Support for implementation of Rwanda’s property tax
A new Rwanda property tax came into effect on January 1st, 2019 which makes significant improvements in taxing both land and properties, reducing exemptions, and enacting an option for mass valuation. The Government of Rwanda (GoR) has recently drafted or gazetted five orders to regulate various aspects of implementation; however, no business processes or standard operations procedures (SoPs) have been developed for the Rwanda Revenue Authority (RRA) and Districts to enable collection and expansion of tax revenues in 2019. As a result, there may be no property tax revenue collected for districts, who will face several billion shillings of budget shortages in this fiscal year.
RRA has made important preparatory steps with financial and technical support from donor agencies, including developing a registration form, launching a taxpayer sensitization campaign, and starting registration of taxpayers. In parallel, teams from IGC and the World Bank have completed a pilot analysis of advanced mass-valuation procedures (CAMA) based on the database of the Rwanda Land Management and Use Authority, GIS maps, and machine-learning technology. Results suggest that the CAMA valuation of both land and buildings can be completed by November 2019 and would enable RRA to bill and levy property taxes equitably and ensure high taxpayer coverage.
Rwanda is at a crucial point in terms of needing to make important policy decisions to make the new tax law effective, and these may include institutionalising the CAMA or continuing self-assessment with or without CAMA results as references for initiating value revisions.
This project aims to complement and reinforce ongoing donor support through a short institutional analysis, a review of the current set of regulations to identify gaps and options for corrective measures, and a diagnostic of training needs to identify specific training for both RRA staff and district officers based on international practices and experiences. Moreover, the researcher has identified a consistent set of actions needed to guide and harmonise the donor activities in order to gain their financial and technical assistance and achieve the highest impact:
- Inform with an initial assessment and experiences a high-level technical workshop with key Rwandan stakeholders and donors and adoption of a short- and medium-term action plan;
- Review regulatory framework and explore options for enhancing valuation, billing, enforcement;
- Explore options for and advise implementation of CAMA;
- Identify the need of SoPs for districts and RRA and training for officers to improve effectiveness; and
- Advise on appropriate guidelines for taxpayers.