June 13, 2019

Government Cuts Taxes On Key Items To Reduce Cost Of Living

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Finance and Economic Planning Minister Dr Uzziel Ndagijimana

In 2019-2020 budget unveiled Thursday by Finance and Economic Planning Minister Dr Uzziel Ndagijimana, he completely removed customs duty on sugar and significantly cut other taxes on specific imports from outside EAC.

Ndagijimana told parliament that the measures are meant to reduce the cost of living by helping citizens get basic needs.

The measures, he said, are also meant to support production of made in Rwanda, and easy access to tech gadgets and services for the population.

Customs duty on sugar from outside EAC region has been cut to 25%, down from a whooping 100% that has been in existence. A kilo of sugar costs Rwf 1,000 ($1.2) in Kigali, meaning it could drop after today with more imports flowing cheaply into the country.

With rice, widely consumed in Rwanda, it will pay import duty of 45% or $345 per ton, down from 75% levy. A kilo of Pakistan rice goes for Rwf 1,200.

Goods imported to stock the Army Shop, where security forces buy their supplies, will attract zero customs duty, slashed down from 25%.

Heavy durty trailers will pay zero customs duty, which has been cut from 10%.

As for trucks with capacity of between 5-20 tons, they will also pay no customs duty, which was reduced from 25%.

Buses that carry between 25-50 passengers will pay 10% duty, down from 25%, a measure aimed at giving bus companies leeway to import as many buses as possible.

Similarly, buses that carry more than 50 passengers will also pay zero customs duty.

The strategy means that bus companies will bring in more, allowing them to ply many more routes especially in Kigali. As a result, the waiting lines and times could reduce dramatically.

Imported materials needed in the garment industry and sowing cloths will pay no tax, slashed from 25 and 10% respectively.

Industrial raw materials will also pay no customs duty, from 25%.

It is clearly a strategy aimed at supporting the recently booming Made in Rwanda fashion industry.

Tax on tech products like computers have also been lashed down completely to zero from 25%

Meanwhile, tax on second-hand clothing has gone to $2.5 per kilo, instead of 35% duty or $0.4 per kilo. The same has been done with second hand shoes, to pay $5, and not 35% or $0.4.

The increase in taxes on second hand cloths and shoes was imposed last year, as part of a regional mechanism to support local industry. The action prompted angry reaction from the US government.

Duty has also been removed completely on ATM cards and EBM kits used by businesses for invoicing, down from 25%.

Finance Minister Dr Ndagijimana told parliament that government had asked for waiver from the EAC’s common external tariff on some good which come from outside the bloc.

EAC includes Rwanda, Uganda, Kenya, Tanzania, Burundi and South Sudan.

Dr Ndagijimana also announced that the tax law will be amended to review the excise duty on some products as way of increasing revenue, as well as discourage the use of what he termed as “products harmful to people using them”.

Total expenditures for the fiscal year 2019/20 are projected at Rwf 2.87 trillion ($3.1billion), with a slight increase from last year.

Rwanda will finance 85.8% of the whole budget, as government maintains its agenda to wean the country off grants – which come with tough conditions in most cases.

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