Business Environment

flag Rwanda Rwanda: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The standard tax year is the calendar year, although the taxpayer may request a different 12-month period.
Accounting Standards
Companies whose debt or equity securities trade in a public market and companies with public accountability (like banks and other financial institutions) must use full IFRS standards. All companies whose securities do not trade in a public market must use the IFRS for SMEs standard (Companies Act 2009).
Accounting Regulation Bodies
Institute of Certified Public Accountants of Rwanda (ICPAR)
Accounting Reports
The main financial documents in Rwanda are the financial statement, the statement of income, the balance sheet and the cashflow statement.
Publication Requirements
The Board of Directors of every company shall ensure that, within three months following the end of a financial statement, the audit is made and signed by at least one representative of the company. Such an audit shall be submitted to the Registrar General. Every company, other than a small private company, shall ensure that, within thirty days after the financial statements of the company and any group financial statements are required to be signed, copies of those statements together with a copy of the auditor's report on those statements are filed with the Registrar General for registration. A small private company shall file with the Registrar General a financial summary for registration. Furthermore, a company shall have a balance sheet date in each calendar year (Companies Act No. 07/2009).
Professional Accountancy Bodies
Institute of Certified Public Accountants of Rwanda (ICPAR)
Certification and Auditing
The financial statements of all companies, except small private companies, must be audited annually by a licensed member of ICPAR.
Accounting News

Return to top

Tax Rates

Consumption Taxes

Nature of the Tax
Value-Added Tax (VAT)
Tax Rate
18% (standard rate)
Reduced Tax Rate
Exports of goods and services, goods and services supplied to diplomatic and consular missions, and services rendered to a tourist for which value-added tax has been paid are zero-rated.
Certain goods and services are exempt from VAT, for instance: unprocessed agricultural products; financial services; educational services; medical services; agricultural, animal husbandry and horticultural services; transportation of passengers (excluding for hire).
Other Consumption Taxes
Excise tax is imposed on the manufacturer or importation of certain products and services, like soft drinks (5-39%), bottled water (10%), cigarettes (36% + RWF 30 per pack), alcohol (60-70%), fuels (RWF 183/lt on premium fuel and RWF 150/lt on gas oil), lubricants (37%), motor vehicles (between 5-15% according to the engine capacity), telephone communication (10%).

Return to top

Corporate Taxes

Company Tax
30% of the taxable profits
Tax Rate For Foreign Companies
Residents are taxed on their worldwide income. Non-resident entities are taxed on the Rwanda-sourced income through a permanent establishment.
Companies that have a place of effective management in Rwanda at any time during the tax period are considered resident for tax purposes.
Capital Gains Taxation
Capital gains on the direct or indirect sale or transfer of shares or debentures are taxed at 5%. Certain transactions are exempt from taxation: sale or transfer of units of collective investment schemes, sale or transfer of shares on the capital market, and gains resulting from the restructuring of companies in respect of the transferring company.
Gains arising from the sale of commercial immovable property are subject to tax at the rate of 30%.
Main Allowable Deductions and Tax Credits
Generally, all expenses corresponding to an actual cost and used for activities related to the tax period are deductible, provided they are not capital in nature.
Interests paid on borrowed money used for business purposes or interests in respect of an amount payable for property acquired to earn income are deductible. Donations to charitable organisations and other non-profit making organisations are tax-deductible (capped at 1% of turnover). Bad debts are deductible under certain conditions. Purchased goodwill can be depreciated at the rate of 10%.
Taxes are not deductible, so as fines and penalties.
Tax losses can be carried forward for five fiscal years; however, if the direct or indirect ownership of the share capital or the voting rights of an unlisted company changes more than 25% by value or by number during a tax period, such a company is restricted from carrying forward losses incurred during the tax period and previous tax periods. The carryback of losses is not allowed.
Other Corporate Taxes
Other taxes include a transfer tax (fixed fee of RWF 20,000) and a property tax (a thousandth of the taxable value per year). A trading licence fee applies at the district level based on turnover, varying between RWF 60,000 (for turnover below RWF 40 million) and RWF 250,000 (for turnover above RWF 150 million).
Concerning social security contributions, an employer is required to contribute 5% of the employee’s gross salary to the Rwanda Social Security Board (RSSB) scheme, with the employee contributing 3%. An extra contribution of 0.3% is required for maternity leave benefits.
Other Domestic Resources
Rwanda Revenue Authority (RRA)
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Rwanda Sub-Saharan Africa United States Germany
Number of Payments of Taxes per Year 9.0 36.6 10.6 9.0
Time Taken For Administrative Formalities (Hours) 90.5 284.8 175.0 218.0
Total Share of Taxes (% of Profit) 33.2 47.3 36.6 48.8

Source: Doing Business - Latest available data.

Return to top

Individual Taxes

Tax Rate

Taxes due from individual businesses and incomes from remunerations from 0 to 30%
360,000 RWF or less 0%
360,000 - 1,200,000 RWF 20%
More than 1,200,000 RWF 30%
Casual labour Up to RWF 30,000: 0%
Above RWF 30,000: 15%
Allowable Deductions and Tax Credits
Expense incurred wholly and exclusively in the production of employment income can be deducted. Deductions are available for retirement contributions made to a qualified pension fund (subject to a limit of the lower of 10% of employment income or RWF 1.2 million per year).
Special Expatriate Tax Regime
Residents are taxed on their worldwide income, whereas non-residents are taxed on their Rwandan-sourced income. Both residents and non-residents are subject to the same tax rates.
An individual is considered resident if he/she stays in Rwanda for more than 183 days in any 12-month period, either continuously or intermittently; or if he/she has a permanent residence or an abode in Rwanda.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Consult the list of Double Taxation Avoidance Agreements signed by Rwanda
Withholding Taxes
Dividends: 15%; Interest: 15%; Royalties: 15%
Bilateral Agreement
Rwanda and Mauritius concluded a Double Taxation Agreement.

Return to top

Intellectual Property

National Organisations
You can contact the Office of the Registrar General Rwanda Development Board (RDB).
Regional Organisations
Rwanda is a member of the African Regional Intellectual Property Organization (ARIPO) and the World Intellectual Property Organization (WIPO).

Return to top

Legal Framework

Independence of Justice
The constitution and law provide for an independent judiciary. Rwanda’s judicial system can be considered fairly independent from influences of the government, individuals, or companies, and was ranked 23rd in the global ranking on judicial independence by World Economic Forum in 2017-18 (highest ranking for African countries). However, courts still suffer from a lack of resources and capacity. Rwandan law prohibits torture and degrading treatment.
Equal Treatment of Nationals and Foreigners
Foreigners are formally granted equal treatment as citizens. According to art. 29 of the 2003 Constitution, every individual has the right to due process of law. Furthermore, extradition of foreigners is authorised only if it is in accordance with the law or international agreements to which Rwanda is a party.
The Language of Justice
Three judicial languages are used in Rwanda which are: Kinyarwanda, French and English.
Recourse to an Interpreter
It is possible to have an interpreter in Rwanda.
Sources of the Law and Legal Similarities
The legal system of Rwanda was originally based on the Belgian civil law system, although, since the renovation of the legal framework in 2002 and tafter the country joined the Commonwealth in 2009, the actual system is hybrid, being a mixture of civil law and common law. The main sources of the law are the Constitution of 2003, formal laws, presidential orders, prime minister's orders, ministerial orders and customary laws.
Checking National Laws Online
Library of the U.S. Congress

Return to top

Standards

National Standards Organisations
Rwanda Standards Board (RSB)
Integration in the International Standards Network
The Rwanda Standards Board (RSB) is a member of the International Organisation for Standardisation (ISO).
Classification of Standards
RW
Online Consultation of Standards
Rwanda Standards Board webstore
Certification Organisations
Rwanda Standards Board (RSB)

Return to top

Business Practices

General Information
Opening Hours and Days
Governmental offices: 7 a.m. to 4 p.m. - Monday to Friday (generally with a one-hour lunch break)
Private sector (offices): 8 a.m. to 5 p.m. – Monday to Friday (generally with a one-hour lunch break) – 8 a.m. to 1 p.m. on Saturdays
Banking sector: 8 a.m. to 5 p.m. - Monday to Saturday.
Shops: from 8 a.m. to 6 p.m. - from Monday to Saturday. Many shops close early on Saturday and remain closed on Sunday (however, supermarkets and shopping malls are open 7 days a week)
 

Public Holidays

New Year’s Day  1st January
Day after New Year’s Day 2nd January
National Heroes Day 1st February
Good Friday between March and April
Easter Monday between March and April
Genocide against the Tutsi Memorial Day 7th April
Labor Day 1st May
Independence Day 1st July
Liberation Day 4th July
Umuganura Day Friday of first week of August
Assumption Day 15th August
Christmas Day 25th December
Boxing Day 26th December
Eid El Fitr the date shall be announced each year according to the lunar calendar
Eid Al Adha the date shall be announced each year according to the lunar calendar
 
Holiday Compensation
Except April 7th (Genocide against the Tutsi Memorial Day), if an official holiday falls on one day of the weekend, the following working day shall be an official holiday. If two consecutive official holidays fall on a day of weekend, the two official holidays shall be compensated in one working day that follows. In case of coincidence of two official holidays, the following working day shall be an official holiday to compensate one of the two coinciding official holidays.
 

Periods When Companies Usually Close

Christmas time December
Eid El Fitr-Eid Al Adha the period shall vary each year according to the lunar calendar
 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: October 2022