Rwanda implements tax cuts for low-income earners
The government of Rwanda has enforced a law effective in November that would allow low-income earners in the country to get tax cuts.
This action by the government is to implement a relevant clause in the country’s income tax law for 2022
Beginning with the November 2023 tax period, the new Pay As You Earn (PAYE) tax bands will be applied for a second year. This is consistent with implementing the October 2022 statute establishing income taxes, particularly concerning a section of Article 56, the Rwanda Revenue Authority (RRA) announced on October 25.
In October 2022, local media The New Times claimed to have secured information from the Ministry of Finance and Economic Planning (MINECOFIN) which showed that in the second year since the law had been enforced, the tax cut for workers who earn between Rwf60,000 ($49) and Rwf200,000 ($162) was estimated to benefit at least 20% of total formal workers who were estimated at over 541,000 in Rwanda as of June 2022.
The government would give up more than Rwf43 billion ($34.7 million) over two years to carry out the tax change, according to MINECOFIN.
The high tax rates now in place, which range from 20% to 30% for monthly incomes between Rwf60,000 ($49) and Rwf100,000 ($81) and between Rwf100,000 ($81) and Rwf200,000 ($162), were making it difficult for low-income earners to meet their basic needs, primary school teacher Angelique Uwubuntu, told local media The New Times.
“The tax cut decision is laudable since it will reduce my financial obligation as a worker while increasing to some extent my ability towards meeting my basic needs,” she added.
