Effectiveness of Rwandan Law of Tax Administration in addressing Tax Offences

III.5. Type of Taxes mainly exposed to tax offences

III.5.1 Taxes on company profits

According to the law, all companies operating in Rwanda for the aim of making profits are taxed, this is illustrated in article no 3 of the law no 9/97 of 26^th June/1997.

This tax is imposed on profits realised by the companies legally registered in Rwanda, cooperatives, societies and their unions, public establishments enjoying financial autonomy, and other registered and non registered societies, whatever their status grouping at least two or more patterns having an aim of making profit.

III.5.2 Tax on profits made by self-employed people

Normally this kind tax is imposed on income or profit made by self employed people excluding pensions payments and income not related to them. This income is from professional businesses obtained during the year of winding up business operations, and it is paid once in the year.

III.5.3 Professional tax on remuneration

Professional tax on remuneration is imposed according to law no 8 and law no 9/97 of 26^th June/ 1997. It is imposed on remuneration received by all people who are paid by their employers or third parties with or without a contract. This remuneration includes salary of administrators, managers' commission agents and liquidator of companies and other fixed or valuable payment of any nature.

III.5.4 Customs duties

These are duties inscribed in the customs tariff for goods which enter or which leave the customs territory^28(*). All these duties are payable to customs on import or export goods.

Custom is an administrative apartment specifically responsible for the application of legislation concerning the importation of goods and the receipt of public taxation produced by the duties and taxes to which those goods are subject.

III.5.5 Value Added Tax (VAT)

VAT is levied on the supply of goods and services made in Rwanda and on importation of goods and services into Rwanda, except those that are exempted.

VAT is paid by the consumer of taxable goods and services but is only levied by taxpayer registered for VAT. Every registered taxpayer for VAT must submit VAT monthly returns within 15 days after the month to which returns relates.

The monthly returns indicate VAT charged on sale (output tax) and VAT paid on purchases (input tax). VAT payable is the difference between the output tax and the input tax, the tax payer will pay the difference and if output tax is less than input tax he will claim for refund.

* ^{28 Art. 1 par. 16 of Law N° 21/2006 of 28/04/2006 Establishing The Customs System (O.G. N° 13/2006 Of 01 July 2006)}