How to file tax returns in Rwanda
According to article 43 of Income Tax Law No 16/2005; “A taxpayer who receives taxable business profit prepares an annual tax declaration in accordance with the form determined by the tax administration and presents it, at the same time, with the accounting balance sheet, profit, and loss statement for the tax period, the annexes thereto, as well as any other relevant document required by the Tax Administration, not later than 31st March of the following tax period”
Corporate Income Tax – CIT
In Rwanda, the Corporate Income tax rate is a tax collected from companies based on the net income companies obtain while exercising their business activity, normally during one business year. Revenues from the Corporate Tax Rate are an important source of income for the government of Rwanda.
The following entities are subjected to corporate income tax:
- Companies established in accordance with Rwandan law or foreign law;
- Cooperative societies and their branches;
- Public business enterprises;
- Entities established by Districts, Towns and Municipalities and the City of Kigali, to the extent that these entities conduct business;
- De facto companies or associations and any other entities that perform business activities, and are established to realize profits.
Exemption from Corporate Income Tax
The Government of Rwanda and the following entities are exempted from corporate income tax:
- the City of Kigali, Districts, Towns and
- the National Bank of Rwanda;
- entities that carry on only activities of a religious, humanitarian, charitable, scientific or educational character, unless the revenue received during a tax period exceeds the corresponding expenses to the extent that those entities conduct a business;
- international organizations, agencies of technical cooperation and their representatives, if such exemption is provided for by international agreements;
- qualified pension funds;
- the Rwanda Social Security Fund;
- the Rwanda Development Bank;
Taxable Business profit is rounded down to the nearest one thousand Rwandan Francs (1,000RWF) and taxable at a rate of thirty percent (30%).Newly listed companies on capital market shall be taxed for a period of 5 years on the following rates:
- 20% if those companies they sell at least 40% of their shares to the public;
- 25% if those companies sell at least 30% of their shares to the public;
- 28% if those companies sell at least 20% of their shares to the public.
Venture capital companies registered with the capital markets Authority in Rwanda benefit from a corporate income tax of zero percent (0%) for a period of five (5) years from the date the decision has been taken.
However, a registered investment entity that operates in a Free Trade Zone or foreign companies that has its headquarters in Rwanda that fulfill the requirements stipulated in the Rwandan Law on Investment Promotion are entitled to:
- pay corporate income tax at the rate of zero per cent (0%);
- exemption from withholding tax mentioned in Article 51 of the Law nº 16/2005 of 18/08/2005 on direct taxes on income;
- tax free repatriation of profit.
If a taxpayer exports commodities or services that bring to the country between three million (3,000,000) US dollars and five million (5,000,000) US dollars in a tax period, he or she is entitled to a tax discount of three percent (3%).
If he or she exports commodities or services that bring to the country more than five million (5,000,000) US dollars in a tax period, he or she is entitled to a tax discount of five percent (5%).
Companies that carry out micro finance activities approved by competent authorities pay corporate income tax at the rate of zero percent (0%) for a period of five (5) years from the time of the approval of the activity. However, this period may be renewed by the order of the Minister.
Ideally, if a company records intercompany transactions, whether in form of revenue, expenses, loans, technical assistance to mention but a few, the new law requires that Transfer Pricing documentation for such entities must be filed with Corporate Income Tax return to the RRA effective March 2019 for the taxpayers with fiscal year running January to December. Failure of which will attract significant penalties including but not limited to adjusting the cost of such affected transactions to the magnitude that RRA auditors may deem to be the ‘arm’s length’.
In addition to the transfer pricing requirement, if the company projects annual revenue/turnover of Frw 400,000,000, it should plan to hire a Certified Public Accountant (CPA) approved by the Institute of Certified Public Accountant of Rwanda (ICPAR) to audit and certify its tax return before submission to the RRA as per Commissioner General Rule number 007/2009 of 07/12/2009.
A: Submit corporate tax declaration
B: Pay corporate income tax
- 01 – Libre deuda de patente/Financial statement (original) including balance sheet and profit and loss statement
- 01 – Libre deuda de patente/Depreciation schedule (original)
- 01 – Libre deuda de patente/List of debtors and creditors (original)