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Tax law and public finance in Rwanda

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144 pages
Tax law and public finance in Rwanda presents the state of play of public finances and tax laws in Rwanda. It sumarises the regulation of public ressources and public expednitures before presenting an overview of tax regulation in Rwanda, as one of the major source of income for the States worldwide. This book therefore provides the basic information relating to law governing the two connected domains of law in Rwanda.
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Pie HabimanaTax law and public fnance in Rwanda
Tax law and public fnance in Rwanda presents the state of play of
public fnances and tax laws in Rwanda. It sumarises the regulation Tax law
of public ressources and public expednitures before presenting an
overview of tax regulation in Rwanda, as one of the major source
of income for the States worldwide. This book therefore provides and public fnance the basic information relating to law governing the two connected
domains of law in Rwanda.
in Rwanda
eM Pie Habimana, holds a Master’s degree (LL.M) in Business Law
and a Post-Graduate Diploma in Legal Practice. He is currently enrolled
in PhD program researching on International Tax Law and Foreign
Direct Investment in Rwanda. Me Pie Habimana is a lecturer of law
at University of Rwanda, College of Arts and Social Sciences, School of
Law and teaches Tax Law, Law of Public Finance and Law of Enterprise.
He is also a visiting lecturer of Tax Law at Kigali Independent University
and a Trainer of Commercial Transactions at Institute of Legal Practice
and Development - Postgraduate program. As member of Rwanda
eBar Association, M Pie Habimana is currently a Managing Partner
of Amicus Law Chambers, a seasoned law frm situated in Kigali .
His research interest focuses on tax law, business transactions and legal
practices. Preface Jean-François Boudet
Postface Jean Baptiste Twahirwa
Droits, Sociétés, Politiques
ISBN : 978-2-343-06843-5 “Afrique des Grands Lacs”
15,50 e
Tax law and public fnance in Rwanda
Pie Habimana













Tax law and public finance
in Rwanda





Collection « Droits, Sociétés, Politiques -
Afrique des Grands Lacs »
Collection dirigée par Jean-François Boudet


Limitée à un espace géographique donné, la Collection « Droits,
Sociétés, Politiques - Afrique des Grands Lacs » accueille des
ouvrages scientifiques et professionnels de qualité, écrits autant
par des juristes que des économistes, des historiens, des
politistes, des philosophes ou des sociologues, contribuant à la
publication et à la diffusion d’ouvrages ainsi que des outils
pédagogiques au service du Droit et de la construction de la
Paix dans la région des Grands Lacs.


Déjà parus

Éric DAVID, Génocide au Rwanda, Les enquêtes officielles
menées en Belgique, en France, à l’ONU et à l’OUA, 2015.

Pie HABIMANA








TAX LAW
AND PUBLIC FINANCE
IN RWANDA

Preface Jean-François BOUDET
Postface Jean Baptiste TWAHIRWA








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Dedicated to my wife Antoinette and my
son Igor Darron


List of abbreviations
AG : Auditor General
CBM : Chief Budget Manager
COMESA : Common Market for Eastern and Southern
Africa
EAC : East African Community
FTZ : Free Trade Zone
INTOSAI : International Organization of the Supreme
Audit Institutions
IPAR : Institute of Policy Analysis and Research
MINECOFIN : Ministry of Economic Finance
OAG : Office of Auditor General
OBL : Organic Budget Law
OECD : Organisation for Economic Cooperation
and Development
O.G. : Official Gazette
RRA : Rwanda Revenue Authority
SAI : Supreme Audit Institutions
SADC : Southern African Development
Community
SEZ : Special Economic Zone
SEZAR : Special Economic Zone Regulatory
Authority
TIN : Taxpayer Identification Number
TSA : Treasury Single Account
UNCTAD : United Nations Conference on Trade and
Development
USD : American dollars
VAT : Value Added Tax



Table of Contents
List of abbreviations .......................................................... 9
Preface .............................................................................. 15
Introduction ...................................................................... 19
CHAPTER ONE: THE MANAGEMENT OF PUBLIC
FINANCES IN RWANDA .............................................. 21
I.1. Rwanda Legal framework of public finances ............ 23
I.1.1. Constitution ......................................................... 23
I.1.2. Organic budget law ............................................. 25
I.1.3. Annual budget laws............................................. 26
I.2. Institutional framework of public finances ................ 27
I.2.1. The Ministry of finance ...................................... 28
I.2.2. The Parliament .................................................... 29
I.2.3. Office of Auditor General of State Finances ...... 29
I.3. Budget planning, execution and control in Rwanda .. 31
I.3.1. Compliance with budgetary principles ............... 31
I.3.2. Budget planning and preparation ........................ 32
I.3. 3. Budget execution ................................................ 32
I.3.4. Government oversight arrangements .................. 33
I.4. Government banking arrangements ........................... 34
CHAPTER TWO: THE RWANDAN TAX LAW .......... 37
II.1. Historical background of taxation in Rwanda 39
II.2. Main principles governing tax in Rwanda ............... 43
II.2.1. Constitutional principles .................................... 43
II.2.1.1. The principle of legality of tax ................... 43
II.2.1.2. The principle of equality before tax ............ 44
II.2.1.3. The principle of liberty ............................... 45
II.2.2. Non-constitutional principles ............................ 45
II.2.2.1. The principle of non-retroactivity ............... 45
II.2.2.2. The principle of territoriality ...................... 46
II.3. Rwandan tax structure .............................................. 47
II.3.1. Centralized taxes ............................................... 47
II.3.1.1. Value Added Tax (VAT) ............................ 48
II.3.1.1.1. Historical background ................................. 48
II.3.1.1.2. VAT Registration ........................................ 48
II.3.1.1.3. VAT taxable activities ................................. 49 II.3.1.1.4. VAT standard rate and time for payment .... 49
II.3.1.1.5. Zero rate VAT and exonerations ................. 50
II.3.1.2. Direct taxes on income ............................... 51
II.3.1.2.1. Personal income tax ..................................... 51
II.3.1.2.1.1. Business profits ........................................ 51
II.3.1.2.1.2. Investment income ..... 56
II.3.1.2.2. Corporate Income Tax ................................. 58
II.3.1.2.3. Withholding taxes ........................................ 60
II.3.1.2.3.1. Pay as You Earn (PAYE) tax ................... 60
II.3.1.2.3.2. Withholding Tax on Imports and public
Tenders ......................................................................... 63
II.3.1.2.3.3. Withholding Tax on other payments ........ 64
II.3.1.2.4. Property tax: 4th base: boats ........................ 64
II.3.1.2.5. Registration fees for vehicles ...................... 65
II.3.1.2.6. Consumption taxes (Excise Taxes) ............. 65
II.3.1.2.7. Import Duties ............................................... 66
II.3.2. Decentralized taxes ............................................ 67
II.3.2.1. Property tax ........................................67
stII.3.2.1.1. 1 base: Registered occupied houses ........... 67
ndII.3.2.1.2. 2 base: Area of unbuilt plots ..................... 69
thII.3.2.1.3. 6 base: Mineral concessions ...................... 70
II.3.2.2. Tax on rental revenues ................................ 71
II.3.2.3. Trading Licence Tax ................................... 72
II.4. Tax incentives under Rwandan law ......................... 75
II.4.1. Profit tax discount .............................................. 75
II.4.2. Investment allowance ........................................ 76
II.4.3. Research and development tax incentives ......... 77
II.4.4. Tax holidays ...................................................... 77
II.4.5. Tax incentives in Special Economic Zones ....... 78
II.5. Tax procedure and tax litigation in Rwanda ............ 80
II.5.1. The taxpayers’ duties ......................................... 80
II.5.1.1. Filing tax returns ......................................... 80
II.5.1.1.1. Rectification ................................................ 80
II.5.1.1.2. Audit and investigations .............................. 81
II.5.1.1.3. Entrance to premises without notice ............ 83
II.5.1.1.4. Estimated assessment procedure ................. 83 II.5.1.1.5. Extending the deadline for filing tax returns
...................................................................................... 84
II.5.1.2. Paying the due tax ....................................... 85
II.5.1.2.1. Possibility of paying taxes in instalments ... 85
II.5.1.2.2. Waive of tax liability, interest and penalties 86
II.5.1.2.3. Prescription .................................................. 87
II.5.1.3. Other duties of taxpayer .............................. 87
II.5.1.3.1. Duty to register ............................................ 87
II.5.1.3.2. Duty to register for VAT ............................. 87
II.5.1.3.3. Duty to use prescribed VAT invoice ........... 88
II.5.2. Fiscal litigation: Settlement of fiscal disputes ... 88
II.5.2.1. The procedure for centralised taxes ............ 88
II.5.2.1.1. Administrative appeal .................................. 88
II.5.2.1.2. Judicial appeal ............................................. 89
II.5.2.2. The procedure for decentralised taxes ........ 89
II.5.2.2.1. Adm..... 90
II.5.2.2.2. Judicial appeal .......... 90
II.5.3. Evidences in tax law .......................................... 90
II.5.3.1. The burden of proof ........................................ 90
II.5.3.2. Types of evidences .... 92
II.5.3.2.1. Ordinary evidences ...................................... 92
II.5.3.2.2. Signs and indications of prosperity ............. 92
II.5.3.2.3. Affidavits ........................................93
II.5.4. Fiscal sanctions .................................................. 94
II.5.4.1. Sanctions applicable to centralised taxes .... 94
II.5.4.1.1. Sanctions imposed by tax administration .... 94
II.5.4.1.2. Sanctions imposed by the courts ................. 99
II.5.4.2. Sanctions applicable to decentralised taxes 99
II.5.5. Forced recovery ............................................... 100
II.5.5.1. The procedure for centralised taxes .......... 100
II.5.5.1.1. Warning ...........................................100
II.5.5.1.2. Seizure and auction of taxpayer’s property
.................................................................................... 101
II.5.5.1.3. Notification to third parties ....................... 101
II.5.5.2. The procedure for descentralised taxes ........ 102
II.5.5.2.1. Warning ..................................................... 102