An individual may claim a deduction for any expense incurred wholly and exclusively in the production of employment income.
Bona fide reimbursement of business expenses relating to travel and car expenses are not part of taxable employment income.
There are no tax allowable personal deductions provided for in the law.
There are no standard deductions provided for in Rwanda.
There are no specific personal allowances provided for in the Rwandan law.
The law allows for deduction of expenses that are wholly and exclusively used in the production of income. The expenses should satisfy the following conditions:
- Incurred for the direct purpose of the business and directly chargeable to the income.
- Correspond to a real expense and can be substantiated with proper purchase receipts.
- Result in a decrease in net assets of the business.
- Used for activities related to the tax period in which they are incurred.
If the taxpayer is carrying on a business in their individual capacity or in a partnership, the deduction of business expenditure or losses is available to them on the same basis as to companies (see the Deductions section in the Corporate tax summary for more information).
Where the deductions and allowances permissible under Rwandan law exceed income, an assessed loss results, which may be carried forward for set-off against income earned in future years. The tax losses can be carried forward for a period of five years.
However, the revenue authority may authorise the taxpayer who applies to carry forward the losses for more than five years if one fulfils certain requirements determined by an Order of the Minister.
Foreign-sourced losses cannot be deducted from either present or future domestic sourced business profits.