A Critical Analysis of Effectiveness of Tax Offences Control Mechanisms Under Rwandan Law

II.2. Powers to investigate tax offences

The declaration of tax is made when the declaration form with the supporting documents is submitted to the tax administration. However this does not constitute the only sources of information for the tax administration because the tax administration has powers to carry out investigations to get additional information. This investigation is conducted in case the tax administration is in doubt of the information furnished by the taxpayer and suspects that a tax offence has been committed. The tax administration can either get the necessary information from the taxpayer or from the third party.

II.2.1 Powers to get information from the taxpayer

A. Powers to access to the taxpayer's books of accounts and records

According to articles 12 and 13 of law on tax procedures35(*) all persons engaged in business activities must keep books of accounts and records. However, it is necessary to distinguish three (3) categories of taxpayers:

1. The physical persons (not business companies) with annual turnover less or equal to 1.200.000 Rfr: Taxpayers falling under this category are not required by the law to keep the books of accounts and records.

The taxpayers with annual turnover less than twenty (20) million Rfr: This category of the taxpayers is obliged by the law to keep the books of accounts only related to their tax liability. It is mainly the sales, wages and salaries paid by the taxpayer;

The taxpayers with annual turnover more than or equal to twenty (20) million Rfr: These taxpayers are obliged by the law to keep a detailed set of books of accounts and records composed of:

· A record showing business assets and liabilities(Balance sheet);

· Records showing daily income and expenses and to the taxpayer's business activity;

· Records showing purchases and sales of goods and services related to the taxpayer's business(Purchases and sales accounts);

· Records showing trading stock at the end of tax period (Annual stock inventory).

All the books of accounts, documents and record are required to be kept in the premises of the taxpayer or any another place located within in Rwanda36(*) at least for a period of ten years. The obligation to keep these sets of accounts is made in order to facilitated the authorised tax officer have access to them and conduct verification and establish whether any tax offence has been committed.

Once the books of accounts and records are produced and provided to the tax authorised officer, they are verified to establish whether they comply and are in conformity to the reality of the business activities under investigation.

B. Access to the taxpayer's business premises

The authorised tax officer has the right to enter into the taxpayer's business premises as well as the houses of dwelling or residence (private buildings). The authorised officer can have access to and enter into the taxpayer's premises (both business premises and private premises) without issuing any written notification. The authorised tax officer can carry out this activity between 7.00 am in the morning and 6.00 pm in the evening)37(*). However this entry should be conducted in application of the constitutional principle of the respect of the private life.^38(*) In the case where the taxpayer refuses the authorised officer the access to his premises, the tax administration can request search warrant from the prosecution. When the tax administration gets the above mentioned permission, it may seek the assistance of the governor of the province, the Mayor of City of Kigali, the Commander of Police or the mayor of the District or Town to in order for the search to be conducted ^39(*)

* ³⁵ Law no 25/2005 0f 04/12/2005 on tax procedures

* ³⁶ Article 13 of LTP

* ³⁷ Article 25 of LTP

* ³⁸ Article 22 of the Constitution of the Republic of Rwanda

* ³⁹ Article 25 of LTP