The Evolving Tax Environment in Rwanda
The Evolving Tax Environment in Rwanda
Rwanda’s tax landscape is undergoing significant transformation, reflecting the country’s efforts to enhance domestic revenue, attract investment, and align its fiscal system with regional and international standards. The latest policy reforms, effective May 2025, span various sectors and introduce both new obligations and potential opportunities for taxpayers. The following is a summary of key changes and their implications for businesses and individuals.
Gaming operators now face a substantial tax increase, with the gaming tax rate rising from 13 percent to 40 percent. Additionally, a new 1.5 percent digital services tax applies to companies with a significant digital presence in Rwanda, even if they do not have a physical office in the country.
For gambling activities, the withholding tax on winnings has risen from 15 percent to 25 percent. In contrast, gambling operators are now exempt from corporate income tax, indicating a policy shift from profit-based to consumption-based taxation.
Nonetheless, certain temporary exemptions remain. Machinery, capital assets, and industrial raw materials continue to be exempt until 30 June 2026. Fully electric vehicles, their batteries, and charging stations are exempt from VAT until 30 June 2028. These temporary measures demonstrate ongoing support for industrialization and green technology.
New product categories have been brought under excise duty, including cosmetics and beauty products (15 percent), other fermented beverages (65 percent), and locally sourced juices containing at least 30 percent local content (10 percent, up from 5 percent).
A phased increase in the excise tax on airtime is scheduled, rising to 12 percent by April 2025, 14 percent in the second year, and 15 percent in the third year.
Monthly tax declaration and payment cycles are now required for most taxpayers, replacing the previous tri-monthly schedule. June remains an exception to prevent overlaps with the fiscal year-end.
Hybrid vehicles continue to enjoy import duty exemptions, but VAT and withholding tax are now reinstated. A new excise duty is introduced based on vehicle age: 5 percent for vehicles aged 0–3 years, 10 percent for those 4–7 years old, and 15 percent for vehicles over eight years.
Road user charges have also been reinstated. The annual fees vary by vehicle type, with cars and jeeps paying RWF 50,000, buses and pickups RWF 100,000, half trailers RWF 120,000, and trucks and full trailers RWF 150,000.
Excise duties on vehicles are now based on engine size and age. Vehicles under 1500cc and up to 3 years old are taxed at 5 percent. Vehicles between 1500–2500cc and aged 3–8 years incur a 10 percent duty, while those over 2500cc and older than eight years are taxed at 15 percent.
In support of environmental sustainability, a new environmental levy of 0.2 percent of the CIF value has been introduced on imported goods packaged in plastic.
For personalized assistance and expert advice, contact the BDO Rwanda tax team at www.bdo-ea.com or email rwanda@bdo-ea.com.
Corporate Income Tax (CIT) Changes
The capital gains tax rate has been increased from 5 percent to 10 percent. The scope of taxable capital gains has also expanded to cover not only shares but also licenses, debt instruments, guarantees, options, and similar financial assets.Gaming operators now face a substantial tax increase, with the gaming tax rate rising from 13 percent to 40 percent. Additionally, a new 1.5 percent digital services tax applies to companies with a significant digital presence in Rwanda, even if they do not have a physical office in the country.
For gambling activities, the withholding tax on winnings has risen from 15 percent to 25 percent. In contrast, gambling operators are now exempt from corporate income tax, indicating a policy shift from profit-based to consumption-based taxation.
A New Tourism Tax on Accommodation
Law Nº 015/2025 of 27 May 2025 establishes a tourism tax on accommodation in Rwanda, set at 3% of the amount paid or payable for lodging, excluding VAT. The tax is collected by accommodation facilities, which are required to register with the Tax Administration, charge the tax to guests, and remit it to the authorities. Declarations must be made monthly, with payments due within 15 days after each month. The taxable event point at the time of payment, and all procedures related to declaration and payment are governed by regulations set by the Tax Administration. The law will take effect on 1 July 2025.VAT Reforms
After years of exemptions, VAT is now applicable on mobile phones and ICT equipment. VAT has also been reinstated on the road transport of goods, fossil fuels, and a range of business inputs. These changes are part of a broader strategy to streamline the VAT regime.Nonetheless, certain temporary exemptions remain. Machinery, capital assets, and industrial raw materials continue to be exempt until 30 June 2026. Fully electric vehicles, their batteries, and charging stations are exempt from VAT until 30 June 2028. These temporary measures demonstrate ongoing support for industrialization and green technology.
Excise Duty Adjustments
Tobacco products now attract a higher specific tax, increasing from RWF 130 to RWF 230 per pack, while the 36 percent ad valorem rate remains unchanged. The excise duty on beer has risen from 60 percent to 65 percent of the factory price. Beer produced using at least 70 percent local raw materials is now taxed at 40 percent, up from 30 percent.New product categories have been brought under excise duty, including cosmetics and beauty products (15 percent), other fermented beverages (65 percent), and locally sourced juices containing at least 30 percent local content (10 percent, up from 5 percent).
A phased increase in the excise tax on airtime is scheduled, rising to 12 percent by April 2025, 14 percent in the second year, and 15 percent in the third year.
Monthly tax declaration and payment cycles are now required for most taxpayers, replacing the previous tri-monthly schedule. June remains an exception to prevent overlaps with the fiscal year-end.
Motor Vehicle Taxation and Fees
Vehicle registration fees have been updated for the first time since 2009. Fees now range from RWF 75,000 for vehicles under 1000cc to RWF 997,000 for those over 4500cc.Hybrid vehicles continue to enjoy import duty exemptions, but VAT and withholding tax are now reinstated. A new excise duty is introduced based on vehicle age: 5 percent for vehicles aged 0–3 years, 10 percent for those 4–7 years old, and 15 percent for vehicles over eight years.
Road user charges have also been reinstated. The annual fees vary by vehicle type, with cars and jeeps paying RWF 50,000, buses and pickups RWF 100,000, half trailers RWF 120,000, and trucks and full trailers RWF 150,000.
Excise duties on vehicles are now based on engine size and age. Vehicles under 1500cc and up to 3 years old are taxed at 5 percent. Vehicles between 1500–2500cc and aged 3–8 years incur a 10 percent duty, while those over 2500cc and older than eight years are taxed at 15 percent.
Environmental and Fuel Levies
The fixed fuel levy of RWF 115 per liter has been replaced by a variable rate of 15 percent of the CIF (Cost, Insurance, and Freight) value. The strategic fuel reserve levy has been increased from RWF 32.73 to RWF 50 per liter.In support of environmental sustainability, a new environmental levy of 0.2 percent of the CIF value has been introduced on imported goods packaged in plastic.
Looking Ahead
These tax reforms highlight Rwanda’s continued efforts to modernize its fiscal system, expand its revenue base, and promote sustainability. As these changes take effect, businesses must reassess their tax strategies, update compliance protocols, and seek professional guidance to ensure a smooth transition.For personalized assistance and expert advice, contact the BDO Rwanda tax team at www.bdo-ea.com or email rwanda@bdo-ea.com.