Rwanda’s taxation system is designed to encourage economic growth while ensuring efficient revenue collection for the development of the country. Staying informed and fulfilling your tax responsibilities on time not only helps you avoid unnecessary costs but also contributes to Rwanda's economic growth and development.

Let’s understand the system into two categories, namely: Domestic Taxes and Custom Taxes. 

Domestic taxes are taxes that are levied on economic activities, goods, services, or income generated within a country’s borders while Custom taxes are taxes imposed on goods when they are imported into or exported out of a country.

Domestic taxes are further divided into Centralized taxes and Decentralized taxes.

Centralized taxes are levied and collected by the Rwanda Revenue Authority (RRA). These taxes include: Personal income tax, Corporate Income tax, Value Added tax, Pay as you earn, Excise duty, Withholding tax, and Social security contributions. Decentralized taxes are levied and collected at district level, hence the common name “District taxes.” They include the trading license, Immovable property tax, rental income tax, and market fees

Below is a detailed breakdown of custom duty taxes:

1. Customs Duties

Custom duties are taxes imposed on goods when they are imported into or exported out of a country. The purpose is to regulate international trade, protect domestic industries, and generate revenue for the government.

Customs Duty is levied on imported goods at the point of entry into the country. The taxes at customs include duties based on product type, VAT, withholding taxes, and consumption taxes.

1.1. Import Duties

These duties are calculated based on the Cost, Insurance, and Freight (CIF) value of goods imported. Rates depend on the nature of the goods and the trade agreements Rwanda is part of.

1.2. Withholding Tax on Imports

A 5% withholding tax is levied on imported goods. This tax must be paid before goods are released by customs.

1.3. Consumption Tax

Consumption tax is charged on certain locally manufactured and imported goods, such as alcoholic beverages, tobacco, vehicles, and fuel. The tax is due when goods are cleared from the factory or at customs.

Locally manufactured goods must declare consumption tax three times per month, while imported goods are taxed at customs. The taxable base is the selling price for locally manufactured goods and the Cost, Insurance, and Freight (CIF) value for imports.

Also Read

https://www.trade.gov/country-commercial-guides/rwanda-import-tariffs#:~:text=These%20include%20excise%20duty%20(varying,percent)%20applied%20on%20CIF%20value%2C

Now you have a comprehensive understanding of Rwanda's taxation system. You can stay on the right side of the law to confidently avoid fines, penalties, and any issues that may arise from non-compliance. Stay informed, stay compliant, and contribute to the country's growth through responsible tax practices.