Effectiveness of Rwandan Law of Tax Administration in addressing Tax Offences

I.1.3 Historical evolution of taxation in Rwanda

Rwandan history indicates that the first tax legislation was inherited from colonial regimes. Such tax legislations include the Ordinance of August 1912 which established graduated tax and tax on real property. There was another Ordinance of 15th November 1925 adopting and putting into application the Order issued in Belgium Congo, on 1st June 1925 establishing a profit tax.

The order was amended several times up to the Order of 25th March 1960, meant for Rwanda's development and cash in-flow. After independence, the first tax legislation passed was that of 2nd June 1964 governing profit tax, which was repealed and replaced by Law No 8/97 of 26/06/1997 on the Code of Direct Taxes on Different Profits and Professional incomes.

This law was amended from time to time in order to keep pace with time and the changing economic environment. Such other legislative instruments include the 1973 law governing property tax, the tax on license to carry out trade and professional activities, the law N°. 29/91 of 28th June 1991 on sales tax /turnover tax (now repealed and replaced by the law N°. 06/2001 of 20/01/2001 on the Code of Value Added Tax (VAT).

Other substantive Law governing Customs was enacted on 17th July 1968 accompanying Ministerial Order of 27th July 1968, putting into application the Customs Law.

In addition the administration and accountability of taxes and duties in Rwanda was initially under the Ministry of Finance and Economic Planning.

In 1997, Rwanda Revenue Authority was established as an independent body by the law no 15/97 of 8/11/1997 to administer the various taxes and tax related laws and to assess, collect, administer, and account for Fiscal and Customs revenue collected to the Government through the Ministry of finance in accordance with established procedure.

RRA came into the country at a time when public institutions in the nation were either experiencing shortage of qualified staff or bearing the effect of it. Such burden partly linked to the 1994 genocide that caused knowledge and knowledge repatriation.

As a tax administration, RRA entered into an environment and niche that concerned with revenue collection. There was a lot of fraud and smuggling in the country and RRA therefore was seen as an enemy threatening peoples' hot business at time^8(*).

Through article 3(c) of the law no 15/97 of 8/11/1997, Rwanda Revenue Authority was given powers to institute prosecution of Tax offenders^9(*). The RRA was mandated to enforce compliance with the laws that it administers to ensure that taxpayers fully comply with their obligations under the tax laws by heavily guarding against all forms of tax offences.

* ⁸ RRA Communication Strategy, 2009

* ⁹ Law No. 15/97 of 11/08/1997 establishing RRA (O.G. No. 22 of November 15, 1997)