Trading stock is valued at cost; however, damaged stock is valued at lower of cost price or market price on the last day of the tax period. Work in progress is valued at cost.
See Capital gains tax (CGT) in the Other taxes section.
Dividend income includes income from shares in any societies, other similar income that may be generated by all entities that pay CIT, as well as the outstanding balance after the taxation of income from the correction made by the tax administration in the transfer pricing.
Dividend income is subject to WHT at the flat rate of 15%. Where there is a DTT between the recipient country and Rwanda, a lower rate as per the DTT will apply.
If dividend distribution has been subjected to WHT, this becomes the final tax. Dividends paid between resident companies are exempt to WHT and are not included in taxable income for CIT purposes.
Financial income includes income from loans, debentures, or other debt securities; income from deposits; income from guarantees; and income from government securities, negotiable securities issued by the government, securities issued by companies or other persons, and income from cash negotiable securities.
Financial income is subject to WHT at a flat rate of 15%. Where there is a DTT between the recipient country and Rwanda, a lower rate as per the DTT will apply.
However, the following financial interests are not subject to the 15% WHT:
- Interests on deposits in financial institutions for at least a period of one year.
- Interests on loans granted by a foreign development financial institution exempted from income tax under applicable law in the country of origin.
- Interests paid by banks or deposit-taking micro-finance institutions operating in Rwanda to banks or other foreign financial institutions.
Royalty income includes all payments of any kind received or receivable:
- on the use of, or the right to use, any copyright of literary, craftsmanship, or scientific work, including cinematographic films, films, or tapes used for radio or television broadcasting
- on the use, right to use, or exploitation of a trademark or a trade name, design or model, computer application, software, and patent
- as the price or consideration of using, or of the right to use, industrial, commercial, or scientific equipment or for using information concerning industrial, commercial, or scientific knowledge or formula, and
- on the right to exploit or explore natural resources.
Royalty income is subject to WHT at a flat rate of 15%. Where there is a DTT between the recipient country and Rwanda, a lower rate as per the DTT will apply.
Rental income includes all revenue derived from rent of machinery and other equipment, including agriculture and livestock equipment, in Rwanda. This is reduced by 10% of gross revenue as deemed expenses, interest paid on loans, and depreciation expenses.
Resident companies and enterprises are taxed on their worldwide income. However, a foreign tax credit is granted in respect of taxes paid on the foreign income, subject to the limit of the tax that would have been paid in Rwanda on the same income.
There are no provisions in Rwanda for tax deferral of income earned abroad.