Approved investors are entitled to a range of benefits and incentives provided for in the Investment Code, Including:
- Exemption from import duties and sales taxes on imports of plant, machinery and equipment. Items which are zero import tax rated are exempted from sales tax otherwise payable on those goods, while, for items which are not zero import tax rated, a single flat fee of 5% of the value of the imported items is payable in lieu of all taxes and duties which would normally be imposed on such goods.
- Investment allowances of 30% of the value of invested capital during the first year of operations.
- Additional deduction from taxable income of 50% of training, research and product development costs.
- The right to fully offset the cost of providing infrastructure to the site of the business operations; and Duty drawback for all duties and taxes paid on imported raw materials if the investor is an exporter who is operating outside a free export economic zones.
- 100% write off of R&D costs
- Common external tariff: 0% on Raw materials and Capital Equipment: 15% on intermediate goods: 25% on finished goods
- Constitutionally protected free repatriation of capital and profits
- Additional fiscal incentives in strategic sectors
- Investors who demonstrate capacity to add more value, technology transfer, and invest in priority sectors may also receive enhanced tax and investment incentives, while there are additional incentives for an investor operating in a Free Export Economic Processing Zone including greater tax benefits
The tax law nº16/2005 of 18/08/2005 on direct taxes on income provides the following tax incentives to investors in Rwanda:
An investment allowance of forty percent (40% in Kigali and 50% outside Kigali) of the invested amount in new or used assets may be depreciated excluding motor vehicles that carry less than eight (8) persons, except those exclusively used in a tourist business is deductible for a registered investor in the first tax period of purchase and/or of use of such an assets provided the amount of business assets invested is equal to thirty million (30,000,000).
Training and research expenses
All Training and Research expenses incurred and declared as agreed by a taxpayer and declared and earlier agreed and which promote activities during a tax period are considered as deductible from taxable profits in accordance with provisions of Article 21 of this law provided they do not relate to capital expenditure.
Loss carried forward
If the determination of business profit results in a loss in a tax period, the loss may be deducted from the business profit in the next five (5) tax periods, earlier losses being deducted before later losses. Foreign losses do not come into play. No carry back of losses is available.
Tax discount and exemption
A registered investment entity that operates in a Free Trade Zone and foreign companies that have their headquarters in Rwanda that fulfils the requirements stipulated in the Rwandan law on Investment Promotion is entitled to pay corporate income tax at the rate of zero per cent (0%) and is exempted from 15% withholding tax mentioned in Article 51 of the law nº 16/2005 of 18/08/2005 on direct income. It is also entitled to tax free repatriation of profits.
Profit Tax Discount
A registered investor shall be entitled to a profit tax discount ranging from 2% to 7% depending on the number of Rwandans employed and the value of exports made during the tax period..
Micro finance activities
Companies that carry out micro finance activities approved by competent authorities pay corporate income tax at the rate of zero percent (0%) for a period of five (5) years from the time of the approval of the activity. However, this period may be renewed by the order of the Minister