WHT of 15% of the total amount, excluding VAT, is required to be accounted for on payments or other methods of extinguishing an obligation made by resident individuals, including tax-exempt entities. The WHT is due where such payments or other methods of extinguishing an obligation are made to a person not registered with the tax administration or to a registered person who does not have recent income tax declaration.
Payments or other methods of extinguishing an obligation subject to WHT of 15% are related to the following:
- Dividends, except dividends paid between resident companies and income distributed to the holders of shares or units in collective investment schemes.
- Financial interests, except 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; and interests paid by banks or deposit-taking micro-finance institutions operating in Rwanda to banks or other foreign financial institutions.
- Service fees, including management and technical service fees, except transport services.
- Performance payments made to a crafts person, a musician, an artist, or a player in sports, cultural, or leisure activities, irrespective of whether paid directly or indirectly.
- Goods sold in Rwanda.
- Profit after tax or retained earnings that are converted into shares, except for financial institutions with paid-up capital below the minimum requirement set by the National bank of Rwanda.
- Profits repatriated from Rwanda.
- Payments made in cash or in kind by a resident person in Rwanda on behalf of a non-resident in Rwanda contracted person provided for under the contract in addition to contractual remuneration.
- Reinsurance premiums paid to non-resident insurers except premiums paid to insurers that have signed agreements with the Government of Rwanda.
However, money that is recorded in the books of accounts as a liability of a taxpayer to creditors and that reduces the taxable income is deemed a payment if it has exceeded six months following the tax period.
WHT is also applicable to non-resident persons for such payments on behalf of their PEs. This means that the local entity/PE is now required to declare and pay WHT at the time when the non-resident pays the foreign supplier on its behalf and not when the non-resident recharges for the costs.
As mentioned above, a WHT of 15% is required to be accounted for on a number of payments. However, the WHT shall be 5% if levied on:
- dividends and interest on securities listed on capital market when the beneficiary of the dividends or interest is a resident taxpayer of Rwanda or of the East African Community, and
- interests derived from treasury bonds with a maturity of at least three years.
There is also a WHT of 5% that is applicable on goods imported for commercial use. Public institutions are required to retain 3% on payments to winners of public tenders; however, the same is increased to 15% if the winner of the public tender is not registered with the tax administration or when registered does not have their previous income tax declaration. Note that businesses that possess a tax clearance certificate are exempted from deduction of all above WHT.
The ITL is also imposing WHT at the rate of 15% on the difference between winnings of the player and the stake invested by the player of gaming activities. The same has to be withheld by the gaming activities operator.
The WHT deducted should be remitted to the RRA within 15 days following the month of deduction.
Rwanda has DTTs with Barbados, Belgium, the People's Republic of China, the Democratic Republic of the Congo, Jersey, Luxembourg, Mauritius, Morocco, Qatar, Singapore, South Africa, Turkey, and The United Arab Emirates. The WHT rates are as follows:
|Dividends||Interest||Royalty||Management or professional fees|
|China, the People's Republic of||7.5||8||10||10|
|Congo, Democratic Republic of the||10||10||10||14|
|United Arab Emirates||7.5||10||10||10|
The DTTs contain conditions to be complied with for the preferential rates to apply; consequently, it is recommended that professional advice is sought before application.