16 May 2017

Rwanda Revenue Authority Has Potential to Surpass the Rwf1 Trillion Target

editorial

Rwanda Revenue Authority (RRA) has announced it will issue 1,000 machines, a 'second generation of electronic billing machines' (EBMs), a system the tax collectors said will help monitor transactions from entry of goods into customs to sale. This is part of efforts to improve tax collections as RRA seeks to collect more than Rwf1 trillion for the first time in its 18-year history, this fiscal year.

The Deputy Commissioner-General and Commissioner for Corporate Services at RRA, Pascal Bizimana, told lawmakers last week that the revenue agency will give the machines first to major business operators, mainly those engaged in import of goods, to control the entire supply chain.

The development is a big step forward as the tax body looks to improve collections and curb tax evasion.

Using EBMs, has seen VAT collection increase from about Rwf110.5 billion in 2013 to Rwf220 billion, last year. This shows that the EBM system is yielding results.

However, there are still issues in the EBM system to fix. Some people are reluctant to give EBM generated receipts. Also some traders connive with buyers to record wrong prices on receipts that are not produced by EBM, so that they share illicitly earned gains. There are also those who still don't understand what VAT is all about.

As RRA consolidates efforts in ensuring tax compliance, a holistic approach will go a long way to ensure that the tax body meets its target. This calls for applying the carrot and stick.

On one hand more sensitization campaigns should be undertaken aggressively across the country to enlighten people about the importance of paying taxes. This can also be coupled with awards for those setting an example as good tax payers. On the other hand punitive measures should be taken against those who evade taxes to send a clear message that tax evasion is a risky venture that should be avoided at any cost.

Although RRA has generally done a commendable job, more efforts are needed to increase the number of taxpayers that stand at 168,346- this will ensure that the target of over Rwf 1 trillion is achieved in revenue collections.

Rwanda

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