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How new property tax law will affect you
August, 13th 2018

The Government has raised taxes on land. The new prices are contained in the new bill determining the sources of revenue and property of decentralised entities.

According to the draft law, which was passed by Parliament on August 2, the tax rate on a parcel of land varies between zero and Rwf300 per square metre from between Rwf30 and Rwf80 previously.

It further states that any undeveloped parcel of land is subject to additional tax of 100 per cent to the tax rate referred to in its article 18.

The new draft law determines the size of a standard plot of 300 square meters, meaning that it is 20 metres in length to 15 metres wide. The tax will increase by 50 per cent for each extra square metre to such standard plot.

However, for land in use for agriculture, livestock or forestry, if the taxpayer owns less than two hectares, it is exempted from tax, as it was also the case in the previous law.

The Commissioner General of Rwanda Revenue Authority (RRA), Richard Tusabe, told The New Times that the new law sets a range of taxes a person has to pay based on their financial means.

The district council determines the tax rate on square metre of parcel of land based on criteria and standard rates set by a Ministerial Order.

“It is the district council that will determine the tax to be paid. What the law provides is the range; it is the council that knows the living conditions and means of the people in a given district, and it will therefore, set taxes that correspond to the area. That is the spirit of the law,” Tusabe said adding that the council will be fine-tuning taxes depending on people’s economic development.

Laban Ishimwe, the owner of Kimironko-based Homeland Real Estate, told The New Times that paying extra tax equivalent to 50 per cent of the initial tax because of an extra square metre to the standard plot was necessary as it can ensure efficient use of land.

However, he said that 300 square metres as maximum size of a standard plot is small for construction of a residential compound, suggesting that it should be increased to 500 square metres.

“There are people who own plots as large as 2,000 square metres. which is an exaggeration, those should pay higher taxes as they are wealthy,” he said.

District councils’ plans

Nyanza District Advisory Council president, Julie Ngabonziza, said: “What will be considered is the people’s financial means.”

Ngabonziza pointed out that the extra tax beyond the 300 square metre-standard maximum is well in line with ensuring that the country gets land for other indispensable uses such as agricultural activities, and infrastructure.

The immediate former chairperson of the parliamentary standing Committee on National Budget and Patrimony, Constance Mukayuhi Rwaka, concurred with Ngabonziza that the Government and districts need revenues for economic activities such as constructing good roads, health facilities, and water infrastructure.

Rwaka said that the Government still depends on foreign assistance to fund about 40 percent of its budget.

“Tax is important for any country. If that fee is collected, it will not be for personal use but to develop services and infrastructure. What is needed is that the tax does not oppress anyone, rather help people develop,” she said.

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