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 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 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, a player, sports, cultural, and leisure activities, irrespective of whether paid directly or indirectly.
- Gambling activities.
- Goods sold in Rwanda.
However, money that is recorded in the books of account 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 dividends attributed to a company registered in Rwanda. 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, businesses that possess a tax clearance certificate are exempted from deduction of the above WHT.
The WHT deducted should be remitted to the RRA within 15 days following the month of deduction.
Rwanda has DTAs with Belgium, Jersey, Luxembourg, Mauritius, Morocco, Qatar, Singapore, South Africa, Turkey, the Democratic Republic of Congo, the People's Republic of China and The United Arab Emirates. The WHT rates are as follows:
|Dividends||Interest||Royalty||Management or professional fees|
|Democratic Republic of Congo||10||10||10||14|
|The People's Republic of China||7.5||8||10||10|
|United Arab Emirates||7.5||10||10||10|
The DTAs contain conditions to be complied with for the preferential rates to apply; consequently, it is recommended that professional advice is sought before application.