Rwanda

Rwanda incorporated companies or associations are treated as Rwanda resident entities. In addition, companies incorporated overseas are also treated as Rwandan resident companies if they have a place of effective management in Rwanda at any time during the tax period. The entity is deemed to have its place of effective management in Rwanda in one of the following circumstances:

• Its day to day control and management are done in Rwanda.
• Its shareholders’ meetings are held in Rwanda.
• Its books of accounts are prepared and kept in Rwanda.
• Its main shareholders or directors are residents of Rwanda.

Rwandan government companies are also considered to be residents in Rwanda.

Permanent establishment (PE)

The definition of a PE for Rwanda is largely based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention definition. According to Rwandan tax law, a PE means a fixed place of business through which the business of a person is wholly or partially carried on.

For non-resident companies, CIT liability will arise if they have a PE in Rwanda through which a trade is carried on. The profits attributable to the PE will be taxed in Rwanda. However, there are no rules or guidance on how the PE's profit should be evaluated for Rwanda tax purposes. The general understanding is that entities are required to use transfer pricing methods to determine the level of profits that should be attributable to the PE based on the functions it performs.

In particular, the existence of the following triggers a PE:

• A place of management.
• A branch.
• A factory or workshop.
• A mine, quarry, or any other place for the exploitation of natural resources.
• A site set for construction, construction site, or a place where supervision or assembly works are carried out.
• A place of provision of services, including consulting services, carried on by a person, with the support of employees or other personnel, for more than 90 days in a 12-month period, either continuously or intermittently.

There are a number of specific exceptions from the definition of a PE. A person is deemed not to have a PE if that person:

• uses facilities solely for the purpose of storage of their goods or merchandise
• maintains a stock of their goods or merchandise solely for the purpose of storage
• maintains a stock of their goods or merchandise solely for the purpose of processing by another person
• has a place of operation aimed purposely at purchasing goods or merchandise or collecting information related to their business, or
• has a place of operation solely for the purpose of performing, within the context of their activities, any other activities of a preparatory nature or intended to make them more effective.

A person is considered not to have a PE if they only carry out activities through an independent broker in the capital market, general commissionaire agent or any other private agent in accordance with procedures of the ordinary course of the activities of such an agent. However, when the activities of the independent broker in the capital market or an agent are carried out wholly or almost wholly on behalf of the person referred above and conditions imposed between the person and the agent in their commercial and financial relations differ from those that would have been made between independent persons, that person is considered to have a PE.

An insurance entity, except in regard to re-insurance, is considered to have a PE if it collects premiums or insures risks through a person other than a broker in the capital market or an agent of an independent status. 

A company that controls or is controlled by another company does not, of itself, constitute either company to be a PE of the other.