Minister of Finance and Economic Planning Yusuf Murangwa
The Government of Rwanda has introduced significant tax reforms aimed at increasing national revenue and driving economic growth.
President Paul Kagame chaired the Cabinet meeting that approved these reforms, which will be implemented in three phases: increasing existing taxes, introducing a new tax, and expanding the Value-Added Tax (VAT) to previously exempt goods.
Objectives of the Tax Reforms
Minister of Finance and Economic Planning, Yusuf Murangwa, emphasised the necessity of these tax adjustments to support Rwanda’s long-term economic development.
“We have begun implementing the second phase of the National Strategy for Transformation (NST2), which requires substantial financial resources. Strengthening revenue collection is essential to achieving our economic goals,” Murangwa stated.
The government will introduce these changes gradually over five years, from 2025 to 2029, ensuring businesses and consumers have sufficient time to adapt.
“Not all taxes will take effect immediately. We have designed a phased approach and will communicate each step clearly to facilitate a smooth transition,” Murangwa added.
To ensure effective implementation, the government plans to conduct public awareness campaigns and engage key stakeholders.
Key Tax Policy Changes
A major reform is the introduction of a Digital Services Tax, which will apply to international digital platforms such as Netflix, Amazon, and other foreign-based services used in Rwanda.
Additionally, the government will extend VAT to products that were previously exempt, including mobile phones and other technological devices.
Murangwa highlighted the widespread adoption of mobile technology in Rwanda as a key reason for this policy adjustment.
“We initially exempted mobile phones from VAT to encourage accessibility. However, with approximately 80% of Rwandans now owning a mobile phone, it is time to revise this policy,” he noted.
The government will also increase taxes on alcoholic beverages and tobacco products, aiming to generate additional revenue while discouraging excessive consumption.
Economic Impact on Businesses and Consumers
These tax reforms are expected to have a significant impact on businesses and consumers.
Higher taxes on alcohol and tobacco may lead to price increases, while extending VAT to mobile phones and technological products could affect affordability.
Consumers subscribing to international digital services should anticipate additional costs due to the new Digital Services Tax.
Despite potential short-term financial adjustments, the government maintains that these reforms are essential for ensuring Rwanda’s fiscal stability and long-term economic resilience.
