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Tax authority targets Rwf1.2 trillion by June

Rwanda Revenue Authority (RRA) is aiming at collecting about Rwf1.22 trillion in tax revenues by June this year.

In their half year performance period, between July to December, the tax authority collected Rwf582.7 billion, surpassing their target by about 10 per cent.

The performance showed an improvement compared to the first semester of 2016/2017, where they collected Rwf 507.5 billion.

Among the key tax revenues that grew in the six months period include, Value Added Tax, profit tax, mining royalties, import duty and infrastructure development levy.

Value Added Tax raked in Rwf196.6 billlion, followed by Pay As You Earn tax which raked in Rwf136.5 billion.

During the said period, the taxman saw an increase of revenue owing to an increase of petroleum imports by about 3 per cent, which further raised revenue.

RRA Commissioner General Richard Tusabe said that the improvement can also be attributed to factors such as economic growth, reduced inflation as well as increased spending in the final half of the year.

He said that given their half year performance and positive macroeconomic indicators, they expected to collect about 1.22 trillion at the end of 2017/2018 fiscal year in June. This would see RRA surpass their annual target by Rwf 20 billion.

To achieve the projection, RRA intends to surpass their target by Rwf 10 billion between January and June like they did in the first semester.

Cost of revenue collection

The agency is also keen to reduce costs of tax collection.

RRA has in the recent past been rolling out initiatives and reforms aimed at improving convenience and compliance from a tax payer’s point of view. This includes provisions such as declaring and payment of taxes via mobile phone or online. However, some of these adjustments have had an impact on the cost of the operations at the agency.

Tusabe said that at they have so far been able to reduce the cost of tax collection from about 3 per cent to about 2.6 per cent and the goal to bring it down to  about 2.5 per cent in the next two or three years. The midterm goal is to reduce the cost to about 2 per cent in the next 5 years.

This would mean that in the period between July to December, the taxman spent about Rwf 15.2 billion to collect the Rwf 582.7 billion.

“If you look at our reform initiative, it has been geared towards two main initiatives, reducing the cost of compliance to the taxpayer through aspects such as online declaration and payment. We also need to acknowledge that some of these reforms have an impact on the cost of administration to RRA. The cost of collection has moved from about 3 per cent to 2.6 per cent. If you look at our reform menu, we are geared at reducing this. An average of 2.5 in the next 2 to 3 years with a view of getting to 2 per cent in 5 years,” Tusabe explained.

The tax body is however not without challenges, such as smuggling, fraud and counterfeits.

In the last fiscal year, RRA registered fraud involving about Rwf 1.2 billion, while this year, it stands between Rwf400 million-Rwf500million, according to Robert Mugabe, the Deputy Commissioner for Revenue Investigation and Enforcement Department.

The popular smuggled items include used clothes and liquor.

To address this, RRA is relying on the recently introduced Electronic Cargo Tracking System as well as cooperation with neighbouring countries.

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