Rwanda, on Tuesday, March 28, signed the Multilateral Competent Authority Agreement (MCAA); a framework that provides an efficient mechanism for information exchange among member countries of the Global Forum (GF) on Transparency and Exchange of Information For Tax Purposes.
With 166 members, the Global Forum, run by the Organization for Economic Cooperation and Development (OECD), is the world's leading international body working on the implementation of global transparency and exchange of information standards.
Under the agreement, countries exchange key information and are able to trace and fight tax malpractices and crimes, among others, the tax evasion and illegal financial activities, Rwanda Revenue Authority (RRA) said.
The multilateral framework agreement, signed by the RRA Commissioner General, Pascal Bizimana Ruganintwali, marks another step towards achieving full tax transparency.
Ruganintwali said the signing underscores Rwanda's commitment to the fight against tax evasion and illicit financial flows as it positions itself as a regional business hub.
We want to become a trusted financial hub, and a destination of foreign direct investments. We want investment banks to establish operations in Rwanda and they have to be assured that tax transparency is guaranteed and thus, the financial transactions are safe," he said.
"Due to terrorism financing and money laundering, today, the world is vigilant and no one is willing to take the risk of investing in a country where there are such illegal financial transactions. Therefore, we have to assure investors that Rwanda works according to global standards". Among other assurances, the government has set up the Financial Intelligence Centre (FIC), which is tasked with tracking the illicit financial flows among other things. In the same spirit, a suite of laws is being finalized and it is designed to increase tax transparency and curb tax evasion by complex structured businesses.
According to the UN, offshore tax evasion and illicit financial flows rob Africa of an estimated $88 billion each year, money that should be invested for development.
The Global Forum (GF)'s member countries are required to implement GF exchange of information standards and fight against illicit financial flows and terrorism financing in their territories.
In 2017, Rwanda joined the Global Forum. Ruganintwali said Rwanda has been working tirelessly to implement the standards overseen by the OECD.
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The 166 member countries of the Global Forum have implemented robust standards that have prompted an unprecedented level of transparency in tax matters.
In 2022, Rwanda ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC), to which 147 countries are signatory.
The signed agreement (MCAA) provides an efficient mechanism for the automatic exchange of financial account information, in the spirit of expanding the information exchange relationship which was in place based only on bilateral agreements. This is another good step in a series of measures to achieve complete tax transparency in Rwanda, Ruganintwali said.
Though Rwanda was exchanging information on request for tax purposes with treaty partners using double tax avoidance agreements; which are bilateral agreements, it can now exchange information on request with any of the member countries of the Global Forum signatory of the MAAC from 1st January, 2023 by the use of the MAAC which is a multilateral agreement.
In 2025, the Rwandan fiscal authority will start exchanging information for tax purposes in an automated way; that will be the implementation of the Automatic Exchange of Information (AEOI) and from that time, member countries will be able to access the financial account information for their tax residents without prior request.
