The Rwandan Cabinet has approved a series of new tax measures aimed at enhancing domestic revenue mobilisation to support the second phase of the National Strategy for Transformation (NST2), which runs from 2024 to 2029.
These reforms, introduced on February 10, 2025, seek to broaden the tax base, increase government revenue, and streamline tax administration to finance economic growth and development initiatives.
Among the key changes are new levies on digital services, excise duties on consumer goods, adjustments to vehicle registration fees, and reintroduced taxes on ICT equipment and mobile phones.
Key Tax Reforms: What You Need to Know
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1. Tax on Foreign Digital Services
• Rwanda has introduced a new tax on foreign digital services, affecting platforms like Netflix and Amazon. This aligns with global trends where governments seek to tax digital economy giants operating within their jurisdictions.
2. Excise Duty on Cosmetic and Beauty Products
• A 15% excise duty will apply to make-up, body lotions, and hair products based on their Cost-Insurance-Freight (CIF) value.
• Pharmaceutical beauty products deemed essential by the Ministry of Health will be exempt.
3. Vehicle Registration Fee Adjustments
• Registration fees for all vehicles, including electric vehicles, will increase, though specific details are yet to be announced.
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4. Fuel Levy Adjustment
• The fuel levy will shift from a fixed fee of Rwf115 per litre to 15% of CIF value, generating additional funds for road maintenance.
5. Reintroduction of VAT on Mobile Phones
• VAT on mobile phones is set to return after being exempted since 2010 to boost affordability and digital inclusion.
• The government reassures that initiatives to increase smartphone ownership and usage will continue.
6. VAT on ICT Equipment Returns
• VAT, which was exempted in 2012 to encourage ICT adoption, will be reinstated, except for specific ICT equipment to be determined in consultation with the Ministry of ICT and Innovation.
7. Increased Taxes on Gambling
• Gross Gambling Revenue (GGR) tax will increase from 13% to 40%, a 27 percentage point rise.
• Withholding tax on winnings will rise from 15% to 25%.
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8. Introduction of Tourism Levy
• A 3% levy will be imposed on hotel accommodation costs to support investment in tourism and hospitality infrastructure.
9. Hybrid Vehicles to Pay VAT but Retain Import Duty Exemption
• Import duty exemption (25%) remains for hybrid vehicles.
• New excise duties will apply based on vehicle age:
• 5% for vehicles under three years
• 10% for four to seven years
• 15% for vehicles eight years and older
• Electric vehicles remain fully exempt to promote green mobility.
10. Higher Excise Duty on Cigarettes
• The excise duty on cigarettes will increase from Rwf130 per pack to Rwf230 per pack, plus 36% of the retail price.
11. Beer Excise Duty to Increase by 5 Percentage Points
• Excise duty on beer will increase from 60% to 65% of the factory price.
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12. Increased Excise Duty on Airtime
• Excise duty on airtime will increase from 10% to 12% in 2024/25, with a gradual rise to 15% in the medium term.
Additional Tax Policy Measures (Effective 2025/2026 and Beyond)
The government has outlined further tax policy changes, to be implemented in the next fiscal year (2025/26) and beyond, including:
• An environmental levy on single-use plastics
• VAT on selected fee-based financial services
• VAT on fossil fuels
• VAT on road transportation services of goods
Also read: Rwanda Leads Africa’s Digital Public Finance Transformation
What These Tax Reforms Mean for Rwanda
The new tax policy reforms are part of Rwanda’s medium-term economic strategy, aimed at:
✅ Expanding the tax base to boost revenue collection
✅ Reducing dependence on external funding
✅ Supporting critical sectors like tourism, infrastructure, and digital transformation
✅ Encouraging green energy adoption while penalising harmful environmental practices
By implementing these reforms, Rwanda aims to strengthen its financial autonomy, ensuring long-term economic growth and improved public service delivery.
