LESSONS FROM COOPERATION WITH THE PRIVATE SECTOR AND LOCAL GOVERNMENTS IN TAX COLLECTION OF SMEs

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LESSONS FROM COOPERATION WITH THE
PRIVATE SECTOR AND LOCAL GOVERNMENTS IN TAX
COLLECTION OF SMEs

• By UZARAMA Vincent
• Deputy Commissioner in charge of Small and Medium
  
• Taxpayers - RRA
• 
  
• ITD Africa Conference Kigali,
  22-24 April 2009

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Content

• Background
• Overview of the cooperation
• Main achievements
• Lessons learnt
• Challenges
• Conclusion

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BACKGROUND

• Widening the tax base and enhancing compliance is
  one of the most challenging tasks for a tax
  administration
• Incomes from micro and Small businesses are not
  taxed adequately
• Need to foster the cooperation with the private
  sector (PSF) and local governments (LG)
• Rwanda Revenue Authority (RRA) has developed
  strong cooperation with PSF and LG through Tax
  Issues Forum (TIF) and Tax Advisory Councils
  (TAC) respectively

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Overview of that cooperation

• Private Sector
• PSF is an umbrella organization for all
  businesses, it is therefore the right channel of
  any business related information exchange i.e
  Taxpayers recruitment, tax education, awareness
  campaign, etc
• TIF has proved to be a platform to exchange
  information and to discuss all tax related
  matters

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COOPERATION CONT

• PSF census of businesses is an opportunity for
  RRA to identify those who are not registered
  taxpayers.
• Through technical committee meetings RRA officers
  get opportunity to understand better issues
  related to an industry since all business sectors
  are represented in PSF
• Likewise the PSF takes advantage to know clearly
  taxpayers rights and obligations, and filtrates
  that to the business community.

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2. LOCAL GOVERNMENTS

• Local administration is structured into
  Provinces, Districts, Sectors, Cells and villages
• With Local Governments RRA has good cooperation
  through Tax Advisory Councils (TAC) and Fiscal
  Decentralisation Steering Committee (FDSC)

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2. LOCAL GOVERNMENTS CONT

• TACs are a forum in which local authorities,
  civil society and opinion leaders discuss tax
  related matters and come up with some concrete
  actions (compliance, service delivery, role of
  taxes, anti fraud awareness)
• FDSC brings together senior officers from
  MINECOFIN, RRA and MINALOC and discusses tax
  related issues to ensure harmony in the tax
  system.

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Main achievements

• Reconciliation of information from fiscal census
  by LD countrywide has helped to update RRA
  taxpayers register
• Revision and update of tax laws with the aim to
  bring new small businesses into the tax net.
• Successful celebration of the taxpayers day every
  year

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Lessons learnt

• Decentralized Taxes have helped in small
  businesses identification and recruitment in the
  tax net
• Strong cooperation between PSF, LG has been an
  instrument to improve SMEs tax compliance.
• Harmonisation of the taxation laws of both LG
  and RRA is necessary to improve the system of
  taxation and to avoid possible double taxation
• Enhanced informaiton sharing has led to the
  expansion of the tax base

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Challenges

• Mobility (moving from one place to another) of
  small business owners
• Inadequate taxation skills by local Governments
  staff
• Lack of strong database and IT facilities in
  local government s

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Conclusion

• RRA appreciates the cooperation with the PSF and
  with LG, because it helps to address taxpayers
  concerns and insures a strong and sustainable tax
  administration for small and medium taxpayers.
• Cooperation with the PS and LG can raise
  awareness of informal businesses on the
  importance of paying taxes.
• Improved cooperation with local governments can
  facilitate and improve small businesses
  compliance management.

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THANK YOU