Corporate - Group taxation

Last reviewed - 18 July 2023

There is no provision for group taxation in Rwanda. Each individual corporate group member is required to submit their own tax return on a stand-alone basis.

Transfer pricing

Rwandan transfer pricing legislation and the prescribed transfer pricing methods are generally consistent with OECD guidelines. The law requires that transactions between related parties be carried out under the arm's-length principle.

The tax law empowers the Commissioner General to adjust profits earned between related parties if the Commissioner General considers that the trading arrangements between related parties do not adhere to the arm's-length principle. The arm's-length principle requires that transfer prices charged between related parties are equivalent to those that would be charged between independent parties in the same circumstances.

Rwanda operates a self-assessment system; consequently, taxpayers are obligated to self-assess their compliance to the tax legislation, which includes transfer pricing policy. According to the TP ministerial order, related persons involved in controlled transactions are required to have documents justifying that their prices are applied according to the arm’s-length principle. This means that companies are expected to have transfer pricing policies and documentation. Newly issued TPL also requires that documentation to be submitted to revenue authority along with annual CIT return.

Failure to do so would result in the tax administration’s adjustment of transaction prices in accordance with general rules on transfer pricing issued by an Order of the Minister as well as imposition of penalties and interests.

Thin capitalisation

The interest paid on loans and advances from related entities is not tax deductible to the extent that the total amount of loans/advances exceeds four times the amount of paid up equity which excludes provisions/ reserves and retained earnings according to the balance sheet during the tax period. For purposes of determining the above, equity excludes provisions or reserves and retained earnings. This provision does not apply to commercial banks, insurance companies and other financial institutions.

Controlled foreign companies (CFCs)

There are no provisions in Rwanda for CFCs.