The Rwanda Revenue Authority (RRA) recorded Rwf759.8 billion in total tax revenue collection during the July 2013-June 2014 fiscal year, which was short of the targeted Rwf782.5 billion. This, it has emerged, could be partly because some budget officers in public institutions have not been remitting taxes collected from civil servants on behalf of RRA, contrary to standing guidelines.
According to Richard Tusabe, the RRA Commissioner General, many government institutions budget managers do not submit tax collections and neither can they account for the money.
He, however, declined to say which government agencies had not remitted the taxes.
The tax body chief attributed this laxity to negligence or corruption tendencies among budget officers.
This was one of the many challenges RRA cited as having a huge blow on their annual tax collections targets during a government officials' tax dialogue last week in Kigali.
Tusabe told participants that they would remind budget managers of their obligations.
According to the recently-released Auditor General's report, a total of Rwf2.7 billion deducted in taxes by government agencies was not remitted. This represents an increase of Rwf2.65 billion compared to Rwf52.3 million registered in the 2012/2013 financial year. Taxes that were not deducted amounted to Rwf592.1 million compared to Rwf564.6 million over the same period.
Dorcelle Mukashyaka, RRA deputy commissioner general, said all government budget officers were well aware of their responsibilities, adding that though RRA has carried out numerous trainings for budget managers in government institutions, the problem has persisted.
According to the report, taxes that were deducted, but not remitted to RRA include Pay As You Earn (PAYE) amounting to Rwf2.22 billion, while Rwf214.1 million was not deducted at all.
Value Added Tax totalling Rwf77.2 million was not deducted from suppliers, while Rwf15.4 million was deducted but not remitted to RRA by some entities, it indicated.
About Rwf2.2 million was not deducted as 3 per cent withholding tax from suppliers while Rwf1.9 million was deducted, but not remitted to RRA by some agencies. The total sum of Rwf83.7 million was never deducted as 15 per cent withholding tax from service providers.
"The concerned people should answer why they don't remit the money because the law clearly states that they should deduct and declare to RRA," Mukashyaka explained.
Nelson Ogara, a senior manager at PricewaterhouseCoopers Rwanda, said failure to remit the taxes to RRA impacts on the economy.
"If the money supposed to be spent by the government is not collected, this creates avoidable shortfall," he said.
He added that if the money remains on the government treasury account, it would not be used as required to support Rwanda's economic growth.
The other challenges facing RRA include resistance to use electronic billing machines and online tax payment facilities, a large informal sector, 'hard to trace' cash transactions, smuggling and tax evasion.