Rwanda EBM success draws international acclaim
By Emmanuel RUTAYISIRE
Riding on a renewed automation drive, Rwanda’s streamlined tax collection strategy is attracting international note as a model for countries seeking to promote fair trade and close leakages in the mobilisation of tax revenues.
This was the case with the Organisation for Economic Cooperation and Development ‘s (OECD) March 30-31, 2017 Global Anti-Corruption and Integrity Forum in Paris to which Mr. Robert Mugabe, Deputy Commissioner, Revenue Investigation and Enforcement Department at RRA was invited owing to a presentation he had earlier delivered at a World Bank meeting in Nairobi on fighting tax crime in East Africa.
The invite was especially noteworthy since Rwanda is not a member of the OECD.
“In Nairobi we explained that Rwanda has moved from a manual to an electronic invoicing system that accurately captures sales data and accounts for VAT, and how this has gone a long in improving VAT tax performance.
We discussed how Rwanda has established risk management systems to identify missing traders and mutating companies, which are key elements of tax evasion,” Mr. Mugabe says.
Like many others at the meeting, a delegate from OECD was impressed with this story, earning Rwanda an invite to the forum.
Ms. Grace Perez-Navarro, deputy director of the OECD’s Centre for Tax Policy and Administration is quoted in the organisation’s 31st March newsletter titled Technology Tools to Tackle Tax Evasion and Tax Fraud crediting Rwanda for its success with the implementation of electronic cash registers.
Ms. Perez-Navarro notes that in an economy comprised of mostly small and medium-size businesses, it is very hard to ensure high levels of compliance. However, introduction of the registers has seen Rwanda do just that, resulting in remarkable increases in VAT collection.
Also, this automation of tax processes has improved the business climate by removing delays and bringing efficiency in operations from the trader’s end.
Introduction of the EBM in financial year 2013/2014, led to an increase in VAT contributions to 33.9%, up from30.6% the previous year.
Further impacting tax performance is the automation of the VAT input validation process which rejects false entries by unscrupulous persons seeking to benefit illegally from VAT refunds.