August 18, 2020
Rwanda announces requirements for VAT exemption applications on imported machinery, capital goods and raw materials
On 20 July 2020 and pursuant to provisions of Article 2 of the Value Added Tax (VAT) Laws of Rwanda, the Rwandan Minister of Trade and Industry issued an announcement listing specific requirements that should be met by industries and manufacturers when filing an application for a VAT exemption on imported machinery, capital goods and raw materials. This exemption is not applicable to importers who intend to resell the imported machinery, capital goods and raw materials.
The following requirements must be met:
The VAT exemption application must be accompanied by:
The application should be submitted to the Minister of Trade and Industry before the machinery, capital goods and raw materials are imported into Rwanda.
Within two weeks from the receipt of a valid application:
Applications for renewals will only be permitted twice a year, i.e., in January and June. However, new applicants will not be subject to these time restrictions.
As the exemption application may only be submitted twice a year, it is important to note that the announcement does not provide clarity on the process to be followed by taxpayers who import machinery, capital goods and raw materials in different quantities and on a frequent basis (e.g., on a monthly basis).
All eligible taxpayers should familiarize themselves with the above requirements in order to ensure that their VAT exemption applications are submitted within the acceptable time periods and in the prescribed manner.
Taxpayers who frequently import machinery, capital goods and raw materials may consider working with their local tax professional(s) to engage the concerned government ministries and agents on the process to be followed on each consignment imported.
For additional information with respect to this Alert, please contact the following:
Ernst & Young (Kenya), Nairobi
Ernst & Young Rwanda Limited, Kigali
Ernst & Young Société d'Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York
PDF version of this Tax Alert