Kigali firms shaken by new tax system

KIGALI, RWANDA – Business owners across the city are skeptical of the recent introduction of the Electronic Billing Machine.
The Rwanda Revenue Authority (RRA) has made it mandatory for all VAT-registered businesses to buy the register.
Some 500 were distributed sometime ago free of charge to selected enterprises in a pilot scheme intended to familiarize the public with the machines.
RRA believes that when business people use the machines the invoicing system will curb tax evasion and also streamline book-keeping.
However, numerous business owners said the new system, will add to their operational costs in purchasing it, maintaining it and using it.
“We are asked to buy the machine ourselves and they charge you a monthly maintenance fee of Rwf 1000 (about $1.50), and because it uses power, you have to increase on the units you are using. Don’t you see that we will be working for nothing?” one concerned businessman in Kigali’s commercial quarter said.
Charles Kabera,  Head of Risk Management in the domestic  taxes department  at RRA said that traders who are complaining about machines have been evading taxes  which the machine is trying to curb.
“Traders have been using two different receipts books where one with less prices  is declared to us while others have not been issuing receipts which is risky to their businesses and their customers as well,” he told East African Business Week last Tuesday.
According to the RRA, Rwanda has decided to introduce legislation which will help businesses to keep their books properly and protect honest taxpayers from unfair competition.
‘The new law is specifically designed to stop tax evasion, which is troubling even the richest countries around the world. We are not the only country introducing technology to combat tax evasion as Sweden, Germany, Greece, Ethiopia, Kenya and almost 50 other countries around the world have already done something similar,’ reads part of the RRA statement.
Some business people interviewed last week, said that the system is difficult to use.  They also said that it affects their profit margins since  buyers are not willing to meet the additional 18% for VAT.
However, others welcomed the machines saying it is supporting them in streamlining their books of accounts and saves time.
“The machine has helped me. I am not worried of my employees  cheating  my customers by over charging them or going through receipts when am going to declare taxes, they are done electronically,” Anastase Kwizera, a trader in Kigali’s Commercial Quarter said.
Kabera said the register helps businesses to keep their books properly, reduce tax evasion, provide market balance and level business opportunities for everyone.
“Introduction of this invoicing system will eventually lead to modernisation of Rwanda towards new consumer  protection programme and creation of fair  competition among all tax payers,”  he said.

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