The Government of Rwanda has introduced new tax laws and ministerial regulations aimed at strengthening the country’s economy and improving the well-being of its citizens. These changes were approved during a Cabinet meeting on February 10, 2025, as part of the country’s strategy to accelerate development under the National Strategy for Transformation (NST2).
Key Announcements and Officials’ Statements
During a press conference on February 11, several government officials, including the Minister of Finance and Economic Planning, Yusuf Murangwa, and the Minister of Trade and Industry, Prudence Sebahizi, explained the significance of these tax reforms. They emphasized that the changes are crucial for boosting revenue collection and supporting Rwanda’s long-term economic growth.
Minister Murangwa highlighted that every developing nation must increase its tax revenues to fund essential services and infrastructure. He noted that low-income countries should aim to collect at least 16% of their Gross Domestic Product (GDP) in taxes to sustain growth.
Breakdown of Tax Reforms
The new tax measures are divided into three main categories:
- Increasing existing taxes
- Introducing Value-Added Tax (VAT) on previously exempt goods
- Implementing a new Digital Services Tax, targeting payments made to international online services like Netflix, Amazon, and other streaming platforms
These adjustments aim to broaden the tax base, enhance compliance, and strengthen Rwanda’s economic self-reliance.
Specific Changes in Taxation
The reforms will be implemented gradually until 2029, with some taking effect in the 2025 fiscal year. Key changes include:
- Luxury Beauty Products: A 15% tax has been introduced on cosmetic and beauty enhancement products. However, medical-related beauty products will remain tax-free.
- Vehicle Registration Fees: Annual registration fees for all vehicles, including imports and locally assembled cars, have been increased to RWF 50,000.
- Fuel Levy: The fuel levy tax, previously set at RWF 115 per liter, will now be calculated as 15% of the import cost (CIF).
- Mobile Phones and Tech Gadgets: VAT has been reinstated on mobile phones and other electronic devices that had been exempted since 2010. The government, however, will continue working with stakeholders to promote access to smart devices.
- Tobacco and Alcohol:
- The tax on a pack of cigarettes has increased from RWF 130 to RWF 230, with an additional 36% retail tax.
- The excise tax on alcoholic beverages has risen from 60% to 65%.
- Airtime and Call Rates: The excise tax on mobile airtime has been raised from 10% to 15% over the next three years. Currently, the cost per minute of a phone call is RWF 40, which is expected to rise slightly to RWF 42 per minute.
Economic Impact and Future Plans
Minister Murangwa reassured the public that the government carefully assessed the potential economic impact of these tax hikes. He explained that while some price increases are expected, the long-term benefits include improved infrastructure, better public services, and a stronger national economy.
Looking beyond NST2, Rwanda is setting ambitious economic targets, aiming for a per capita income of $4,000 annually. These reforms are expected to generate an additional RWF 250 billion in tax revenue over the next five years, further supporting the country’s economic transformation.
The new tax policies reflect Rwanda’s commitment to self-sufficiency and sustainable development. While they may introduce short-term costs for consumers, they are designed to secure long-term economic stability and growth. The government urges citizens and businesses to comply with the new regulations to contribute to national progress.
