Microfinance institutions (MFIs) in Rwanda reportedly are calling for the government to change tax laws affecting microfinance such that MFIs are taxed as traditional commercial banks. Under the current tax law, MFIs face “double taxation” in that they pay a 30-percent income tax in addition to tax incurred by the client. According to statement attributed to Peter Rwema, the director of research and development of the 84-member Association of Microfinance Institutions of Rwanda (AMIR), “Clients pay 18 percent value-added tax (VAT) on collateral and again pay 18 percent VAT when repaying the loan.” It is unclear whether the VAT is charged on both principal and interest paid by the client.
AMIR has reportedly written a letter to the Minister of Finance and the Prime Minister to request the passage of the 2010 “Leasing Law”, that would treat microfinance loans as normal service loans. Richard Tusabe, the commissioner of domestic customs for the Rwanda Revenue Authority (RRA), reportedly stated, “We are in touch with [AMIR] and we believe the issue of double taxation will be settled.” Mr Tusabe also stated that RRA and the Prime Minister plan to solve the issue by mid-April
Details of how banks are taxed in Rwanda are not available as of publication time due to problems with the following website: http://www.minecofin.gov.rw/node/526
By Brian LeBlanc, Research Associate
About the Association of Microfinance Institutions of Rwanda (AMIR)
AMIR is an organization that was established in 2007 to build the capacity of the microfinance industry in Rwanda. As of March 2011, AMIR consists of 84 members that serve poor and middle-class families throughout the country. The association is governed by a general assembly and board of directors from Rwandan microfinance institutions (MFIs). Membership to AMIR is open to all MFIs that have been registered by Rwanda’s central bank.
Sources and Additional Information:
allAfrica article, http://allafrica.com/stories/201304020013.html?viewall=1
MicroCapital article, March 19, 2013, “MICROCAPITAL BRIEF: Rwanda’s Microfinance Growth Attributed to Both Existing Institutions, Launch of New Savings and Credit Cooperatives (SACCOs),” https://www.microcapital.org/microcapital-brief-rwandas-microfinance-growth-attributed-to-both-existing-institutions-launch-of-new-savings-and-credit-cooperatives-saccos/
MicroCapital article, October 31, 2012, “MICROCAPITAL BRIEF: Finscope Rwanda Survey Indicates Rise in Rural Lending Penetration to 58%, Reaches Savings to 68%,” https://www.microcapital.org/microcapital-brief-finscope-rwanda-survey-indicates-rise-in-rural-lending-penetration-to-58-reaches-savings-to-68/
MicroCapital article, March 28, 2011, “MICROCAPITAL BRIEF: Association of Microfinance Institutions (AMIR) Seeks Government Support, Tax Breaks,” https://www.microcapital.org/microcapital-brief-association-of-microfinance-institutions-in-rwanda-amir-seeks-government-support-tax-breaks/
MicroCapital article, May 4, 2009, “MICROCAPITAL BRIEF: International Finance Corporation Rwanda (CEDP) Leasing Program Calls for More Leasing to SMEs by Financial Institutions at Workshop Organized by Rwandan Association of Micro Finance Institutions in Collaboration with Rwanda Development Board,” https://www.microcapital.org/microcapital-brief-association-of-microfinance-institutions-in-rwanda-amir-seeks-government-support-tax-breaks/
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