Business players in the ecosystem have been tipped on new provisions and changes made under the new Income Tax Law to avoid any mistakes as it comes into force.
One of the reasons for most of the proposed changes under Law No. 027/2022 of 20 October 2022 is to accommodate Kigali International Financial Centre (KIFC)'s mandate to promote and develop Rwanda as a leading financial destination for international investment and cross-border transactions in Africa.
In a workshop organized by BDO Rwanda on November 18, business people, accountants, auditors, and tax specialists convened together to explore the new amendments and identify whether there are gaps that still need to be tackled.
Beatrice Mujawayezu, Director of Business Service Outsourcing at BDO Rwanda, said that with the tax law changes that come at the right time, the government has prioritised citizens given the current economic environment.
According to Ministry of Economic Planning and Finance, to implement the tax reform, the government will forego more than Rwf43 billion for the 2 years (including Rwf20.7 billion for phase 1 of implementation consisting of the tax waiver on the small-income earners, and Rwf22.5 billion for phase 2, which is about tax cut).
However, she finds that there are still some gaps that should be addressed such as facilitating business operators in airplanes to give out EBM receipts version 2 and also easing the process of transitioning from individual businesses to companies.
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Fidel Ukwishaka, Tax Manager at BDO Rwanda, said that the new law exercises tax on income from business operations, employment income, or investments.
"In the old law, there were some words that created confusion and some practices that lacked clear implementation procedures but those two cases are handled in this new one," he explained.
With the increase in the amount of personal income that is exempted from tax, he said that it will boost the economy in a way that one has a little more to save, open up a small business, or spend in consumption.
"Government revenue from this type of tax might slightly decrease but this will be offset by revenues from other income taxes when economic activities increase because people will be using that money in investments," Ukwishaka noted.
Lydie Murorunkwere, Managing Director of ML Corporate Services -a company that provides services ranging from registering, licensing, legal and compliance consultation, and taxation to corporate companies -said that it is encouraging to see how regulators are putting effort in easing doing business in the country.
"It requires understanding and going through all amendments under the new law so that people can be aware of implications that they hold and know which structure is the most appropriate when venturing into business."
