RWANDA REVENUE AUTHORITY APPLICATION OF VAT IN THE FINANCIAL SECTOR IN RWANDA PRESENTED BY MBERA EMMY AND KANYANGE ANGELIQUE Date: 14 June 2016

STRUCTURE OF FINANCIAL SECTOR IN RWANDA Rwandan financial sector structure is composed of: 1. Banking sector Rwandan banking system is composed of 11 commercial banks, 4 microfinance banks, 1 development bank ,1 cooperative bank , 88 foreign exchange bureaus and capital market. 2. Non-bank financial institutions which is made of the pension and insurance sectors (12 insurers, 8 loss adjusters, 6 brokers and 155 insurance agents). These institutions are supervised and regulated by the National bank of Rwanda.

Value added tax is governed by Law n° 37/2012 of 09/11/2012 on the code of Value Added Tax.

SCOPE OF VAT (Art. 3) Other than exempt goods and services, value added tax (VAT) is charged on the following: -Every taxable supply in Rwanda; and -Every taxable import of goods or services. Person must register for VAT if they carry out a business in Rwanda that deals in taxable supplies and has, or is likely to have a turnover of more than Frw 20 million in any tax year or Frw 5 million in a calendar quarter.

Standard rate of VAT is 18% VAT rate Standard rate of VAT is 18%

VAT tax point (Art.10) The taxation period for the supply of goods and services shall be : 1. The date on which the invoice is issued; 2. The date on which payment of goods and services, including a partial payment is made. 3. The date on which goods are either removed from the premises of the supplier or when they are given to the recipient; 4. The date on which the service is delivered

VAT reverse charge (Art. 12) A local recipient of services from a foreign supplier will be required to account for a VAT reverse charge at 18% of the value of the services procured. The VAT Act further provides that the recipient may not reclaim the corresponding input VAT unless the services so procured are not available in the local market. Services are considered not to be available in Rwanda if there is no person in the local market that can deliver identical or similar services.

Compliance obligations The VAT return must be filed using Electronic filing / Etax and any payment due made to the RRA within 15 days of the end of the month for which the VAT is accounted for. The tax is calculated by deducting the input tax allowed to the taxpayer under articles 15, 16 and 17 in the taxation period from the total output tax payable in respect of taxable goods or services supplied.

Exempt supplies (Art. 6,7◦) Financial and insurance services: Premiums charged on life and medical insurance services; Fees charged on the operations of current accounts; Transfer of shares; Capital market transactions for listed securities.

Exempt supplies cont… RRA made a MOU with financial institutions and agreed on the transactions to exempt on VAT. 7 criteria were retained to classify exempted banking products & services: 1. Return on financial & equity investment; 2. Incentives for financial inclusion; 3. Foreign exchange operations; 4. Foreign country originated fees & commissions; 5. Grants & Donations; 6. Internally generated income; 7. Miscellaneous.

Thank you