12 September 2017

Rwanda: RRA Devises New Ways to Identify Tax Evaders

The Rwanda Revenue Authority has joined hands with other government agencies to gather data on tax evaders.

RRA is partnering with a number of national agencies to share data on taxpayers which will see them reconcile taxes declared and expenditures, expected to help in identifying evaders.

With about 20 per cent of the tax base currently filing nil, the development will enable the tax body to identify the genuine cases and evaders.

This is one of the new measures by the tax authorities following the 2017/2018 budget increase of domestic revenues by about 118.9 billion to collect Rwf1200.3 billion.

This fiscal year's nation budget is Rwf2.09 trillion, up from last year's Rwf1.95 trillion.

Despite an increase of about Rwf140.7 billion in spending in the 2017/2018 budgets, the government has chosen not to introduce additional taxes but tighten revenue collection measures and efficiency.

RRA Commissioner General Richard Tusabe told The New Times last week that they have already held inception meetings with a number of agencies who have information that could be of use in the effort to further improve efficiency.

"We have started, we had a workshop with all the stakeholders who we believe have vital information. In the process of information sharing, we should not compromise confidentiality. We are now drawing a roadmap on how to engage," he said.

He said that the high levels of automation in various government and private sector agencies creates ideal conditions for data sharing.

"If you look across government agencies and private sector, the level of automation is really high. It is a question of interfacing with each other and seeing how we can use that information to each other's benefit. It is not only possible, it is what we believe will be transformational, we can run a tax administration system that is based on data. We have already began the process but it takes time since not all organisations are at the same level," he explained.

The new data is expected to complement the new supply chain management system which the taxman uses to monitor a section of the business community's transactions.

Tusabe said that the data led tax administration is expected to reduce cost of doing business for tax payers as well as tax administration for the Authority. In the initial phase, the authority will have to incur costs such as training and setting up systems.

"It is going to change the cost of doing business for the taxpayers and it is going to reduce the cost of tax administration. In the short run, we might be incurring costs in setting up systems but, in the long run, the ultimate objective is to make sure that the tax payer is complying with this," she said.

Angelo Musinguzi, a tax manager at KPMG, told The New Times that the development was a positive one as RRA seeks to raise more revenue by improving efficiency.

He said that, in recent times, the agency has taken proactive steps to improve taxpayers' experience as well as ease tax administration.

Going forward, he said the new development will see the taxman collect information of taxpayers and consequently identify those evading taxes in such ways as pretending to be part of the informal sector.

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