The government, on June 29, promulgated a 2024/2025 state finance law under which Rwanda plans to spend a national budget of more than Rwf5.69 trillion for the fiscal year that commenced on July 1.
According to the Ministry of Finance and Economic Planning, the budget is intended to sustain economic growth, bolster climate change mitigation efforts, and fund crucial investments in agriculture, private sector development, youth employment, energy, ICT, transport, and financial development.
It will also speed up the implementation of key projects in priority sectors such as health, education, disaster management, social protection, governance, justice, and reconciliation.
One of the key sources of funds to finance the budget is tax revenues which are projected to amount to more than Rwf2.97 trillion (or 52 per cent of the total budget for 2024/2025), according to the finance law.
This is more than Rwf333 billion or 12 per cent higher than the tax revenue target for 2023/2024 was Rwf2.63 trillion for the 2023/2024 fiscal year that ended on June 30.
Such revenues will come from four areas, it indicated. They include taxes on income, profits or capital gains which are expected to generate more than Rwf1.4 trillion, which is the largest contribution, followed by taxes on goods and services with Rwf1.3 trillion.
Taxes on international trade and transactions will generate more than Rwf209 billion, while tax on property will bring in more than Rwf7 billion, it added.
ALSO READ: RRA eases conditions for taxpayers to settle tax arrears in instalments
Under Rwanda Revenue Authority (RRA) action plan for 2024/25, the tax administration body seeks, among others, to maximise revenue collection.
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This, it indicated, will be achieved through initiatives including widen tax base by activities such as enhancing taxpayer registration mechanisms; strengthening mechanisms to maintain adequate and accurate taxpayer registry; and reviewing tax laws for adequacy/relevancy.
Another initiative is sustaining tax compliance through strengthening mechanisms to boost taxpayer compliance, enhancing automation of filing processes, and enforcing the usage of electronic payment mechanisms on all large and medium taxpayers.
ALSO READ: A closer look at 2023's tax changes: Five laws tailored to citizens' needs
Total domestic resources
Overall, domestic resources (including the more than Rwf2.97 trillion in taxes) are expected to amount to more than Rwf3.64 trillion (representing about 64 per cent of the total budget) - with other revenues apart from taxes expected to contribute more than Rwf444 billion.
They include income from sale of goods and services with more than Rwf382 billion, property income with more than Rwf24.5 billion, and fines, penalties and forfeit that are anticipated to generate over Rwf36.6 billion, as well as domestic loans which are likely to be Rwf232 billion.
External resources are expected to contribute slightly more than Rwf2 trillion, which include grants amounting to more than Rwf725 billion, and foreign loans Rwf1.3 trillion.
