As part of efforts to relax the burden imposed on businesses by the #COVID-19 pandemic, the Ministry of Finance and Economic Planning has announced temporary tax reliefs.
In line with the implementation of Cabinet resolutions of April 30 related to supporting different sectors of the economy to recover from effects of #COVID-19 pandemic, the Ministry said on Saturday that businesses are allowed to compute their quarterly payment for Corporate Income Taxes (CIT) and Personal Income Tax (PIT) based on the transactions of the current year.
Implementation modalities will be determined by the Tax Administration, the Ministry said in a communique.
According to the Rwanda National Institute of Statistics (RNIS) the Consumer Price Index (CPI) for the month of March indicates that CPI increased by 13.1% on annual basis and increased by 1.9% on monthly basis.
Urban CPI increased by US$8.5B on annual basis (March 2020 to March 2019) and increased by 1% on monthly basis (March 2020 to February 2020). The annual average inflation rate between March 2020 and March 2019 was 4.2%.
Food and non-alcoholic beverages increased by 18.8%, ‘alcoholic beverages, tobacco and narcotics’ increased by 17.2% and housing, water, electricity, gas and other fuels increased by 4.8%.
The Rural CPI increased by 16.5% on annual basis and increased by 2.5% on monthly basis.
The increase is generally detrimental to household income and coupled with a slump in supply chain due to a decline in productivity and imports, a scenario that has already hurt the economy.
Therefore these tax reliefs could play a critical role in relaxing the damage on the economy, in compound terms.
Meanwhile, the Ministry said, transport motor vehicles will pay their quarterly fixed personal income tax this year pro-rata to the period of operation.
Pay As You Earn (PAYE) will be waived for a period of 6 months (from April to September 30, 2020 for teachers of private school earning up to Frw 150k net salary.
According to the Ministry, this waiver will also apply for a period of 3 months (from April to June 2020) for employees of companies operating in the tourism and hotel sector who earn up to Frw 150k net salary.
Another relief is extended to face masks made in Rwanda. The ministry said this decision is part of the effort to prevent the spread of COVID-19. All mask producers will be exempted from value-added tax (VAT).
Source: Taarifa Rwanda