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13 October 2023

Rwanda gazettes amendments to the Income Tax Law, changing certain reporting requirements and the corporate rate

  • The Government of Rwanda has gazetted Law No. 051/2023 amending provisions in the existing Income Tax Law No 027/2022 (ITL 2022), which had been gazetted in October 2022.
  • The amendment was gazetted on 14 September 2023 and immediately came into force.

Executive summary

The Government of Rwanda gazetted Law No 051/2023 amending the current Income Tax Law No 027/2022. The primary objective of the amendment is to reduce the standard corporate income tax rate from 30% to 28% as well as to include provisions that will ease pressure on taxpayers to submit certified financial statements while filing corporate income tax declarations with tax office.

This Alert highlights the key provisions under the gazetted Income Tax Law 2023.

Tax declaration (Article 9)

The amendment introduces a provision permitting taxpayers to apply for an extension to submit their certified financial statements together with the corporate income tax returns by the due date. Where the extension application is granted, the taxpayer is expected to submit their annual tax declaration along with audited financial statements to the Tax Authority within three months of making the provisional tax declaration.

Further, any taxpayer granted this extension must submit non-certified financial statements and fulfil their tax payment obligations by the prescribed deadline.

Currently, the annual turnover threshold for required certification of financial statements by qualified professionals is 600 million Rwandan francs (FRW 600m).

An additional amendment has been introduced exempting persons whose annual turnover is below FRW 2m from the requirement to file their annual tax declaration.

Corporate income tax rate (Article 48)

To improve Rwanda's competitiveness and attract foreign direct investments, the corporate income tax rate has been reduced from 30% to 28%.

However, there is a lack of clarity on whether taxpayers will be required to prorate the corporate tax rate based on the number of days — i.e., between 1 January and 13 September (30%) and between 14 September and 31 December (28%) for September to December year-ends.

Next steps

All concerned taxpayers should put in place measures to comply with the provisions of the Income Tax Law 2023, noting that the requirements of the new law took effect on the date it was gazetted, 14 September 2023.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young (Kenya), Nairobi

Ernst & Young Rwanda Limited, Kigali

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2023-1710

 
 

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