Effectiveness of Rwandan Law of Tax Administration in addressing Tax Offences

IV.3.3 Taxpayer assistance and education

Tax administration should recognise that the traditional tax infrastructure of law, auditors, penalties, debt collectors and court cases needs to be supplemented by measures to boost taxpayers' commitment to pay tax and their trust in the tax administration.

The tax administration should use different measures to assist and educate taxpayers, such as providing information and tools to help taxpayers comply; providing rewards and incentives for good compliance; and involving taxpayers in consultative forums. At the same time, taxpayers will also help the tax administration by acting as informants and establishing good taxpayer behavioural norms.

In 2007, taxpayers' education continued especially on the new tax and customs laws with a view to enhance taxpayers' compliance. Several seminars, workshops and consultative meetings with taxpayers, both small and large were organised in all provinces and Kigali City. Also three seminar sessions on new fiscal laws with lawyers were organized in collaboration with the Supreme Court. Sixty meetings at district level were also organised through Tax Advisory Councils^45(*).

RRA has taken ground breaking initiatives to sensitise the business community on Value Added Tax (VAT) collection. Some taxpayers are not informed about the law while others lack financial accounting skills and end up committing mistakes unintentionally. In this regard, VAT campaigns were organised in different venues of Kigali City. RRA has come closer to help taxpayers understand the law and train them to handle financial accounting matters so as to avoid fines. Also RRA wanted to hear the concerns of taxpayers to enable it tailor make solutions.

During the year 2007, RRA continued to give relevant information to taxpayers to enable them comply with their tax obligations. In this regard, the design and content of the RRA's website was upgraded to provide easily more comprehensive and targeted information to our customers.

IV.3.4 Providing information, tools to help taxpayers

The provision of information, tools and guidance to help taxpayers comply is very important. If taxpayers do not understand what their obligations are, any intervention to enforce compliance will be perceived as unfair. Thus, a first step in considering how to address a specific non-compliant behaviour should be to review whether or not the appropriate steps have been taken to make obligations clear -- meaning transparent, easy to understand, simple and non-confusing guidance. Such a process should include consideration of the following issues:

· Are the authority's administrative requirements clear?

· Are there clear information products available, at relevant levels of detail, in the language of the taxpayer? Are these products accessible in the taxpayers' channels of choice (e.g. web-based, paper-based, CD-Rom)?

· Has there been adequate communication and marketing of the information available? Has this included publication in relevant industry or community vehicles?

· Are effective support services available to meet taxpayers' needs? (e.g. telephone enquiry services, web services, educational field visits, etc.)

· Have opportunities been taken to remind those potentially at risk of what their obligations are?

Other measures include expanding a range of electronic services provided (such as RRA website, online registration, e-filing and portals). It is believed that there will be an increase in the number of taxpayers and tax advisers taking advantage of the ease and convenience these services provided.

The administrative burden of tax compliance has been shown to fall more heavily on small businesses than on large businesses. From this context, a specific program should be implemented to help those new to business to get established. A pilot program should be conducted where those new to business will be given a personal phone-call from a tax officer to check if the business operator had any questions about his tax obligations. The objective of this study will be to establish whether those who were contacted will be more compliant (i.e. lodge on time and have smaller debts) than those who have not been called.

There is also importance of tax consciousness and the tax administration is introducing a strategy of increasing public awareness amongst the younger generation. This is being done through series of debates and essay-writing competitions at school level. It is hoped that this effort will generate tax consciousness among the younger generation who will then become law-abiding citizens.

Visits to business premises are also helpful because they offer a personalised and direct approach to assistance, but these visits need to be carefully pitched because they could be viewed as an enforcement approach, leading to more angst and fear! It is more common to establish shop fronts or call centres where taxpayers can access to seek assistance or information to help them comply, or to conduct seminars or workshops for groups of taxpayers

* ⁴⁵ RRA Annual Report for 2007, March 2008