Rwanda has a residence-based tax system in terms of which residents are taxed on their worldwide income and non-residents are taxed on income earned from a source in Rwanda only.
A company is deemed to be resident in Rwanda if it:
- is established according to Rwandan law;
- has its place of effective management in Rwanda; or
- is a Rwandan state company.
corporate tax rate
Taxable business profits of resident companies and Rwandan permanent establishments of foreign companies are taxed at a rate of 30%.
Reduced rates may apply to registered investment entities that operate in a free-trade zone.
|capital gains tax (“CGT”)|
Capital gains from the disposal of business assets are aggregated with other income and taxed at the normal corporate income tax rate of 30%.
Effective from the 2016 year of assessment, an additional tax of 5% is levied on the disposal of immovable property, resulting in an effective CGT rate of 35%.
withholding tax (“WHT”) rates
WHT rate (%)
|branch profits||0%||dividends declared by foreign head office subject to non-resident shareholder's tax of 10%|
| dividends||15%/5% in the EAC|| 15%/5% in the EAC|
| interest||5% on listed and government securities/15% on unlisted securities|| 15%/5% on listed and government securities|
| royalties||15%|| 15%|
| management and technical services fees||15% || 15%|
| || |
double tax agreements (“DTAs”)
DTAs are in place with Belgium, Jersey, Mauritius, Singapore and South Africa.
The EAC DTA with Rwanda, Burundi, Uganda, Kenya and Tanzania is not effective yet.
Losses are deductible, provided that they have been incurred in a trade or business during a preceding year of assessment and may generally be carried forward for five years.
Depreciation allowances claimable in a loss-making year may be carried forward indefinitely.
Foreign-source losses may not reduce domestic-source business profits.
The Rwandan transfer pricing rules require the adoption of the arm’s length price and the comparison of the conditions in a transaction between related parties with the conditions in an uncontrolled transaction.
Related parties are defined to include a company or any person who owns, directly or indirectly, at least 50% in another company and two or more companies if a third party directly or indirectly owns at least 50% in each company.
Interest paid on loans and advances from related entities is not tax deductible to the extent that the total amount of loans/advances exceeds four times the amount of equity (excluding provisions and reserves) during the tax period.
The restriction does not apply to commercial banks and insurance companies.
Individuals are taxed at the following sliding scale of between 0% and 30%.
|annual chareable income of residents (RWF)||tax rate |
|up to 360 000 0%|| 0%|
|360 001-1.2-million|| 20%|
|above 1.2-million|| 30%|
Employers must contribute 5% of the employee’s gross salary to the RSSB, covering contributions for old age benefits, early retirement, invalidity, pension, medical care, injury at work and maternity leave benefits.
Employees must contribute 3% of their gross salary.
|payroll taxes||There is no payroll tax in Rwanda.|
|stamp duty |
There is no stamp duty in Rwanda.
|taxable supplies ||VAT is levied on the supply and importation of goods and services.|
Companies must register for VAT if their turnover exceeds RWF20-million per annum in the previous fiscal year or RWF5-million in the preceding calendar quarter, or is likely to exceed such thresholds in the coming year.
|reverse VAT on imported services|
In terms of the VAT reverse-charge mechanism, a resident taxpayer receiving taxable services from a non-resident person is liable to declare and remit the output tax due on such supply.
When the imported services are not available in Rwanda, such VAT may be claimed as an input tax by the recipient of the services.