Kigali GMT +2
EY Street address:
Mail address: Avenue de la Paix Kigali P.O. Box 3638 M-Peace Place, Executive Wing, 6th Floor Kigali Kigali Rwanda Rwanda
Executive and immigration contact
Michael M. Ichura +250 788-309-977
Email: michael.m.ichura@rw.ey.com
A. Income tax
Who is liable. Residents are subject to tax on their worldwide income, while nonresidents are subject to tax on their Rwandansource income only.
Income subject to tax
Employment income. Employment income includes the following:
• Wages and salaries
• Vacation pay
• Sick pay and medical allowance
• Payments instead of vacation
• Directors’ fees
• Commissions
• Bonuses
• Gratuities
• Entertainment or other allowances received for employment
Employment income also includes all benefits in kind, including employer-provided cars, housing, loans at interest rates lower than the central bank lending rates and benefits provided to employees’ relatives by employers.
Self-employment and business income. Business income includes the following:
• Trading profits
• Gains derived from disposals of business assets, shares of prof its or profits from partnership interests
• Gains on assets held in foreign currency
• Professional, technical, management and other fees
• Investment income in the form of capital gains, financial inter est, dividends, royalties or rent and other income that has not been taxed as business income
Investment and other income. A final withholding tax at a rate of 15% is imposed on the following:
• Dividends, except income distributed to the holders of shares or units in collective-investment schemes.
• Financial interest except for the following:
— Interest on deposits in financial institutions for at least a one-year period
on loans
foreign development financial
from income tax under the applicable law in the country
paid by banks operating in Rwanda to banks or other foreign financial
Technical, management
other service fees except for trans port services’ fees
Payments made to craftspersons, artists and players in sports, culture and leisure
and gambling
for goods
Individual property owners who earn rental income are subject to rental income tax. The tax is payable to local or urban decentral ized authorities at the following rates.
Rental income earned by an individual Exceeding Not exceeding Rate
Sitting allowances. Sitting allowances are subject to a final with holding tax of 30%.
Capital gains. Sales of business assets and proceeds from asset sharing are taxed at 30%. Capital gains on the sale or transfer of shares are taxed at a rate of 5%.
Deductions. Business expenses are deducted from taxable income if all of the following conditions are satisfied:
• They are incurred for the direct purpose of the business and they are directly chargeable to income.
They correspond to a real expense and can be substantiated with proper purchase receipts.
• They lead to a decrease in the net assets of the business.
• They are used for activities related to the tax period in which they are incurred.
Fixed assets qualify for an annual capital allowance deduction. The deduction may be calculated using the straight-line or declining-balance methods at rates ranging from 5% to 50%, depending on the type of asset.
Rates. The following table sets forth the tax rates, which are applicable to employment income and taxable business income earned by individuals and unincorporated entities.
Annual taxable income Exceeding Not exceeding Rate
Small enterprises pay a lump sum tax of 3% of annual turnover. However, they can opt for the normal tax regime.
Micro enterprises pay a flat amount of tax based on the annual turnover as shown in the following table.
Annual turnover
From To
Flat tax amount RWF RWF RWF
2,000,000 4,000,000 60,000 4,000,001 7,000,000 120,000 7,000,001 10,000,000 210,000 10,000,001 12,000,000 300,000
Relief for losses. Losses may be carried forward for five years to offset future profits of businesses. However, a request may be made to the tax authority to carry forward tax losses for more than five years.
B. Other taxes
Estate and gift taxes. Estate and gift taxes are not levied in Rwanda.
Net worth tax. Net worth tax is not levied in Rwanda.
C. Social security
The Rwanda Social Security Board, which is Rwanda’s statutory social security fund, provides employees with retirement benefits. Employees contribute 3% of their total monthly salaries excluding transport allowance, and employers contribute an amount equal to 5% of each employee’s total salary excluding the transport allow ance. In addition, employers and employees each contribute 0.3% of the total salary, excluding the transport allowance, for the maternity leave benefit, and employees contribute 0.5% of the net salary for Community-Based Health Insurance.
D. Tax filing and payment procedures
Tax is withheld from employees under the Pay-As-You-Earn (PAYE) system. However, if the employer is unable to withhold tax from an employee, the obligation of declaring and paying the tax reverts to the employee.
The tax year runs from 1 January to 31 December. Taxpayers with accounting periods coinciding with the tax year must file three provisional returns and pay tax equal to 25% of the tax paid in the preceding year by 30 June, 30 September and 31 December. However, to help companies recover from the effects of the COVID-19 pandemic on the economy, the provisional taxes will be based on the transactions of the current year. Taxpayers with other accounting periods must file provisional returns within three months after the beginning of the accounting period that ends within the tax year.
Taxpayers must file their final tax returns within three months after the end of their accounting year. An assessment is made based on the return, with a credit granted for taxes withheld at source and for provisional taxes paid.
Nonresidents who trade in Rwanda must register their operations or appoint an agent for tax purposes and are subject to the filing and payment requirements described above.
E. Double tax relief and tax treaties
In accordance with tax treaties, residents may credit foreign taxes paid on foreign-source income against Rwandan tax payable in accordance with tax treaties. Rwanda has entered into double tax treaties with Barbados, Belgium, Jersey, Mauritius, Morocco, Qatar, Singapore and South Africa.
F. Temporary permits
All foreign visitors must obtain valid entry visas to enter Rwanda, with the exception of nationals of member countries of the East African Community (EAC) and nationals of a few other countries.
Visitors’ passes are issued to citizens of EAC member countries at the border post. They are valid for 72 hours and renewable once.
Students may obtain long-term permits called students’ passes, which are valid for the duration of their courses of study.
Transit passes are normally valid for 72 hours. They may be extended once if necessary.
When applying for passes, applicants must have valid passports or equivalent travel documents. No quota system exists for immi gration purposes in Rwanda.
G. Work permits and self-employment
Foreign nationals must obtain a work permit before undertaking employment in Rwanda. The application for a work permit is made to the Director General of Immigration and Emigration and consists of:
• An application letter from the employer
• Notified diploma or degree
• Original police clearance from the country in which the appli cant has lived for the last six months
• The applicant’s curriculum vitae (CV) and a copy of his or her passport
• Completed application form
• One color passport-size photo with white background
• An employment contract signed by the applicant and employer
• Payment of RWF100,000 (approximately USD113) to the gov ernment treasury
H. Residence permits
A work permit has a dual purpose in Rwanda. It serves as a work permit and resident permit, allowing an expatriate to live and work in Rwanda during his or her assignment.
I. Family and personal considerations
Family members. Dependents of expatriates with work permits may obtain long-term permits called dependents’ passes. The dura tion of these passes depends on the duration of the expatriate’s work permit.
Working spouses of work permit holders do not automatically receive the same type of pass or permit as the principal permit holder. Applications must be filed independently.
Driver’s permits. Foreign nationals may drive legally in Rwanda with their home country driver’s licenses for three months.
To obtain a local driver’s license in Rwanda, an applicant must obtain a provisional driver’s license after paying a general fee. This enables the applicant to go to a driving school and to take a driving test, after which he or she is issued a driving permit. No written or physical examination is required.