The Ministry of Finance and Economic Planning has announced that taxation on the sale of plots of land could be implemented if the new bill on land and buildings currently under discussion in Parliament is adopted. The scrutiny of the bill started last week.

Richard Tusabe, the Minister of State in Charge of the National Treasury at the Ministry of Finance and Economic Planning, said that the reforms are being carried out due to the fact that the previous law had loopholes, as land sales were never taxed despite the increasing value of land, which is attributed to the infrastructure. Some plots of land are being sold at Rwf400 million in the City of Kigali.

According to land reference prices published in November 2018, Rwf169, 676 per square metre was the maximum reference price or the highest price for land parcels in Kimironko, for instance.

Gisozi came second at Rwf152, 550 per square meter, followed by Nyarugenge at Rwf151, 697 and Rusororo at Rwf151, 169.

However, based on the new reference prices, the value of land in these areas has since increased by 19 per cent.

"It is unfair when someone is taxed when they sell a cow while someone who sells Rwf150 million is not taxed," Tusabe noted.

If the reforms are put in place, selling a plot of land in Rebero in Kicukiro District or Nyarutarama area in Gasabo District could be charged taxes equivalent to 2.5 per cent of its value.

However, members of parliament suggested a 1.5 per cent charge.

Tusabe said taxes on selling plots of land are needed, given that some businesses were avoiding investing in other sectors and instead resorting to buying and selling land plots, as they were not being taxed.

However, he said, those selling plots of land whose value is below Rwf5 million will be exempt from taxes.

Meanwhile, a new proposal submitted by the Rwanda Revenue Authority (RRA) could, among others, see a decrease on land taxes (immovable properties), as well as the current rates of the corporate income tax lowered.

Under the proposal, RRA said, the government would maintain former land taxes of up to Rwf80, from the current Rwf300 per square metre (that were set under the property tax law enacted in 2018).

Rwanda is committed to a fundamental tax overhaul through a comprehensive tax reform strategy.

Vision 2050 seeks to mobilise 21.5 per cent of GDP by 2035 in domestic revenues, up from 15.9 per cent in 2019-20.