Rwanda

Rwanda operates both a source and residence-based taxation system. This means that any income that is deemed to be from sources within Rwanda is liable to tax in Rwanda. In addition, resident entities are taxed on their worldwide income. However, where such income is taxed in another country, a tax credit is allowed, which does not exceed the tax that would have been payable on the same income in Rwanda.

Non-resident entities are taxed on income sourced in Rwanda through a permanent establishment (PE).

The standard CIT rate is 28%. However, micro-enterprise companies (with turnover of less than RWF 12 million in a tax period) pay flat tax amounts depending on their turnover amounts, and small businesses (whose turnover is between RWF 12 million and RWF 20 million in a tax period) pay a lump sum tax at the rate of 3% of turnover.

Flat tax amounts payable by micro-enterprise companies are as per the table below:

Also, road transport activities of persons and goods are imposed a flat amount of tax that is calculated depending on the passenger or goods carrying capacity.

Special CIT regimes

There are special CIT rates for certain industries or sectors of the economy.

Newly listed companies on capital markets are taxed as follows for a period of five years:

• If a company sells at least 30% of their shares to the public, the CIT rate is 25%.
• If a company sells at least 40% of their shares to the public, the CIT rate is 20%.

Income accruing from savings in the collective investment schemes or Rwandan employees’ share-based scheme, provided that employees' shares in the company do not exceed 10% of company’s share capital, is exempt.

Agriculturalists and pastoralists are exempt from CIT if turnover from their activities does not exceed RWF 12 million in a tax period.

Deposit-taking micro-finance institutions approved by competent authorities pay CIT at the rate of 0% for a period of five years from the time of their approval.

Registered investors in priority sectors can enjoy reduced CIT rates and tax holidays where certain conditions and thresholds are fulfilled (see the Tax credits and incentives section for more information).

Local income taxes

Rwandan legislation does not provide for any provincial or local taxes on income.