Taxes on digital and cosmetics to broaden the tax base. As part of its strategy to increase national resources, the government is introducing a tax on foreign digital services such as Netflix and Amazon. This measure aims to capture a share of the revenues generated by these platforms in Rwanda. In addition, cosmetics and beauty products are now subject to an excise duty of 15% on their cost-insurance-freight (CIF). However, pharmaceutical products for dermatological use will remain exempt.
Return of VAT on telephones and ICT equipment
After more than a decade of exemption, Value Added Tax (VAT) is being reintroduced on cell phones and ICT equipment. These measures, initially put in place to encourage the adoption of new technologies, have helped increase digital penetration in the country. The government assures that it will continue to work with industry players to keep smartphones affordable. The new tax reforms also include an increase in registration fees for all vehicles, including electric cars. In addition, the government is replacing the flat rate of Rwf115 per liter of fuel with a tax of 15% of the CIF, in order to boost maintenance of the national road network.
A brake on gambling
To encourage more responsible gambling, the tax on gross gaming revenue (GGR) is raised from 13% to 40%, an increase of 27 percentage points. Withholding tax on gamblers’ winnings will also rise from 15% to 25%. These increases are designed to limit the negative impact of gambling on the population.
New taxes for tourism and green mobility
A 3% levy on the cost of hotel rooms has been introduced to support investment in the tourism sector. With regard to sustainable mobility, hybrid vehicles will continue to benefit from an exemption from import duties, but will be subject to a progressive excise duty, depending on their age (5% for those less than three years old, 10% for those four to seven years old and 15% for those eight years old and over). VAT and a 5% withholding tax will also apply. Electric vehicles will remain totally exempt.
Higher taxes on alcohol, tobacco and airtime
Consumer goods are not spared by the new tax measures. Excise duty on cigarettes is being raised from USD0.091 (Rwf130) to USD0.16 (Rwf230) per pack, plus 36% of the retail price. The excise tax on beer increases from 60% to 65% of the factory price. In addition, the airtime tax, currently 10%, will rise to 12% in 2024-2025 and gradually reach 15% in the medium term.
Further reforms expected in 2025-2026
The Ministry of Finance and Economic Planning has announced that further tax measures will come into force in the next fiscal year. These include an environmental tax on single-use plastics, as well as the application of VAT to certain fee-based financial services, fossil fuels and road haulage.
With these new reforms, Rwanda seeks to strengthen its financial autonomy while pursuing its economic development. However, these tax increases could have repercussions on the cost of living and household consumption.
