Effectiveness of Rwandan Law of Tax Administration in addressing Tax Offences

IV.3. Application of Administrative sanctions44(*)

Administrative control is about the use of operational and administrative measures such as reducing the compliance cost/burden on taxpayers; actively registering the tax base, introducing record keeping requirements, to improve compliance behaviour, etc.

RRA should continue working towards reducing the compliance cost/burden on taxpayers. The requirement for tax clearance certificates; the creation of specialised units to deal with compliance risks (such as Risk Management and Intelligence Unit in Customs); and the active registration of taxpayers are also common initiatives. Invoicing/receipting requirements and decentralising the tax office will also be used.

Administrative sanctions used to fight tax offences include the following:

· Refusal to benefit from tax clearance certificate (quitus fiscal);

· Refusal to benefit from facilities of payment in instalments of their tax arrears;

· Refusal to allow the certificate giving right to a public tender;

· Refusal of automatic refund (refunded after audit);

· Non renewal of the of clearing agencies' license due to poor performance record

· Denial of pre-clearance facility

Additional administrative measures against tax defaulters in Customs & Excise department are stipulated below.

Pursuant to article 226 of the n° 21/2006 of 28/04/2006 establishing the Customs System, Customs may take one or more of the following administrative measures against one or more of the offenders of the Customs law:

· Temporarily deny access to Customs offices, bonded warehouses, or temporary storage facilities;

· Temporarily suspend or terminate authorization to act as a clearing agent;

· Temporarily suspend or terminate his/her authorization for a customs procedure with economic impact;

· Temporarily suspend or terminate access to Customs electronic network.

IV.3.1 Introducing invoicing/receipting requirements

Requirements for invoices and receipts should be emphasized with the goal of improving the quality of the audit trail and increasing transparency for consumers by enforcing prescribed documentation and record maintenance by businesses. Taxpayers should ensure that tax invoices:

· Show Taxpayer identification number

· Clearly identify each taxable supply

· Show the total amount of VAT payable

· The total amount payable.

IV.3.2 Introducing record keeping and accounting codes

Poor recording keeping is one of the key barrier that RRA meets when reviewing or auditing businesses.

The law or regulations should specify taxpayers' obligations to keep books of account and other records necessary for determining tax liability. These would include the content and form of invoices, what taxpayers must use them, and under what circumstances.

The tax administration should compel businesses to keep better records by providing assistance and information on record keeping; providing recording keeping tools; and/or by using the law to make certain reporting, record keeping or accounting standards mandatory.

* ⁴⁴ Source: RRA