Mobilising more and better: Towards improving domestic resource mobilisation in Rwanda
Rwanda has significantly increased tax revenue through comprehensive reforms, modernisation of tax administration, and broader inclusion of SMEs, while strengthening institutional credibility and taxpayer trust. Despite these gains, challenges remain from a large informal sector, compliance gaps, and underdeveloped property taxation, prompting further reforms focused on digital tools, transparency, local revenue mobilisation, and new revenue sources.
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Kumwenda-Policy-Brief-December-2025.pdf
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- Rwanda increased tax revenue from under 10% of GDP in the early 2000s to 17% by 2018 through tax policy and administration reforms.
- Modernisation efforts such as Electronic Billing Machines, e-filing, and e-payment systems improved compliance and efficiency, particularly for VAT.
- Institutional reforms and performance management strengthened the credibility of the Rwanda Revenue Authority and fostered taxpayer trust.
- The tax base was broadened by integrating more SMEs and decentralising some revenue collection functions.
- Challenges include a large informal sector, compliance gaps, complex auditing, widespread tax exemptions, and underdeveloped property taxation.
- Priority reforms involve reducing unproductive tax expenditures, leveraging digital tools and AI for compliance, and strengthening local revenue mobilisation.
- Additional measures include improving transparency, building audit capacity, enhancing cross-border cooperation, and exploring new revenue sources like digital taxes and capital gains on property.