assures real payers of VAT that their contribution can be monitored and followed-up till the government treasury.

Pilot phase

In fact, once an invoice is presented through EBM, all its content, including VAT component paid by consumer through the price of good and/or service, is transferred to the tax server on real time.

Implemented in a phased-approach, the pilot phase consisted of 800 VAT registered taxpayers and after the success story of pilot phase, EBM was rolled out to all VAT registered taxpayers. The impact assessment of EBM revealed that this system contributed to the increase of between 4 and 16% depending on the level of its usage by taxpayers.    

Despite the above highlighted performances, the implementation of EBM encountered some challenges related to the nature of devices used and the details of transactions they provide to both the RRA and taxpayers, channels of exchange of information, access of sales for various purposes including error correction, data transmission, lack of communication between devices used by one taxpayers and those ones used by clients or suppliers for a complete understanding of supply chain and internal controls.  

It is against the above mentioned challenges that the government of Rwanda upgraded the EBM system by introducing a software-based billing system known as EBM2 to fix some of the mentioned challenges and will replace progressively the EBM1 implemented since 2013. 

The software-based billing system which replaced the first version of the EBM has made paying taxes for companies; easier, cheaper in Rwanda.

Free of charge

“It is the same as the first EBM version. What we did was to upgrade it to have  more functions that was lacking in the EBM1 such as communication between devices used by one taxpayers and with those ones used by suppliers and clients for a complete understanding of chain of distribution, displaying details of sales transactions to taxpayers, easy the channel of data transmission, remote services and support to users, keeping purchases and sales record” said Emmy MBERA, the EBM coordinator at RRA, adding that RRA is distributing the software freely, users are trained free of charge and servicing it is free.

The development mirrors the tax administration’s continuous drive to facilitate business growth by making it less cumbersome for the busy taxpayer to comply with meeting tax obligations.

Janet Mbabazi, an administrative assistant at Hima Cement, one of the companies which was selected to pilot the application early 2017 is full of praises, for both RRA saying it is “exciting” to get the software free of charge, she said “if one is going to buy it on the market it would expensive”.

Mbabazi says the first version of EBM was burdensome to use as they had to repeat the process of keying in the TIN number, prices of items and quantity before issuing an invoice.

With the EBM Version 2 software, Hima Cement has built a customer data base which can be accessed in a flash of a second by keying in, giving the company time to serve more clients which positively impact sale volumes.

The biggest challenge the first version, Mbabazi says whenever a taxpayer made a mistake or loses an invoice, it required them to go to RRA for assistance in order to correct the anomaly.

For small businesses, this means closing for some time, a cost implication which was weighing heavily on company earnings.

The move by RRA to distribute the software and offer free after care services has drawn a lot of enthusiasm from small, medium and large taxpayers in the country, more than 2 500 taxpayers have the software now in just 1 month; that is a reflection that the software has answered their needs.

Filing VAT made easier

Dipak L Ganatra manager of ETS Harjit describing the app as the best in Africa. “I have been working in many African countries,” said Ganatra. “I have worked in Tanzania, Uganda, Zimbabwe … this system is 100% perfect. You can’t find the system anywhere…,” said Ganatra.

Denis Ndikumana at Bafakurera Company says that his ability to monitor transactions and stock levels at any point in time is one of the biggest innovations which the software has introduced.

Analysts say the fact that taxpayer has a true position of their purchases and sales, it means at the time of filing VAT it will be easier. 

EBM Version 2 has also eased the clumsy process of VAT refund, since RRA can now smoothly get related business transaction information on time.

 Currently the requirement of taxpayers to hire professional accounts before they file tax returns is no longer necessary as the RRA system records total sells per month, each quarter, yearly and VAT collected.

With the new software-based billing system, taxpayers are able to get timely details of what they have submitted to RRA as opposed to waiting until the end of the month to access RRA portal link.

Pascal RUGANINTWALI, Deputy Commissioner General at RRA says Rwanda’s quick adoption to internet based filling and as well as wide spread usage of electronic gadgets, including phones to file taxes encouraged RRA to rollout the EBM Version 2 software.

“Currently 100% of the taxpayers are filling through e-tax,” said RUGANINTWALI before explaining that the taxpayers will not have challenges as there is a standby team at RRA to respond to taxpayer’s needs.

Hundreds of taxpayers keep going to RRA head office for training and installation of the software which has cut costs of tax compliance, increased the level of transparence between the taxpayers and RRA as it allows users track transactions and stock levels at any point in time.