Worldwide Tax Summaries

Rwanda
Last reviewed - 20 July 2022

Individual - Significant developments

There have been no significant developments in the taxation of individuals in Rwanda during the past year.

Individual - Taxes on personal income

Rwandan resident individuals are taxed on their worldwide income. Non-residents are taxed on their Rwandan-sourced income. The same rates
of tax are applicable to both residents and non-residents.

The taxable income of a person for any year is the total of that person's income for the year less the total amount of deductions allowed to that
person. Taxable income comprises the following: employment income, business profits, and investment income.

Personal income tax rates

The current monthly personal income tax (PIT) rates are as follows:

Bands of income (RWF*)

Taxable income (RWF) PIT rate (%)
From To

0 30,000 30,000 0

30,001 100,000 70,000 20

100,001 and above   30

* Rwandan francs

Local income taxes

There are no local income taxes in Rwanda.

Individual - Residence
Residency is determined by reference to permanent residency, habitual abode, or physical presence. A person is resident in Rwanda if they fulfil
one of the following conditions:

Has a permanent residence in Rwanda.

Has a habitual abode in Rwanda.

Is a Rwandan representing Rwanda abroad.

Stays in Rwanda for more than 183 days in any 12-month period, either continuously or intermittently.
The term 'habitual abode' is not defined in the law.

Individual - Other taxes

Social security contributions
Rwanda has a national social security fund known as the Rwanda Social Security Fund (commonly known as Caisse Social du Rwanda or CSR).
All salaried workers, both nationals and foreigners, working in Rwanda are required to contribute to the scheme. The employer is required to
contribute 5% of the employee's gross salary to the scheme, while the employee's contribution is 3%.

The employer is mandated to deduct social security contributions from employees every month. However, the employer is required to remit total
contributions on a quarterly basis, during the month following the end of the quarter. The mandate of collecting social security contribution is
with the Rwanda Revenue Authority (RRA).

Consumption taxes
Value-added tax (VAT)
An individual trader is liable for VAT on the same basis as a company. VAT is an indirect tax, which is largely directed at the domestic
consumption of goods and services, and at goods imported into Rwanda. The tax is designed to be paid mainly by the ultimate consumer or
purchaser in Rwanda. Goods and services are either exempt from VAT, or are levied at two rates, namely a standard 18% rate and a zero rate.

Most business transactions carried out in Rwanda are subject to VAT. The tax is collected by businesses that are registered for VAT by the RRA
on all taxable supplies throughout the production and distribution chain. Sales or supplies by non-VAT registered person are not subject to VAT.

Net wealth/worth taxes

Rwanda does not levy any net wealth/worth taxes.

Inheritance, estate, and gift taxes

Rwanda does not levy any inheritance, estate, or gift taxes.

Property taxes
Property tax is levied on registered land and buildings/houses whether in use or not, according to rates determined by the districts. The tax
varies from district to district.

Luxury and excise taxes

Excise duty is levied on certain locally manufactured goods, as well as their imported equivalents. Excise duty of 150% is levied on cigarettes;
60% on beer; 70% on brandies, liquors, and whisky; and 8% on telephone communication. There is also excise duty on motor vehicles ranging
between 5% and 15%.

Relief from excise duty is available for exported products.

Transfer taxes
There is a transfer tax that is levied on transfer of property.

Individual - Income determination

Employment income
Employment income includes all payments made to the employee in cash or in kind. This includes the following:

Wages, salary, leave pay, sick pay and medical allowance, payment in lieu of leave for an employee who stops working before benefiting
from one's annual leave, sitting allowances, commissions, bonuses, and gratuity.

Allowances relating to the cost of living, subsistence allowances, housing allowances, and entertainment or travel allowances.

Any discharge or reimbursement of expenses incurred by the employee or an associate.

Payments to the employee working in exceptional conditions of employment.

Payments for redundancy or loss or termination of contract.

Pension payments.
Other payments made in respect of previous, current, or future employment.

Benefits in kind form part of taxable remuneration. The Rwandan law provides the basis for taxation of the following benefits in kind:

Housing: This is taxed at 20% of total employment income, excluding benefits in kind.

Motor vehicle benefit: This is taxed at 10% of employment income, excluding benefits in kind.

Rent of house or motor vehicle directly paid by an employer for an employee: This is taxed as any other allowance.

Loan to staff at low interest rate: Benefit arises if the loan is three times more than the monthly salary. The benefit is computed as the
difference between the rate of interest offered to commercial banks by the National Bank of Rwanda and the actual interest paid by the
employee that month.
There is no relief for pension contribution as contribution is based on the amount after payment of PIT. The withdrawal is therefore not taxed.

Equity compensation
There is no specific law on taxation of stock options. In practice, stock options acquired by virtue of employment, whether from the employer or
an associated institution, are subject to income tax on the difference between the market value of the equity instrument and the consideration
paid by the employee or office holder on the date that the equity instruments vest.

Business income
Self-employment income is derived from an unincorporated business, partnership, trade, or profession.
An amount received or accrued from self-employment will be taxable in Rwanda. Non-residents will only be taxed on Rwandan-sourced self-
employment income.

Capital gains
Capital gains on secondary market transactions on listed securities are not taxable. In addition, income accruing to employee share option
schemes is also exempt from tax. There is no comprehensive law on taxation of capital gains for individuals. However, capital gains on sale or
transfer of shares is taxed at 5% on the difference between the acquisition value of shares and their selling or transfer price where the gain is not
expressly exempt from tax.

Dividend income
Dividends declared by Rwandan resident companies are generally subject to a 15% dividend withholding tax (WHT) for individual shareholders,
which is the final tax.

Interest income
Interest income is subject to WHT at rate of 15%, which is the final tax.

Rental income
Rental income tax is charged on income generated by individuals from rented fixed assets located in Rwanda.

Rental income tax is charged to the following:

Income from rented buildings in all or part.

Income from rented improvements in whole or in part.

Any other activity to which rental income may be accrued.

The taxable income shall be obtained by deducting from the gross rental income 50%, considered as the expenses incurred by the taxpayer on
maintenance and upkeep of the rented property.

When the taxpayer produces the proof of bank interest payments on a loan for the construction or purchase of a rented property, the taxable
income is determined by deducting from gross rental income 30%, considered as the expenses incurred plus actual bank interest paid from the
beginning of the rental period.

The rental income tax is calculated as follows:

The bracket part of annual income generated through rental of a building from RWF 1 to RWF 180,000 is taxed at 0%.
The bracket part of annual income generated through rental of a building from RWF 180,001 to RWF 1 million is taxed at 20%.

The bracket part of annual income generated through rental of a building above RWF 1 million is taxed at 30%.
Any person who earns rental income must, on or before 31 March each year, file an official tax declaration.

Exempt income
The following items are exempt from tax:

Discharge or reimbursement of expenses incurred by employee (wholly and exclusively for business).

Contributions made by the employer for the employee to the public institution in charge of social security.

Pension payment from the public institution in charge of social security or from a qualified pension fund.
Employment income received by an employee who is not a citizen of Rwanda from a foreign government or non-governmental
organisation (NGO) under an agreement signed by the government of Rwanda, where income relates to performance of aid services in
Rwanda. The agreement needs to specify the tax exemption.

Employment income received from an employer who is not a resident in Rwanda by a non-resident individual for the performance of
services in Rwanda, unless such services are related to a permanent establishment (PE) of the employer in Rwanda.

Persons exempted from employment income tax

The following persons are exempted from employment income tax in Rwanda as provided for by international agreements:

A foreigner who represents one's country in Rwanda.

Any other individual employed in any Embassy, Legation, Consulate, or Mission of a foreign state performing state affairs, who is a
national of that state and who possesses a diplomatic passport.

A non-citizen individual employed by an international organisation that has signed an agreement with the government of Rwanda in
accordance with Rwandan laws.

Individual - Deductions
Employment expenses
An individual may claim a deduction for any expense incurred wholly and exclusively in the production of employment income.

Bona fide reimbursement of business expenses relating to travel and car expenses are not part of taxable employment income.

Personal deductions
There are no tax allowable personal deductions provided for in the law.

Standard deductions
There are no standard deductions provided for in Rwanda.

Personal allowances
There are no specific personal allowances provided for in the Rwandan law.

Business deductions
The law allows for deduction of expenses that are wholly and exclusively used in the production of income. The expenses should satisfy the
following conditions:

Incurred for the direct purpose of the business and directly chargeable to the income.

Correspond to a real expense and can be substantiated with proper purchase receipts.
Result in a decrease in net assets of the business.

Used for activities related to the tax period in which they are incurred.

If the taxpayer is carrying on a business in their individual capacity or in a partnership, the deduction of business expenditure or losses is
available to them on the same basis as to companies (see the Deductions section in the Corporate tax summary for more information).

Losses
Where the deductions and allowances permissible under Rwandan law exceed income, an assessed loss results, which may be carried forward
for set-off against income earned in future years. The tax losses can be carried forward for a period of five years.

However, the revenue authority may authorise the taxpayer who applies to carry forward the losses for more than five years if one fulfils certain
requirements determined by an Order of the Minister.

Foreign-sourced losses cannot be deducted from either present or future domestic sourced business profits.

Individual - Foreign tax relief and tax treaties

Foreign tax relief
Individuals whose home country is Rwanda can claim credits in Rwanda for foreign taxes suffered on foreign income. The credits are generally
limited to the lower of the foreign taxes paid and Rwandan taxes due. The foreign tax suffered must be substantiated by appropriate evidence
(i.e. tax declaration, WHT certificate, or other acceptable document) for the credit to be granted.

Tax treaties
Rwanda has double tax treaties (DTTs) with Belgium, the People's Republic of China, the Democratic Republic of Congo, Jersey, Luxembourg,
Mauritius, Morocco, Qatar, Singapore, South Africa, Turkey, and the United Arab Emirates.

Individual - Other tax credits and incentives

There are no other significant tax credits or incentives for individuals in Rwanda.

Individual - Tax administration

Taxable period
The tax period for individuals is January to December of each year.

Tax returns
Annual tax returns/declarations for individuals are due by 31 March of the following year after the tax period. However, the following individuals
are exempted from filing of annual tax returns:
 Resident employees whose only income is employment income.

Resident individuals who receive investment income that is subject to WHT.

Non-resident individuals who suffer WHT on income sourced from Rwanda.

Payment of tax
Tax on employment income is withheld by the employer under the pay-as-you-earn (PAYE) system and remitted to the RRA on a monthly basis
together with PAYE returns by the 15th day of the following month.

Tax audit process

There is no specified audit cycle, but individuals can be selected for an audit by any factor by the RRA. The audit or inspection will commence
with a request from the RRA for the taxpayer to make available any such records or information as may be required.

Statute of limitations
Submitted tax returns remain open for audit for a period of five years.

Topics of focus for tax authorities

High net worth individuals and sole proprietorships are the focus of the RRA.

Individual - Sample personal income tax calculation

This sample PIT calculation assumes two resident individuals whose annual income is RWF 45,000,000, each. Employee 1 is provided with an
employer-owned house and car for private use, while the employer rents a house and car at RWF 1,000,000 and RWF 350,000, respectively, for
Employee 2. Both of the employees have children attending school, and the employer provides an education allowance of RWF 720,000 per
year to each, but paid on a monthly basis.

Individual PAYE calculation

Employee 1 Employee 2
(monthly) (monthly)
Item
(RWF) (RWF)

Salary 3,750,000 3,750,000

Education allowance 60,000 60,000

Total cash 3,810,000 3,810,000

Add: Non cash benefits (benefits in kind)

Company-owned house provided to Employee 1 (20% of 3,810,000) 762,000 -

Company-owned car provided to Employee 1 (10% of 3,810,000) 381,000 -

House rental cost on behalf of Employee 2 - 1,000,000

Car rental cost on behalf of Employee 2 - 350,000

Taxable income 4,953,000 5,160,000

PAYE thereon 1,469,900 1,532,000

Employee social security contribution (3%) 148,590 154,800

Employee maternity benefits contribution (0.3%) 14,859 15,480

Net pay 2,176,651 2,107,720

Employer social security contribution (5%) 247,650 258,000

Employer maternity benefits contribution (0.3%) 14,859 15,480

Rwanda contacts
 Moses Nyabanda
Country Senior Partner

+250 252 5882 03/04/05/06

Frobisher Mugambwa
Associate Director, Tax Services
+250 252 588203

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