ATAR TRAINING

TRAINING DECENTRALIZED TAX

MARCH 2015

LOCAL REVENUE NEW LEGAL FRAMEWORK

Law No 59/2011 of 31st December 2011 establishing the sources

of revenue and property of decentralized entities and governing

their management.

Presidential order No 25/01 of 09/07/2012 establishing the list of

fees and other charges levied by decentralized entities and

determining their thresholds.

Ministerial order No 005/12/10/TC determining the modalities for

the implementation of law No 59/2011 of 31/12/2011.

LOCAL TAXES AND FEES

DECENTRALIZED TAXES

FEES AND CHARGES LIVIED BY DECENTRALIZED ENTITIES

PART I. DECENTRALIZED TAXES

1. FIXED ASSET TAX ( Law nº59/2011 of

31/12/2011, art. From 6 to 38)

2. TRADING LICENSE TAX ( Law nº59/2011 of

31/12/2011, art. From 39 to 47)

3. RENTAL INCOME TAX ( Law nº59/2011 of

31/12/2011, art. From 48 to 56)

I.1. FIXED ASSET TAX(GENERAL PROVISIONS)

WHO HAS TO PAY :

The owner of fixed asset

the holder of the fixed asset whose the legal owner is unknown for a

period of at least 2 years;

the holder of fixed asset if the freehold land title is not yet registered in

the name of the owner;

the proxy who represents the owner who lives abroad;

a usufructuary.

I.1.FIXED ASSET TAX(GP) – cont’n

FIXED ASSET TAX BASE

Market value of the fixed asset for which the owner or the proxy

obtained the freehold land title.

TARIFF OR TAX RATE

1/1000 of the taxable value.

I.1.FIXED ASSET TAX(GP) – cont’n

EXEMPTIONS : fixed assets used for medical purposes, vulnerable

groups, educational and sporting activities; fixed assets intended for research activities; fixed assets belonging to the Government,

Provinces, decentralized entities; fixed assets used for religious activities; fixed assets used for charitable activities;

I.1.FIXED ASSET TAX (GP)– cont’n

EXEMPTIONS (cont’n) :

fixed assets belonging to foreign diplomatic missions in Rwanda;

land in use for agriculture, livestock or forestry if is not more than 2 hectares.

fixed assets used for residential purposes, if the assessed value does not exceed 3,000,000Rwf.

I.1 FIXED ASSET TAX(GP) – cont’n

POINTS TO NOTE

Co-ownership of fixed asset Valuation cycle The methodologies of fixed asset valuation.

• Exercises

I.1 FAT: PROCEDURES APPLICABLE

Legal reference :

Law No 59/2011 of 31/12/2011 establishing the

source of revenue and property of decentralised

entities and governing their management;

Ministerial order Nº005/12/10/TC of 22/06/2012

determining the modalities for the implementation of

law Nº 59/2011 of 31/12/2011.

I.1 FAT: PROCEDURES APPLICABLE (cntd)

Tax declaration

Not later than 31 March of the tax year

Tax payment: Not later than March 31st of the tax year, in case of

the self assessment tax; Within 1 month from the day the tax assessment

notice is received by the taxpayer, in case of re – assessment done by decentralised entity;

Within 6 months, in case of deferral of tax payment; Within 12 months, in case of tax payment in

instalments

Interest and fines: Late submission of tax declaration:

10 % if the delay is less than one month; 20 % when the delay is not more than two months; 30% in case the delay is not more than three

months; 40 % if the delay is more than three months.

Interest and fines:

Incorrect or absence of tax declaration with intention of evading tax:

20% of tax due for the first time 40% of tax due if the offence is repeated.

1.1 FAT: PROCEDURES APPLICABLE (cntd)

Interest and fines:

Late tax payments

Interest of 1.5% per month Surcharge of 10% of the tax due. However, such a

surcharge must not exceed an amount of 100,000 Rwf.

Audit and investigations procedures

For the 4 years of the assessment cycle, the tax declaration can be reviewed

within a period of 6 months after the date of filing the tax declaration.

Taxpayer; Third parties and Persons bound to professional secrecy have to

provide information within 15 business days.

The decentralized entity may any time correct the tax declaration submitted by

the taxpayer, if he has not done properly his tax declaration.

After audit and investigation, the tax assessment is done and sent to the

taxpayer within 6 months after the date of tax declaration was submitted.

Tax recovery procedures

Warning letter

Access to money owned to or held by third parties on

behalf of the taxpayer

Seizure and sale of movable and fixed assets

Write off of the due tax.

Appeal procedures The taxpayer can submit his objection, within 30

days, to the decentralized entity. The entity have to reply within 60 days. If he is not satisfied with the decision, he can appeal

to the competent court within30 days. If he wins the case, he is refunded within 1 month

Roles and responsibilities of Decentralised entities: To avail tax declaration forms no later than January 31st of

every year; To review the tax declaration within a period of six months; To appoint a proxy in case of co-ownership when the co-

owners have not appointed him; To respond to the appeal of taxpayer within two (2) months; To reply within fifteen (15) days when the taxpayer requests to

pay in instalment; To follow all recovery procedures if necessary.

I.1 FIXED ASSET TAX - contd

FIXED ASSET TAX DECLARATION FORM

EXERCISES

I.2 TRADING LICENSE TAX- GENERAL PROVISIONS

WHO HAS TO PAY

Any person who deals with a profit – oriented activity in Rwanda.

TRADING LICENSE TAX BASE

It is applied to the profit – making activities.

I.2 TRADING LICENSE TAX(GP) - contd

Tariff for taxpayer registered for VAT :

Turnover Tax due in Rwf

From Rwf 1 to Rwf 40,000,000 60,000

From Rwf 40,000,001 to Rwf 60,000,000 90,000

From Rwf 60,000,001 to Rwf 150,000,000 150,000

Above Rwf 150,000,000 250,000

I.2 TRADING LICENSE TAX(GP)- cntd

Tariff for taxpayer not registered for VAT :

Type of Activity Rural area

Towns area

City of Kigali

A) Vendors without shops, small scale technicians who do

not use machines and Sewing machine

4,000 6,000 8,000

B) Transporters of people and goods on motorcycles 4,000 6,000 8,000

C) Traders and technicians who use machines 20,000 30,000 40,000

D) All other vehicles besides bicycles 40,000 on each vehicle 40,000 on each

vehicle

40,000 on each

vehicle

E) For transport activities by motor boat 20,000 on each boat 20,000 on each boat 20,000 on each boat

F) Others profit - oriented activities 20,000 30,000 40,000

I.2 TRADING LICENSE TAX (GP)- cntd

Exemptions :

The Government entities are exempted from

trading license tax.

I.2 TRADING LICENSE TAX(GP)-cntd

Points to notes :

if a taxpayer operates branches offices, the trading license tax is declared and paid for the head office as well as for each branch;

when several activities are carried out by the same company or a individual in the same premises, only one trading license tax is declared and paid;

I.2 TRADING LICENSE TAX(GP)-cntd

Points to notes :

The trading license tax certificate must be displayed clearly at the entrance of the business premises or affixed to the car, boat or any other vehicle for which the tax was paid;

In case the taxpayer stops his activities during the taxable year, and if the trading license tax was paid, he must be refunded depending on the remaining months;

I.2 TRADING LICENSE TAX(GP)- cntd

Points to notes :

if taxable activities start after January, the trading license tax must be paid for the remaining months including the one in which the activities started until the end of taxable year;

for the taxpayer conducting seasonal or periodic activities, the trading license tax must be paid for a whole tax year.

I.2 TRADING LICENSE TAX (cntd)

EXERCISES

I.2 TRADING LICENSE TAX-PROCEDURES APPLICABLE

Legal reference :

law Nº 59/2011 of 31/12/2011.

I.2 TRADING LICENSE TAX (PA)- contd

Tax declaration is done :

Not later than 31 March of the tax year

If the activity starts after 31 March, within 30 business days following the beginning of the activity.

Tax payment

The tax payment is made at the bank as follows:

not later than 31st March of the tax year for existing

activities or when they start before 31st March;

within 30 business days in case the activities begin

after 31st March of the tax year.

Interest and fines: Late submission of tax declaration: 10 % if the delay is less than one month; 20 % when the delay is not more than two

months; 30% in case the delay is not more than three

Interest and fines: Incorrect or absence tax declaration with

intention of evading tax:

Interest and fines:

Late tax payments

Interest of 1.5% per month Surcharge of 10% of the tax due. However,

such a surcharge must not exceed an amount of 100,000Rwf.

Audit and investigations procedures An authorised decentralized entity officer can conduct investigations in

order to : be sure on the category of the business; verify if the trading license tax certificate is displayed at business

premises. The decentralized entity gets from RRA no later than 31st January of

every tax year the information for Value Added Tax of registered taxpayers in order to:

classify the taxpayers in categories according to their respective turnover;

cross check the information with self assessed tax declaration.

Warning letter

Access to money owned to or held by third parties

on behalf of the taxpayer

Roles and responsibilities of Decentralised entities: To determine which areas are considered as urban or rural; To issue an official trading license tax certificate for year

paid; To refund, within ninety (90) days, tax paid when a taxpayer

stops his activities before the end of the tax year, basing on the remaining months of the tax year.

To get the information from RRA about the turnovers of VAT registered taxpayers not later than 31st January of every tax year.

I.2 TRADING LICENSE TAX (cntd)

TRADING LICENSE TAX DECLARATION FORM

EXERCISES

I.3. RENTAL INCOME TAX- GENERAL PROVISIONS

WHO HAS TO PAY :

Any individual who earns income from renting out the fixed

assets located in Rwanda.

RENTAL INCOME TAX BASE :

The rental income tax is charged on the total amount of rental

income earned during the previous tax year.

I.3. RENTAL INCOME TAX(GP)- cntd

TARIFF OR TAX RATE :

0% on the bracket lower than 180,000 Rwf ; 20% from 180,001 Rwf to 1,000,000 Rwf ; 30% above 1,000,000 Rwf.

I.3. RENTAL INCOME TAX(GP)- cntd

POINTS TO NOTE: Deducting from the gross rental income 50% or 30%

if the tax payer has proof of paying bank interest; The copy of the rental contract has to be submitted

to the decentralized entity within 15 following the date the contract was signed;

When a rental contract is expired or is amended, the taxpayer has to notify the decentralized entity within 30 days.

I.3 RENTAL INCOME TAX (cntd)

EXERCISES

I.3.RENTAL INCOME TAX- PROCEDURES APPLICABLE

Legal reference :

law Nº 59/2011 of 31/12/2011.

I.3.RENTAL INCOME TAX (PA)- cntd

Tax declaration is done :

Not later than 31 March of the year following the tax year. The tax declaration form has to be accompanied by a copy of the rental contract.

Tax payment is made at the bank as follows: Not later than March 31st of the following tax year, in

case of the self assessment tax; Within 1 month from the day the tax assessment

notice is received by the taxpayer, in case of re – assessment done by decentralised entity;

Within 6 months, in case of deferral of tax payment; Within 12 months, in case of tax payment in

instalments

Interest and fines: Late submission of tax declaration: 10 % if the delay is less than one month; 20 % when the delay is not more than two

months; 30% in case the delay is not more than three

Interest and fines:

Incorrect or absence tax declaration with intention of evading tax:

Interest and fines:

Late tax payments Interest of 1.5% per month Surcharge of 10% of the tax due. However,

such a surcharge must not exceed an amount of 100,000 Rwf.

Audit and investigations procedures

An authorised decentralized entity officer

can conduct investigations in order to verify if

the self assessed tax declared is actual tax

to be paid.

Warning letter

Access to money owned to or held by third parties

on behalf of the taxpayer

Write off of the due tax.

Roles and responsibilities of Decentralised entities: To avail tax declaration forms no later than January

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