Rwanda National Police

Traders have been cautioned against fraudulent practices to evade taxes, which pose serious threat to their businesses and loss of government revenue.

In a joint press conference by Rwanda Revenue Authority (RRA), Rwanda National Police (RNP), Private Sector Federation (PSF) and Rwanda Inspectorate, Competition and Consumer Protection (RICA); held on Friday November 25, officials warned of serious repercussions for tax evasion.

RNP spokesperson, Commissioner of Police (CP) John Bosco Kabera said that over the past two weeks, the Revenue Protection Unit (RPU) arrested 86 traders in City of Kigali for tax fraud.

Some 20 vehicles and five motorcycles used in fraud were also impounded during the same period, he added.

The traders were fined more than Frw35 million, according to RRA.

Hajara Batamuriza, the Commissioner for Domestic Taxes at RRA, said that although the introduction of EBM to issue electronic tax receipts has modernized the sales and increased revenues, there are some traders, who are still engaged in tax fraud through manipulation of EBM.

"There is still a practice of traders, who undervalue their goods with intention to evade taxes. When customers buy goods, they are given electronic receipts with less the value of the commodity; others do not issue invoices; falsification receipts and accounting statements but also buyers, who do not exercise their rights to demand for receipts to ensure that the taxes they pay when buying goods are delivered," Batamuriza said.

Also raised is an issue of traders, who demand more money from customers than the actual value of the product, if they want invoice.

"Taxes are paid by customers and traders are just custodians, who are supposed to ensure that these taxes are delivered to the government," she noted.

CP Kabera, on his part, warned of increased operations against tax fraud.

"Use of electronic invoicing system is an obligation and failure or non-compliance is punishable by law," said CP Kabera.

Article 81 of Law N? 026/2019 of 18/09/2019 regulating tax procedures states: "Except for taxpayers registered for the value added tax, any person, who is required to issue an invoice generated by an electronic invoicing system recognized by the Tax administration but fails to do so is liable to an administrative fine of two (2) times the value of the transaction.

Any value addition tax unregistered person, who carries out a taxable transaction and delivers an electronic invoice with under-valued price or quantity of goods or services is liable to an administrative fine of two (2) times the value of the under-valued transaction.

In aticle 85, a person registered for the VAT, who sells goods or services without issuing an electronic invoice is liable to an administrative fine of ten (10) times the value of the evaded Value Added Tax.

In case of the fault is repeated, the defaulter is liable to an administrative fine of twenty (20) times the value of the evaded Value Added Tax.

In article 86, a person, who fails to comply with obligations of the user of the electronic invoicing system is liable to an administrative fine of Frw200,000 and up to Frw400000 if the fault repeated.

A person registered to the Value Added Tax, who carries out a taxable transaction and delivers an electronic invoice with under-valued price or quantity of goods or services is liable to an administrative fine of ten (10) times the value of the evaded value added tax.