In Rwanda, employers have several tax responsibilities. One of these is the Pay As You Earn (PAYE) system, which is a method of withholding income tax from salaries. The PAYE rates are progressive, with 0% on the first 60,000 Rwandan Francs (RWF) of monthly income, 20% on income between 60,001 RWF and 100,000 RWF, and 30% on income above 100,000 RWF. For casual laborers, who are employed for less than 30 days in a tax year, there is a 15% flat rate. The payment deadline for PAYE is the 15th of the following month after the salary is paid.

Social Security Contributions (RSSB)

Employers also have responsibilities towards the Rwanda Social Security Board (RSSB), which manages Rwanda's pension scheme and other social security benefits. Employers are required to contribute 5% of an employee's gross salary to the RSSB, with the payment deadline being the 15th of the following month.

Other Employer Taxes

In addition to PAYE and RSSB contributions, employers are also subject to the Skills Development Levy (SDL). This is calculated as 1% of the gross salary of all employees. However, it's currently not being collected.

In Rwanda, the income tax system for employees is known as Pay As You Earn (PAYE). All employees with taxable income are eligible for this system. The calculation method for PAYE involves progressive tax rates. These rates are 0% on the first 60,000 Rwandan Francs (RWF) of monthly income, 20% on income between 60,001 RWF and 100,000 RWF, and 30% on income exceeding 100,000 RWF.

Social Security Contributions (RSSB)

Rwanda's mandatory pension scheme and other social security benefits are funded by the Rwanda Social Security Board (RSSB). All employees in the formal sector are eligible for this. The calculation method for RSSB involves a deduction of 3% of the employee's gross salary.

Important Notes

Specific rules may apply if an employee has more than one employer.

In Rwanda, the standard VAT rate is 18%, which is applicable to most taxable services. However, some services are exempt from VAT. These include financial services, educational services, and specified healthcare services.

VAT Registration

Businesses with an annual turnover exceeding 20 million RWF must register for VAT.

VAT Filing Frequency

VAT returns are generally filed on a monthly basis.

VAT Payment Deadline

Both VAT returns and payments are due by the 15th of the following month.

VAT Calculation Example

Consider a marketing agency based in Rwanda that provides a taxable service worth 500,000 RWF. The VAT calculation would work as follows:

• VAT amount: 500,000 RWF * 18% = 90,000 RWF
• Total cost to the client: 500,000 RWF + 90,000 RWF = 590,000 RWF

For comprehensive information on VAT regulations, refer to the Rwanda Revenue Authority (RRA), the official authority on tax matters.

Reduced Corporate Income Tax (CIT) rates are among the most attractive tax incentives.

Types of Preferential CIT Rates

• 0% CIT: This is applicable to international companies that establish their headquarters or regional offices in Rwanda. The minimum investment threshold is USD 10 million.
• 15% CIT: This lower rate is beneficial for businesses operating in strategic sectors such as energy, transport, ICT, and financial services.

Qualification Criteria for Preferential CIT Rates

Each incentive has specific requirements. Generally, companies must register with the Rwanda Development Board (RDB) and demonstrate their contribution to priority sectors through job creation, technology transfer, or export generation.

Application Process for Preferential CIT Rates

For detailed guidance and application procedures, companies should contact the RDB. Their website offers downloadable forms and clear instructions.

Additional Tax Benefits

Apart from the preferential CIT rates, Rwanda offers other tax breaks:

• Corporate income tax holiday: Depending on the investment and location, up to seven years of exemption on profits may be granted.
• Exemption of customs duties: Businesses in Export Processing Zones (EPZs) can import machinery and materials duty-free.
• VAT refund: Businesses can claim back Value Added Tax (VAT) paid on inputs used for production and exports.