Last month, Rwanda gazetted different laws implementing tax policy reforms announced by the Government in February 2025. The reforms are mainly aimed at boosting domestic revenue mobilisation, and include income tax reforms, the introduction and reinstatement of indirect taxes on certain goods and services and the adoption of new taxes. Below are the key highlights of the said reforms.
1. Income Tax Reforms
The income tax-related reforms are contained in Law nº 014/2025 amending Law nº 027/2022 establishing taxes on income as amended (the "Income Tax Amendments Act").
The notable changes under the Income Tax Amendments Act include the extension of the scope of application of capital gain tax from share transfer transactions to the transactions involving transfer of other securities such as debt instruments, options, guarantees and similar assets. The Income Tax Amendments Act also increases the CGT rate from 5% to 10%.
Another reform under the Income Tax Amendments Act relates to a change in the tax regime of gaming businesses. Before the Income Tax Amendments Act, gaming businesses were liable to corporate income tax on a net basis (plus monthly 13% tax on gross gaming revenues allowed as deductible from CIT taxable income), but going forward they will be subject to 40% tax on gross gaming revenue ("GGR") payable at the end of each month. The Income Tax Amendments Act also increases withholding tax on winnings from 15% to 25% chargeable on cashout as per the guidance issued by the Minister of Finance and Economic Planning (Minister of Finance) on 3 June 2025.
The Income Tax Amendments Act also introduces a digital services tax of 1.5% on gross revenues from digital services provided in Rwanda by companies with a substantial national presence. This will however become effective upon the publication (likely at the beginning of financial year 2026/2027) of the order of the Minister of Finance determining the scope of taxable digital services, the definition of substantial national presence, the modalities for registration, tax declaration and payment, and other possible criteria for the taxation of digital services.
2. Introduction and Reintroduction of Indirect Taxes on Certain Goods and Services
Under Law nº 009/2025 of 27/05/2025 amending Law nº 049/2023 of 05/09/2023 establishing value added tax (the "VAT Amendments Act") and Law nº 011/2025 of 27/05/2025 establishing the excise duty, VAT and/or excise duty have been introduced/reintroduced on the following goods and services:
- VAT on the transportation of goods by land;
- VAT on hybrid motor vehicles;
- VAT on mobile telephones and ICT equipment, and services;
- 15% excise duty on the amount or commission charged on financial transactions;
- 15% excise duty on cosmetics and beauty products; and
- 5-15% excise duty on hybrid motor vehicles, depending on the year of manufacturing.
The VAT Amendments Act has also put a time limit on the VAT exemption for certain goods and services as follows:
- industrial machinery and raw materials intended for public organs in charge of national defence and security will be exempt from VAT until 30 June 2026;
- imported pure electric motor vehicles, relevant batteries, and their electric charging station equipment will be exempt from VAT until 30 June 2028;
- energy supply equipment, as listed by the order of the minister in charge of energy and approved by the Minister of Finance, will be exempt from VAT until 30 June 2028.
3. Introduction of New Indirect Taxes
An environment levy has been introduced under Law nº 010/2025 of 27/05/2025, establishing an environmental levy on imported items which provides for an environmental levy of 0.2% on the customs value of certain imported items packaged in plastic materials unless they are pharmaceuticals or are otherwise exempted under the East African Community Customs Management Act.
A tourism levy of 3% has also been introduced by law nº 015/2025 of 27/05/2025, establishing a tourism tax on accommodation and is chargeable on the VAT exclusive amount paid for accommodation services in Rwanda.
4. Change in Petrol and Gas Oil Strategic Reserves and Road Maintenance Levies
Under Law nº 012/2025 of 27/05/2025, the levy on petrol and gas oil for the establishment of strategic petroleum products reserves has been increased from FRW32.73 to FRW50 per litre.
The road maintenance on petrol and gas oil has (under law nº 013/2025 of 27/05/2025) been adjusted from 115 per litre of petrol and gasoil to 15% of the value of petrol or gas oil, cost of insurance and freight. The same law has also introduced the road maintenance levy on motor vehicles ranging from FRW50,000 to FRW150,000 per annum depending on the type of the motor vehicle with the exception of government motor vehicles, motor vehicles for embassies and diplomats accredited to Rwanda and motor vehicles of international organizations that have signed agreements with the Republic of Rwanda.
All the above reforms are effective from 29 May 2025, except for the new tax regime for gambling businesses and withholding tax on winnings, which will become effective after three months from 29 May 2025. In terms of the guidance of the Minister of Finance, the effective date of VAT on transportation of goods by land, VAT and excise duty on hybrid vehicles has also been extended to 1 July 2025, whereas the effective date for excise duty on commissions charged on financial transactions is 1 July 2027.
* Reviewed by Dieudonné Nzafashwanayo, Executive in Rwanda
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
