TAXATION BOOK

ACCOUNTING PROFESSION OPTION

For Rwandan Schools

Senior
5 Teacher Guide

Experimental Version

Kigali, 2023
 © 2023Rwanda Basic Education Board

All rights reserved

This book is the property of the Government of Rwanda. Credit must be

provided to REB when the content is quote
FOREWORD
Dear Teachers,

Rwanda Basic Education Board is honoured to present the teacher’s guide for Taxation
in the Accounting Profession Option. This book serves as a guide to competence-
based teaching and learning to ensure consistency and coherence in the learning of
the Taxation Subject. The Rwandan educational philosophy is to ensure that students
achieve full potential at every level of education which will prepare them to be well
integrated in society and exploit employment opportunities.

Specifically, the curriculum for Accounting Profession Option was reviewed to train
quality Accountant Technicians who are qualified, confident and efficient for job
opportunities and further studies in Higher Education in different programs under
accounting career advancement.

In line with efforts to improve the quality of education, the government of Rwanda
emphasizes the importance of aligning teaching and learning materials with the
syllabus to facilitate their learning process. Many factors influence what students
learn, how well they learn and the competences they acquire. Those factors include
the relevance of the specific content, the quality of teachers’ pedagogical approaches,
the assessment strategies and the instructional materials.

High Quality Technician Accounting program is an important component of Finance

and Economic development of the Rwanda Vision 2050, “The Rwanda We Want” that
aims at transforming the country’s socioeconomic status. The qualified Technicians
accountant will significantly play a major role in the mentioned socioeconomic
transformation journey. Taxation textbooks and teacher’s guide were elaborated to
provide the legislation related tax system that are necessary to train a Technician
Accountant capable of successfully perform his/her duties.

The ambition to develop a knowledge-based society and the growth of regional and
global competition in the jobs market has necessitated the shift to a competence-
based curriculum.

The Taxation teacher’s guide provides active teaching and learning techniques that
engage students to develop competences. In view of this, your role as a Taxation
teacher is to:

• Plan your lessons and prepare appropriate teaching materials.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE iii

 • Organize group discussions for students considering the importance of social
constructivism suggesting that learning occurs more effectively when the
students work collaboratively with more knowledgeable and experienced
people.
• Engage students through active learning methods such as inquiry methods,
group discussions, research, investigative activities and group or individual
work activities.
• Provide supervised opportunities for students to develop different
competences by giving tasks which enhance critical thinking, problem
solving, research, creativity and innovation, communication and cooperation.
• Support and facilitate the learning process by valuing students’ contributions
in the class activities.
• Guide students towards the harmonization of their findings.
• Encourage individual, pair and group evaluation of the work done in the
classroom and use appropriate competence-based assessment approaches
and methods.
To facilitate you in your teaching activities, the content of this book is self-explanatory
so that you can easily use it. It is divided in 3 parts:

The part I explains the structure of this book and gives you the methodological
guidance;

The part II gives a sample lesson plan;

The part III details the teaching guidance for each concept given in the student book.

Even though this Teacher’s guide contains the guidance on solutions for all activities
given in the student’s book, you are requested to work through each question before
judging student’s findings.

I wish to sincerely express my appreciation to the people who contributed towards the
development of this book, particularly, REB staff, RRA officers, UR Lecturers, Teachers
from TTC and General Education and experts from different Education partners
for their technical support. A word of gratitude goes also to the administration of
Universities, Head Teachers and TTCs principals who availed their staff for various
activities.

Dr. MBARUSHIMANA Nelson

Director General, REB.

iv TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

ACKNOWLEDGEMENT
I wish to express my appreciation to the people who played a major role in the
development of this teacher`s guide for Taxation in the Accounting profession
option. It would not have been successful without active participation of
different education stakeholders.

I owe gratitude to different universities and schools in Rwanda that allowed

their staff to work with REB in the in-house textbooks production initiative.

I wish to extend my sincere gratitude to RRA Officers, lecturers and teachers

whose efforts during writing exercise of this teacher`s guide was very much
valuable.

Finally, my word of gratitude goes to the Rwanda Basic Education Board staffs
who were involved in the whole process of in-house textbook writing.

Joan MURUNGI
Head of Curriculum, Teaching and Learning Resources Department/REB

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE v

TABLE OF CONTENT

FOREWORD..................................................................................................... iii
ACKNOWLEDGEMENT.................................................................................... v
PART I. GENERAL INTRODUCTION................................................................. 1
1.1. The structure of the guide..........................................................................1
1.2. Methodological guidance..........................................................................1
PART II: SAMPLE LESSON PLANS................................................................... 16
PART III: UNIT DEVELOPMENT ....................................................................... 21

Unit 1: TAXATION OF CORPORATE BUSINESS PROFITS....................... 22

1.1. Key unit competence...................................................................................22
1.2. Prerequisites (knowledge, skills, attitudes, and values)...................22
1.3. Cross-cutting issues to be addressed:....................................................22
1.4. Guidance on the introductory activity 1 ..............................................23
1.5. List of lessons and lesson development................................................24
1.6. Summary of the unit.....................................................................................37
1.7. Additional Information for Teachers.......................................................37
1.8. End unit assessment.....................................................................................37
1.9. Additional activities......................................................................................40
Unit 2: WITHHOLDING TAXES................................................................ 43
2.1. Key unit competence ..................................................................................43
2.2. Prerequisite (knowledge, skills, attitudes and values)......................43
2.3. Cross-cutting issues to be addressed:....................................................43
2.4. Guidance on introductory activity .........................................................44
2.5. List of lessons/sub-heading ......................................................................45
2.6. Summary of the unit.....................................................................................52
2.7. Additional information for teachers.......................................................54
2.8. Answers to end unit assessment activities...........................................55
2.9. Additional activities .....................................................................................55
Unit 3: TAXES AND FEES OF DECENTRALIZED ENTITIES .................... 58
3.1. Key unit competence entities...................................................................58
3.2. Prerequisite (knowledge, skills, attitudes and values)......................58
3.3. Cross-cutting issues to be addressed:....................................................58

vi TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 3.4. Guidance on introductory activity .........................................................59
3.5. List of lessons/sub-heading .....................................................................60
3.6. Summary of the unit.....................................................................................71
3.7. Additional information for teachers.......................................................72
3.8. End unit assessment (Answers)................................................................72
3.9. Additional activities (Questions and Answers)...................................74
Unit 4: CUSTOMS AND CONSUMPTION TAX ........................................ 78
4.1. Key unit competence ..................................................................................78
4.2. Prerequisite (knowledge, skills, attitudes and values)......................78
4.3. Cross-cutting issues to be addressed:....................................................78
4.4. Guidance on introductory activity .........................................................79
4.5. List of lessons/sub-heading ......................................................................80
4.6. Summary of the unit.....................................................................................94
4.7. Additional information for teachers.......................................................97
4.8. End unit assessment (answers).................................................................100
4.9. Additional activities .....................................................................................104
Unit 5: VALUE ADDED TAX (VAT)........................................................... 107
5.1. Key unit competence:r.................................................................................107
5.2. Prerequisite (knowledge, skills, attitudes and values)......................107
5.3. Cross-cutting issues to be addressed:....................................................107
5.4. Guidance on introductory activity .........................................................108
5.5. List of lessons/sub-heading ......................................................................110
5.6. Summary of the unit ....................................................................................121
5.7. Additional information for teachers ......................................................124
5.8. End unit assessment (answers).................................................................126
5.9. Additional activities (Questions and answers)....................................129
Unit 6: ELECTRONIC BILLING MACHINE (EBM).................................... 133
6.1. Key unit competence: Use electronic billing machine ....................133
6.2. Prerequisite (knowledge, skills, attitudes and values) .....................133
6.3. Cross-cutting issues to be addressed:....................................................133
6.4. Guidance on introductory activity .........................................................134
6.5. List of lessons/sub-heading.......................................................................135
6.6. Summary of the unit.....................................................................................144
6.7. Additional Information for Teachers.......................................................148

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE vii

 6.8. End unit assessment ....................................................................................149
6.9. Additional activities .....................................................................................150
Unit 7: TAXATION OF CROSS BORDER ACTIVITIES............................... 153
7.1. Key unit competence..................................................................................153
7.2. Prerequisites (knowledge, skills, attitudes, and values)...................153
7.3. Cross-cutting issues to be addressed:....................................................153
7.4. Guidance on the introductory activity 1 ..............................................153
7.5. List of lessons and lesson development................................................156
7.6. Summary of the unit.....................................................................................167
7.7. Additional information for teacher.........................................................169
7.8. End unit assessment.....................................................................................170
7.9. Additional activities......................................................................................173
Unit 8: TAXES DECLARATIONS AND PAYMENT.................................... 183
8.1. Key unit competence...................................................................................183
8.2. Prerequisite (knowledge, skills, attitudes and values)......................183
8.3. Cross-cutting issues to be addressed:....................................................183
8.4. Guidance on introductory activity .........................................................184
8.5 List of lessons/sub-heading .......................................................................185
8.6. Summary of the unit.....................................................................................196
8.7. Additional information for teachers.......................................................198
8.8. End unit assessment (answers).................................................................198
8.9. Additional activities .....................................................................................200
Unit 9: TAX ADMINISTRATION............................................................... 203
9.1. Key unit competence...................................................................................203
9.2. Prerequisite (knowledge, skills, attitudes and values)......................203
9.3. Cross-cutting issues to be addressed:....................................................203
9.4. Guidance on introductory activity .........................................................204
9.5. List of lessons/sub-heading .....................................................................205
9.6. Summary of the unit.....................................................................................213
9.7. Additional information for teachers.......................................................216
9.8. End unit assessment (answers).................................................................220
9.9. Additional activities (Questions and answers)....................................223
REFERENCES.................................................................................................... 227

viii TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

PART I. GENERAL INTRODUCTION

1.1. The structure of the guide

The teacher’s guide of Taxation is composed of three parts:

The Part I concerns general introduction that discusses methodological

guidance on how best to teach and learn Taxation, developing competences
in teaching and learning, addressing cross-cutting issues in teaching and
learning and Guidance on assessment.

Part II presents a sample lesson plan. This lesson plan serves to guide the
teacher on how to prepare a lesson in Taxation.

The Part III is about the structure of a unit and the structure of a lesson. This
includes information related to the different components of the unit and these
components are the same for all units. This part provides information and
guidelines on how to facilitate students while working on learning activities.
More other, all application activities from the textbook have answers in this
part.

1.2. Methodological guidance

1.2.1. Developing competences
Since 2015 Rwanda shifted from a knowledge based to a competence-based
curriculum for pre-primary, primary, secondary education and recently
the curriculum for profession options such as TTC, Associate Nurse and
Accounting programs. This called for changing the way of learning by shifting
from teacher centred to a student-centred approach. Teachers are not only
responsible for knowledge transfer but also for fostering students’ learning
achievement and creating safe and supportive learning environment. It
implies also that students have to demonstrate what they are able to transfer
the acquired knowledge, skills, values and attitude to new situations.

The competence-based curriculum employs an approach of teaching and

learning based on discrete skills rather than dwelling on only knowledge or
the cognitive domain of learning. It focuses on what student can do rather
than what student knows. Students develop competences through subject

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 1

unit with specific learning objectives broken down into knowledge, skills and
attitudes/ values through learning activities.

In addition to the competences related to Taxation, students also develop

generic competences which should promote the development of the higher
order thinking skills and professional skills in Taxation teaching. Generic
competences are developed throughout all units of Taxation as follows:

Generic
Ways of developing generic competences
competences
Critical thinking All activities that require students to calculate,
convert, interpret, analyse, compare and contrast,
etc. have a common factor of developing critical
thinking into students
Creativity and All activities that require students to plot a graph
innovation of a given algebraic data, to organize and interpret
statistical data collected and to apply skills in
solving problems of production/ finance/ economic
have a common character of developing creativity
into students
Research and All activities that require students to make research
problem solving and apply their knowledge to solve problems
from the real-life situation have a character of
developing research and problem solving into
students.
Communication During Taxation class, all activities that require
students to discuss either in groups or in the whole
class, present findings, debate …have a common
character of developing communication skills into
students.
Co-operation, All activities that require students to work in
interpersonal pairs or in groups have character of developing
relations and life cooperation and life skills among students.
skills

2 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Lifelong learning All activities that are connected with research have
a common character of developing into students
a curiosity of applying the knowledge learnt in a
range of situations. The purpose of such kind of
activities is for enabling students to become life-
long students who can adapt to the fast-changing
world and the uncertain future by taking initiative
to update knowledge and skills with minimum
external support.
Professional skills Specific instructional activities and procedures
that a teacher may use in the class room to
facilitate, directly or indirectly, students to be
engaged in learning activities. These include a
range of teaching skills: the skill of questioning,
reinforcement, probing, explaining, stimulus
variation, introducing a lesson; illustrating with
examples, using blackboard, silence and non-
verbal cues, using audio – visual aids, recognizing
attending behaviour and the skill of achieving
closure.

The generic competences help students deepen their understanding of

Taxation and apply their knowledge in a range of situations. As students
develop generic competences, they also acquire the set of skills that employers
look for in their employees, and so the generic competences prepare students
for the world of work.
1.2.2. Addressing cross cutting issues
Among the changes brought by the competence-based curriculum is the
integration of cross cutting issues as an integral part of the teaching learning
process-as they relate to and must be considered within all subjects to be
appropriately addressed. The eight cross cutting issues identified in the national
curriculum framework are: Comprehensive Sexuality Education, Environment
and Sustainability, Financial Education, Genocide studies, Gender, Inclusive
Education, Peace and Values Education, and Standardization Culture.

Some cross-cutting issues may seem specific to particular learning areas/

subjects but the teacher need to address all of them whenever an opportunity

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 3

arises. In addition, students should always be given an opportunity during the
learning process to address these cross-cutting issues both within and out of
the classroom.

Below are examples of how crosscutting issues can be addressed:

Cross-Cutting Issue Ways of addressing cross-
cutting issues
Comprehensive Sexuality Education: Using different charts and
The primary goal of introducing their interpretation, Taxation
Comprehensive Sexuality Education teacher should lead students to
program in schools is to equip children, discuss the following situations:
adolescents, and young people with “Alcohol abuse and unwanted
knowledge, skills and values in an age pregnancies” and advise students
appropriate and culturally gender on how they can fight against
sensitive manner so as to enable them them.
to make responsible choices about their
Some examples can be given
sexual and social relationships, explain
when learning statistics, powers,
and clarify feelings, values and attitudes,
logarithms and the related
and promote and sustain risk reducing
graphical interpretation.
behaviour.
Environment and Sustainability: Using Real life models or
Integration of Environment, Climate students’ experience, Taxation
Change and Sustainability in the Teachers should lead students
curriculum focuses on and advocates for to illustrate the situation of
the need to balance economic growth, “population growth” and discuss
society well-being and ecological its effects on the environment
systems. Students need basic knowledge and sustainability.
from the natural sciences, social
sciences, and humanities to understand
to interpret principles of sustainability.

4 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Financial Education:
The integration of Financial Education Through different examples and
into the curriculum is aimed at a calculations on interest (simple
comprehensive Financial Education and compound interests),
program as a precondition for achieving interest rate problems, total
financial inclusion targets and improving revenue functions and total cost
the financial capability of Rwandans so functions, supply and demand
that they can make appropriate financial functions, Taxation Teachers can
decisions that best fit the circumstances lead students to discuss how
of one’s life. to make appropriate financial
decisions.
Gender: At school, gender will be Taxation Teachers should address
understood as family complementarities, gender as cross-cutting issue
gender roles and responsibilities, the through assigning leading roles
need for gender equality and equity, in the management of groups to
gender stereotypes, gender sensitivity, both girls and boys and providing
etc. equal opportunity in the lesson
participation and avoid any
gender stereotype in the whole
teaching and learning process.
Inclusive Education: Inclusion is based Firstly, Taxation Teachers need to
on the right of all students to a quality identify/recognize students with
and equitable education that meets their special needs. Then by using
basic learning needs and understands adapted teaching and learning
the diversity of backgrounds and abilities resources while conducting a
as a learning opportunity. lesson and setting appropriate
tasks to the level of students,
they can cater for students with
special education needs. They
must create opportunity where
students can discuss how to
cater for students with special
educational needs.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 5

Peace and Values Education: Peace Through a given lesson, a teacher
and Values Education (PVE) is defined as should:
education that promotes social cohesion,
Set a learning objective which is
positive values, including pluralism and
addressing positive attitudes and
personal responsibility, empathy, critical
values,
thinking and action in order to build a
more peaceful society. Encourage students to develop
the culture of tolerance during
discussion and to be able to instil
it in colleagues and cohabitants;

Encourage students to respect

ideas from others.
Standardization Culture: Standardization With different word
Culture in Rwanda will be promoted problems related to the
through formal education and plays a effective implementation
vital role in terms of health improvement, of Standardization, Quality
economic growth, industrialization, Assurance, Metrology and
trade and general welfare of the people Testing, students can be
through the effective implementation motivated to be aware of health
of Standardization, Quality Assurance, improvement, economic growth,
Metrology and Testing. industrialization, trade and
general welfare of the people.

1.2.3. Guidance on how to help students with special education

needs in classroom
In the classroom, students learn in different way depending to their learning
pace, needs or any other special problem they might have. However, the
teacher has the responsibility to know how to adopt his/her methodologies
and approaches in order to meet the learning need of each student in the
classroom. Also, teachers need to understand that student with special needs,
need to be taught differently or need some accommodations to enhance the
learning environment. This will be done depending to the subject and the
nature of the lesson.

6 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

In order to create a well-rounded learning atmosphere, teachers need to:
• Remember that students learn in different ways so they have to offer a
variety of activities (e.g. role-play, music and singing, word games and
quizzes, and outdoor activities);
• Maintain an organized classroom and limits distraction. This will help
students with special needs to stay on track during lesson and follow
instruction easily;
• Vary the pace of teaching to meet the needs of each student. Some
students process information and learn more slowly than others;
• Break down instructions into smaller, manageable tasks. Students
with special needs often have difficulty understanding long-winded
or several instructions at once. It is better to use simple, concrete
sentences in order to facilitate them understand what you are asking.
• Use clear consistent language to explain the meaning (and demonstrate
or show pictures) if you introduce new words or concepts;
• Make full use of facial expressions, gestures and body language;
• Pair a student who has a disability with a friend. Let them do things
together and learn from each other. Make sure the friend is not over
protective and does not do everything for the one with disability. Both
students will benefit from this strategy;
• Use multi-sensory strategies. As all students learn in different ways, it is
important to make every lesson as multi-sensory as possible. Students
with learning disabilities might have difficulty in one area, while they
might excel in another. For example, use both visual and auditory cues.
• Below are general strategies related to each main category of disabilities
and how to deal with every situation that may arise in the classroom.
However, the list is not exhaustive because each student is unique with
different needs and that should be handled differently.
Strategy to help students with developmental impairment:
• Use simple words and sentences when giving instructions;
• Use real objects that students can feel and handle. Rather than just
working abstractly with pen and paper;
• Break a task down into small steps or learning objectives. The student

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 7

 should start with an activity that she/he can do already before moving
on to something that is more difficult;
• Gradually give the student less help;
• Let the student with disability work in the same group with those
without disability.
Strategy to help students with visual impairment:
• Help students to use their other senses (hearing, touch, smell and
taste) and carry out activities that will promote their learning and
development;
• Use simple, clear and consistent language;
• Use tactile objects to help explain a concept;
• If the student has some sight, ask him/her what he/she can see;
• Make sure the student has a group of friends who are helpful and who
allow him/her to be as independent as possible;
• Plan activities so that students work in pairs or groups whenever
possible;
Strategy to help students with hearing disabilities or communication
difficulties
• Always get the student’s attention before you begin to speak;
• Encourage the student to look at your face;
• Use gestures, body language and facial expressions;
• Use pictures and objects as much as possible.
• Keep background noise to a minimum.
Strategies to help students with physical disabilities or mobility
difficulties:
• Adapt activities so that students who use wheelchairs or other mobility
aids, can participate.
• Ask parents/caregivers to assist with adapting furniture e.g. the height
of a table may need to be changed to make it easier for a student to
reach it or fit their legs or wheelchair under;
• Encourage peer support when needed;

8 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • Get advice from parents or a health professional about assistive devices
if the student has one.
Adaptation of assessment strategies:

At the end of each unit, the teacher is advised to provide additional activities
to help students achieve the key unit competence. These assessment activities
are for remedial, consolidation and extension designed to cater for the needs
of all categories of students; slow, average and gifted students respectively.
Therefore, the teacher is expected to do assessment that fits individual
students.
Remedial activities After evaluation, slow students are provided with lower
order thinking activities related to the concepts learnt
to facilitate them in their learning.

These activities can also be given to assist deepening

knowledge acquired through the learning activities for
slow students.
Consolidation After introduction of any concept, a range number of
activities activities can be provided to all students to enhance/
reinforce learning.
Extended activities After evaluation, gifted and talented students can be
provided with high order thinking activities related to
the concepts learnt to make them think deeply and
critically. These activities can be assigned to gifted and
talented students to keep them working while other
students are getting up to required level of knowledge
through the learning activity.

1.2.4. Guidance on assessment

Assessment is an integral part of teaching and learning process. The main
purpose of assessment is for improvement of learning outcomes. Assessment
for learning/ Continuous/ formative assessment intends to improve students’
learning and teacher’s teaching whereas assessment of learning/summative
assessment intends to improve the entire school’s performance and education
system in general.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 9

Continuous/ formative assessment

It is an on-going process that arises during the teaching and learning process.
It includes lesson evaluation and end of sub unit assessment. This formative
assessment should play a big role in teaching and learning process. The
teacher should encourage individual, pair and group evaluation of the work
done in the classroom and uses appropriate competence-based assessment
approaches and methods.

Formative assessment is used to:

• Determine the extent to which learning objectives are being achieved
and competences are being acquired and to identify which students
need remedial interventions, reinforcement as well as extended
activities. The application activities are developed in the student
• book and they are designed to be given as remedial, reinforcement,
end lesson assessment, homework or assignment
• Motivate students to learn and succeed by encouraging students to
read, or learn more, revise, etc.
• Check effectiveness of teaching methods in terms of variety,
appropriateness, relevance, or need for new approaches and strategies.
Taxation teachers need to consider various aspects of the instructional
process including appropriate language levels, meaningful examples,
suitable methods and teaching aids/ materials, etc.
• Help students to take control of their own learning.
In teaching Taxation, formative or continuous assessment should compare
performance against instructional objectives. Formative assessment should
measure the student’s ability with respect to a criterion or standard. For this
reason, it is used to determine what students can do, rather than how much
they know.
Summative assessment
The assessment can serve as summative and informative depending to its
purpose. The end unit assessment will be considered summative when it is
done at end of unit and want to start a new one.

It will be formative assessment, when it is done in order to give information

on the progress of students and from there decide what adjustments need to
be done.

10 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

The assessment done at the end of the term, end of year, is considered as
summative assessment so that the teacher, school and parents are informed
of the achievement of educational objective and think of improvement
strategies. There is also end of level/ cycle assessment in form of national
examinations.
When carrying out assessment?

Assessment should be clearly visible in lesson, unit, term and yearly plans.
• Before learning (diagnostic): At the beginning of a new unit or a section
of work; assessment can be organized to find out what students already
know / can do, and to check whether the students are at the same level.
• During learning (formative/continuous): When students appear to be
having difficulty with some of the work, by using on-going assessment
(continuous). The assessment aims at giving students support and
feedback.
• After learning (summative): At the end of a section of work or a learning
unit, the Taxation Teacher has to assess after the learning. This is also
known as Assessment of Learning to establish and record overall
progress of students towards full achievement. Summative assessment
in Rwandan schools mainly takes the form of written tests at the end of
a learning unit or end of the month, and examinations at the end of a
term, school year or cycle.
Instruments used in assessment.
• Observation: This is where the Taxation teacher gathers information
by watching students interacting, conversing, working, playing, etc.
A teacher can use observations to collect data on behaviours that
are difficult to assess by other methods such as attitudes, values,
and generic competences and intellectual skills. It is very important
because it is used before the lesson begins and throughout the lesson
since the teacher has to continue observing each and every activity.
• Questioning
a) Oral questioning: a process which requires a student to respond
verbally to questions
b) Class activities/ exercise: tasks that are given during the learning/
teaching process
c) Short and informal questions usually asked during a lesson

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 11

 d) Homework and assignments: tasks assigned to students by their
teachers to be completed outside of class.
Homework assignments, portfolio, project work, interview, debate, science
fair, Taxation projects and Taxation competitions are also the different forms/
instruments of assessment.

1.2.5. Teaching methods and techniques that promote active

learning
The different learning styles for students can be catered for, if the teacher uses
active learning whereby students are really engaged in the learning process.

The main teaching methods used in Taxation are the following:

• Dogmatic method (the teacher tells the students what to do, what to
observe, how to attempt, how to conclude)
• Inductive-deductive method: Inductive method is to move from
specific examples to generalization and deductive method is to move
from generalization to specific examples.
• Analytic-synthetic method: Analytic method proceeds from unknown
to known, ’Analysis’ means ‘breaking up’ of the problem in hand so
that it ultimately gets connected with something obvious or already
known. Synthetic method is the opposite of the analytic method. Here
one proceeds from known to unknown.
• Skills lab method: Skills lab method is based on the maxim “learning
by doing.” It is a procedure for stimulating the activities of the students
and to encourage them to make discoveries through practical activities.
• Problem solving method, Project method and Seminar Method.
The following are some active techniques to be used in Taxation:
• Group work
• Research
• Probing questions
• Practical activities (drawing, plotting, interpreting graphs)
• Modelling
• Brainstorming
• Quiz Technique

12 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • Discussion Technique
• Scenario building Technique
What is Active learning?
Active learning is a pedagogical approach that engages students in doing
things and thinking about the things they are doing. Students play the key
role in the active learning process. They are not empty vessels to fill but
people with ideas, capacity and skills to build on for effective learning. Thus,
in active learning, students are encouraged to bring their own experience and
knowledge into the learning process.
The role of the teacher in active The role of students in active
learning learning
–– The teacher engages students –– A student engaged in active learning:
through active learning methods –– Communicates and shares relevant
such as inquiry methods, group information with fellow students
discussions, research, investigative through presentations, discussions,
activities, group and individual group work and other student-centred
work activities. activities (role play, case studies, project
–– He/she encourages individual, work, research and investigation);
peer and group evaluation of the –– Actively participates and takes
work done in the classroom and responsibility for his/her own learning;
uses appropriate competence-
–– Develops knowledge and skills in active
based assessment approaches and
ways;
methods.
–– Carries out research/investigation by
–– He provides supervised
consulting print/online documents and
opportunities for students to
resourceful people, and presents their
develop different competences
findings;
by giving tasks which enhance
–– Ensures the effective contribution
critical thinking, problem
of each group member in assigned
solving, research, creativity and
tasks through clear explanation
innovation, communication and
and arguments, critical thinking,
cooperation.
responsibility and confidence in public
–– Teacher supports and facilitates
speaking
the learning process by valuing
–– Draws conclusions based on the
students’ contributions in the class
findings from the learning activities.
activities.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 13

Main steps for a lesson in active learning approach

All the principles and characteristics of the active learning process highlighted
above are reflected in steps of a lesson as displayed below. Generally, the
lesson is divided into three main parts whereby each one is divided into
smaller steps to make sure that students are involved in the learning process.
Below are those main part and their small steps:

1) Introduction
Introduction is a part where the teacher makes connection between the
current and previous lesson through appropriate technique. The teacher
opens short discussions to encourage students to think about the previous
learning experience and connect it with the current instructional objective.
The teacher reviews the prior knowledge, skills and attitudes which have a link
with the new concepts to create good foundation and logical sequencings.

2) Development of the new lesson

The development of a lesson that introduces a new concept will go through the
following small steps: discovery activities, presentation of students’ findings,
exploitation, synthesis/summary and exercises/application activities.
™™ Discovery activity
Step 1:
–– The teacher discusses convincingly with students to take responsibility
of their learning
–– He/she distributes the task/activity and gives instructions related to
the tasks (working in groups, pairs, or individual to prompt /instigate
collaborative learning, to discover knowledge to be learned)
Step 2:
–– The teacher let students work collaboratively on the task;
–– During this period the teacher refrains to intervene directly on the
knowledge;
–– He/she then monitors how the students are progressing towards the
knowledge to be learned and boosts those who are still behind (but
without communicating to them the knowledge).

14 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 ™™ Presentation of students’ findings/productions
–– In this part, the teacher invites representatives of groups to present their
productions/findings.
–– After three/four or an acceptable number of presentations, the teacher
decides to engage the class into exploitation of students’ productions.
™™ Exploitation of students’ findings/ productions
–– The teacher asks students to evaluate the productions: which ones are
correct, incomplete or false
–– Then the teacher judges the logic of the students’ products, corrects
those which are false, completes those which are incomplete, and
confirms those which are correct.
™™ Institutionalization or harmonization (summary/conclusion/ and
examples)
–– The teacher summarizes the learned knowledge and gives examples
which illustrate the learned content.
™™ Application activities
–– Exercises of applying processes and products/objects related to learned
unit/sub-unit
–– Exercises in real life contexts
–– Teacher guides students to make the connection of what they learnt to
real life situations.
–– At this level, the role of teacher is to monitor the fixation of process and
product/object being learned.
3) Assessment
In this step the teacher asks some questions to assess achievement of
instructional objective. During assessment activity, students work individually
on the task/activity. The teacher avoids intervening directly. In fact, results
from this assessment inform the teacher on next steps for the whole class and
individuals. In some cases, the teacher can end with a homework/ assignment.
Doing this will allow students to relay their understanding on the concepts
covered that day. Teacher leads them not to wait until the last minute for
doing the homework as this often results in an incomplete homework set
and/or an incomplete understanding of the concept.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 15

PART II: SAMPLE LESSON PLANS
Term Date Subject Class Unit Lesson Duration Class size
No No
1 28 /09/ 2023 Taxation Year 5 5 7 of 11 40 Min 35
Type of Special Educational Needs to be Three students with visual impairment
catered for in this lesson and number of
learners in each category
Unit title Value added tax (VAT)
Key Unit Compute VAT and file returns in a timely manner
Competence:
Title of the Input and output VAT
lesson
Instructional Given a written scenario of businesses, student will be able to Explain
Objective and compute the input and output VAT according to the businesses. The
teacher will read for the students with visual impairment and allow them to
answer verbally or use Braille documents.
Plan for Inside the classroom in a U shape arrangement or outside the classroom
this Class
(location: in /
outside)
Learning The learning material will depend on what is available (example: scenario,
Materials (for field visit, etc.)
all learners)
References Taxation year 5
Timing for Description of teaching and learning activity Generic
each step competences
Think-pair-share; small group discussion on Explain and cross cutting
and compute the input and output VAT in the issues to be
country, gallery walk, and content harmonization addressed + a
from different group presentations short explanation
Teacher Learner activities
activities
1. Introduction Revision on the Answer the questions on the Communication:
minutes previous lesson on Registration laws related on VAT Through
the Registration laws answering
related on VAT questions and
peer discussion.
Explain the meaning Correct homework with the
of Registration laws teacher
related on VAT

16 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 Handle any homework Discover the title of today’s
or assignments, lesson:
Ensure a conducive
learning environment.
Show learners the Input and output vat
relationship between
the previous lesson
and new lesson
Guide students to
discover the lesson of
the day.
Share the objectives
of the lesson with the
learners
Ask students to show
the link between
learning objective and
Key unit competence
2. Development of the lesson : 105min
a) Discovery Ask student to play Listen carefully to instructions Cooperation,
activity Water Melon Game: interpersonal
Put students into management
35 Minutes groups & have them sit and life
Forming groups:
together.
–– Students arrange themselves Skills: Students
Ask student to look in in teams and sit together. share ideas in
student book year 5 pairs and in
taxation unit 5. –– Work individually or in pairs groups.
to explain and compute input
This activity will be and output vat practiced in Critical thinking:
done first individually, the country.
–– Student
shared in pairs then in
analyse
a big group according
situation
to students sitting
of business
arrangement
in their
Tell students that this community
activity will be done and come up
in 35 minutes and the with taxes can
presentation will be be paid by the
done using gallery businesses.
work.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 17

 Teacher moves –– In their groups, they share Communication:
around in groups to and agree on the explain and
guide them as they –– Students
compute input and output
attempt to answer the discuss in
vat practiced in the country
questions. groups and
answer
The teacher pays questions.
a special attention
to students with Research and
disabilities problem solving:
Through
discussion
and research,
students explain
and compute
input and output
vat practiced in
the country
Peace and values
education:
Trough games
and group
discussions,
students socialize
and develop
some values like
sharing, honesty,
cooperation,
respect, team
work, etc.
b)Presentation –– Invite the student to Groups present about explain
and hang their work on and compute input and output
exploitation the Present Boards. vat practiced in the country
of learner’s
–– Allow students to do –– Each team hangs its answers
productions
gallery work on Present Board.
40 Minutes –– Each team moves around to
read presentations of other
teams while taking notes and
asking for clarification where
they do not understand.

18 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– To ask other groups –– Inclusive
if they agree on Education:
Harmonize their findings and
what other groups come up with explain and Taking into
have presented and compute input and output vat account students
comment on each practiced in the country. with visual
presentation. impairment
–– Invite the during gallery
representative walk and also
of each group to read for them.
come, explain and
Communication:
compute input and
–– Student
output vat practiced
discusses and
in the country.
communicates
verbally while
presenting
their work and
commenting
on other groups
work.

Critical thinking:
–– Learners use
critical thinking
in answering
questions.
c) Summary/ –– Help the students Input and output vat: Inclusive
conclusion to come up with a Education:
summary on input Input VAT:
10 Minutes and output vat Taking into
In general, input VAT is the VAT account of
practiced in the
on purchases students
country.
with visual
–– Read the summary Purchases of goods and impairment by
loudly for the two services include the value of all
reading for them
students with visual goods and services purchased note written
impairment to allow during the accounting period onboard and
them to take notes. for resale or consumption in the giving more time
production process.
to take note.
Output VAT:

Output VAT is the VAT on the

sales

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 19

3. Assessment Q1. ABC business Expected Answers: Critical thinking:
is registered as VAT
20 Minutes Q1. Students
taxpayer. It sells today
800,000Rwf of taxable VAT= 18 * FRW 800,000 develop critical
goods (VAT inclusive) 118 thinking and
= FRW 122,034 reasoning skills
Calculate the VAT while answering
output for this Q2. questions from
business other groups.
Flour 29,500
Q2. EVA’s purchases Rice 70,800 Research and
on credit from EDWIN Akandi 86,400 problem solving
50 Kg of flours at FRW TOTAL 186,700
500/Kg VAT excluded. Imagination and
7,080,000 *18 application of
Q3. Output VAT =
–– 100Kg of rice at 118 this lesson to real
FRW 600 with VAT = FRW 1,080,000 business world.
excluded.
1,100,000 * 18
Input VAT=
–– AKANDI 24 cartons 100
each one contains = FRW198,000
12 bottles at FRW
VAT payable =1,080,000-
300 with VAT
included. 198,000 = FRW 882,000

Fill invoice by showing

VAT for each product
and total invoice to be
paid

Q3. A company is
registered for VAT.
During a period, they
have sales of FRW
7,080,000 including
VAT at 18% and
purchases of FRW1,
100,000 excluding
VAT. What is the
VAT payable by the
company at the end of
the period?
Teacher self- For example:
evaluation 3 students need remedial activities (they are given)

20 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 PART III: UNIT
DEVELOPMENT

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 21

 TAXATION OF CORPORATE BUSINESS
Unit 1 PROFITS

1.1. Key unit competence : To be able to apply and compute the taxation
of corporate income tax (CIT)

1.2. Prerequisites (knowledge, skills, attitudes, and values)

In addition to Unit 6 on Taxation of Individual Business Profits covered in
S4, where they were introduced to the meaning of business profit, students
were introduced to taxes in Rwanda in senior 2 (unit 5) and in senior 3 (unit
5) introduced compute the taxation of corporate income tax (CIT). This
prior knowledge, skill or competency should help students to calculate the
corporate income tax (CIT) related to the company’s operations and to file the
appropriate declaration.

1.3. Cross-cutting issues to be addressed:

• Inclusive education: Encourage the participation of all students during
the teaching and learning process
• Peace and value education: During group activities, the teacher
encourages students to respect their peers’ opinions
• Gender education: From the beginning to the end of class, provide
all students with equal opportunities for girls and boys to participate
actively in class.
• Financial education: Remind students to be financially competent so
they can understand and use effectively various financial skills including
personal financial management, budgeting, and investing. Know how to
manage your money and save responsibly.

22 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

1.4. Guidance on the introductory activity 1
–– Lead small groups of students to work on introductory activity 1.
–– During the class discussion, have the students think about different
possible solutions for taxes returns and justify their phases in front of
the whole class
–– The teacher should visit all groups and offer assistance as needed.
–– After a set amount of time, ask the students to present and harmonize
their findings.
–– Explain to students that based on the sentences they are looking at,
they may get different responses for the given task. Make an effort to
pique students’ interest in the first unit’s material.
–– Ask students to do the application activity 1.1 and evaluate whether
lesson objectives were achieved to assess their competences.
Answers for introductory activity 1
• On client one; KIGALI CITY, because it is government entity it is
exempted to pay corporate income tax, but in case it does a business
i.e., doing an activity that generate the profit, it is supposed to pay tax
based on its size.
• On Rweru Ltd, because it is a company that doing business and has
provided its financial statement, John has to assess its financial
statement prepared and evaluate whether all the expenses included
are allowed for tax purpose, see whether all expenses supposed to be
included were recorded and see also if the income included are allowed
and no income included but which are not taxed. So, after assessing all
these, John has to adjust the reported profit and computed the tax to
be paid by Rweru Ltd.
• On Rubengera Company Ltd, John has to advice based on the
implication of tax law in case a company acquired 65% or more of a
company in exchange of shares in the purchasing company:
1) The transfer of assets by a company during restructuring is exempt
from corporate income tax.
2) In case of restructuring of companies, the transferring company is
exempt from tax in respect of capital gains and losses realized on
restructuring. The receiving company values the assets and liabilities
involved at their book value in the hands of the transferring company

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 23

 at the time of restructuring. The receiving company depreciates the
business assets according to the rules that would have applied to the
transferring company as if the restructuring did not take place.
3) In case of restructuring, the receiving company is entitled to carry
over the reserves and provisions created by the transferring company,
subject to the conditions that would have applied to the transferring
company as if the restructuring did not take place. The receiving
company assumes the rights and obligations of the transferring
company in respect of such reserves and provisions.
• On XYZ Ltd, John has advice that in case a company made a loss,
income tax law grant to deduct that loss from the business profit
in the next five (5) tax periods, earlier losses being deducted before
later losses. However, XYZ Ltd may apply to the tax administration to
be allowed to carry forward the loss for more than five (5) tax periods
if it fulfils the requirements based on a Ministerial Order determines
the requirements to carry forward the loss for more than five (5) tax
periods. This can be done in case the loss not full deducted with the
five years.
All the above advice, John has to base on the Relevant legislation and
guidance governing the taxes in Rwanda including, income tax law, VAT law,
Tax procedure law.

1.5. List of lessons and lesson development

Lesson title/ Learning Number of
Headings #
sub-headings objectives periods
Relevant Introductory activity Arouse the curiosity 1
legislation, of students on the
Chargeable and content of unit 1.
exempt entities 1 Relevant Explain the relevant 1
legislation legislation and
guidance
2 Chargeable List chargeable and 2
and exempt exempt entities
entities according to the
income tax law

24 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 1 The income tax Identify taxable 3
regimes trading profits for
companies
2 Taxable income Demonstrate the 4
computation of
1.2 Income tax taxable income for
companies
3 Taxable trading Apply the 4
profits adjustments for
taxable business
profits
1 Taxable income List other income 1
of companies from
different activities
2 Investment Apply the 3
income investment income
1.3 Other in calculation of
income for company’s taxable
companies income
3 Rental income Apply the rental 3
income in
calculation of
company’s taxable
income
1 Calculation of Construct a 4
1.4 Total taxable
total taxable company’s
income for
income for corporate income
companies
companies tax calculation
1 Definition of Explain the meaning 1
restructuring of restructuring
1.5 Corporate
restructuring
and tax on 2 Implications of Apply the principles 1
liquidation restructuring of restructuring in
corporate income
tax

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 25

 3 Implications of Apply the principles 1
liquidation of liquidation in
corporate income
tax
4 Impact on Explain the impact 1
losses of restructuring on
company’s share
capital
1 When does a Explain when the 1
1.6 Business loss business loss company incurs a
reliefs arise? loss
2 What can be Explain what can be 1
done with a done when with a
business loss? business loss.
1.7 End unit assessment 3

Lesson 1: Relevant legislation, Chargeable and exempt entities

a) Learning objective: Explain the relevant legislation and list
chargeable and exempt entities according to the income tax law
b) Teaching resources: Printed or soft income tax law No 027/2022 of
20/10/2022, RRA tax handbook (2019), calculators, students’ book,
and other reference textbooks to facilitate research.
c) Prerequisites/Revision/Introduction: Students will perform well
in this unit if they have learned well the content of units 4, 5 and
unit 6 of Taxation in senior 4.
d) Learning activities
–– Invite students to sit in small groups;
–– Invite students to work in groups and do activity 1.1 from in their
student book;
–– Move around the class to facilitate when needed and bring more
clarity to any challenges they may encounter during their work;
–– Identify groups with different work steps.
–– Invite each group with different activities to present their answers
in a class discussion;

26 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– As a teacher, harmonize the learnings from the students’
presentation and ask them to provide other real-life examples of
problems involving the use of company profits
–– Guide them to explore examples from the student book
Answers for Activity 1.1

On the photo, there are people in the meeting, but as the word parliament,
law photo and commissioner of Revenue authority is shown here, this
means that the meeting is discussing on the matter regarding laws
governing the taxes.

a) Answers for the application activity 1.1.

Answer 1
The correct answer is D

Because no entity is exempted from income tax, A is not correct because

ETS is an importation company in the business hence not exempted,
B is not correct because Navigation Company is a HR service provider
Company, hence not exempted from income tax, C is not correct because
Gasabo District conference hall is a separate business with a unique TIN
and hence not exempted from income tax.

Answer 2
Taxable Exempt
Jali Ltd, a Rwandan registered company √
National Bank of Rwanda √
Moriah Ltd, a company registered in Kenya which √
operates a permanent establishment in Kigali
The United Nations Economic Commission √
for Africa (UNECA), an inter-governmental
organization which has exemption under an
international agreement
Nile Ltd, an Ethiopian company which is √
managed in Rwanda

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 27

Lesson 2: Income tax
a) Learning objectives:
• Identify taxable trading profits for companies
• Demonstrate the computation of taxable income for companies
• Apply the adjustments for taxable business profits
b) Teaching resources: Printed or soft Income Tax Law No. 027/2022 of
20/10/2022, RRA Tax Guide (2019), calculator, student book and other
reference books to facilitate research.
c) Prerequisites/Revision/Introduction: Students will perform well in
this unit if they have learned well the content of unit 6 in the subject of
Taxation found in senior 4.

d) Learning activities
–– Individually, invite students to work on the activity 1.2 from the S5
Taxation student’s book;
–– Move around for facilitating students where necessary and give more
clarification on eventual challenges they may face during their work;
–– Invite students to share their results to their neighbours
–– Individually, invite students to share their findings to the whole class
–– As a teacher, harmonize the findings from presentations and use
different probing questions to help students to explore examples and
the content given in the student’s book to enhance skills on taxable
income and taxable trading profits.
–– Invite students individually to comment on the general conclusion
from findings
–– Ask students to do the application activity 1.2 and evaluate whether
lesson objectives were achieved to assess their competences.
Answers for Activity 1.2
• First year and second year, Muhire is supposed to pay income tax
under flat regime. This means that in year 1, he is supposed to pay
FRW 120,000 while in year 2 he is supposed to pay FRW 210,000.
• For the third year, he is supposed to pay income tax under the
turnover regime. This means that he is supposed to pay at turnover
rate of 3%= FRW 15,000,000*3%= FRW 450,000.

28 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • For the income received in the year ended 31st December 2021,
he is supposed to pay income tax under the real regime. For this
regime, the taxpayer is supposed pay 30% of taxable income. The
taxable income is obtained after taking the total revenue minus the
allowable expenses. This means that all expenses incurred by Muhire
are not allowed to be deducted as expenses for tax purpose. For
example, personal expenses are not allowed to be deducted in total
revenue Muhire generated, because personal expenses are not for
business. So, the income tax due to Muhire is equal to 30%*(FRW
50,000,000-FRW (30,000,000-20,000,000)) = 30%*(FRW 50,000,000-
FRW 10,000,000) = 30%* FRW 40,000,000 = FRW 12,000,000.

e) Answers for the application activity 1.2

Item Do nothing Add back Deduct

Depreciation of FRW 22,000,000 √
FRW 8,000,000 of agricultural √
income
Dividends paid of FRW 12,000,000 √
which have been deducted from
the profit figure
FRW 2,000,000 of client entertaining √
FRW 5,000,000 of rental income √
Tax depreciation of FRW 20,000,000 √
FRW 20,000,000 of staff salaries √

Lesson 3: Other income for companies

a) Learning objective: Apply the investment and rental income in
claculation of company’s taxable income
b) Teaching resources: Printed or soft Income Tax Law No 027/2022 of
20/10/2022, RRA Tax Guide (2019), calculator, student book and other
reference books to facilitate research.
c) Prerequisites/Revision/Introduction: Students learn this lesson better
if they have a good basic knowledge of mathematical calculations.
d) Learning activities
–– Organize students into small groups;
–– Invite students to work on the questions for activity 1.3 in small groups.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 29

 –– Walk around to help and guide students who are having difficulty with
their assignment.
–– Invite each group to share their answers with another group, and
encourage each another when they have greater difficulty completing
this activity 1.3
–– During a class discussion, ask the group leader to present their findings
to the whole class.
–– As a teacher, harmonize the students’ different responses to Activity 1.3
–– Have students review application activity 1.3 and assess whether the
objectives of the lesson have been met.
Answers for Activity 1.3
Once Muhanga Enterprise Ltd’s management implemented the
resolutions of the board meeting, on the first investment proposing,
there will be a dividend income, on second one, there will be an interest
income and for the third one, there will be a rental income.
e) Answers for the application activity 1.3
Solution 1
Investment income
FRW
100 800,000
Interest income ( FRW 680,000 * )
85
100 700,000
Royalty income (FRW 595,000 * )
85
Less expenses of managing the investments (50,000)
Investment income 1,450,000

Solution 2
Rental income
A. FRW 134,000
FRW
Rental income (FRW 20,000 * 12) 240,000
10% wear and tear expense (10% * FRW 240,000) (24,000)
Interest paid on loan to purchase (FRW 800,000 * 4%) (32,000)
Depreciation expense (5% * FRW 1,000,000) (50,000)
Rental income 134,000

30 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Lesson 4: Total taxable income for companies
a) Learning objective: Construct a company’s corporate income tax
calculation
b) Teaching resources: Printed or soft Income Tax Law No 027/2022 of
20/10/2022, RRA Tax Guide (2019), calculator, student book and other
reference books to facilitate research.
c) Prerequisites/Revision/Introduction: Students will perform well in this
unit if they have a good command of the content of the previous lesson
and also have a good basic knowledge of mathematical calculations.
d) Learning activities
–– Invite students to work in groups on Activity 1.4 found in their student
book;
–– Move around the class to moderate if necessary and provide further
explanation of any challenges they may encounter during their work
–– Invite members from each group to give a presentation of their results/
calculations;
–– As a teacher, bring together the results of the presentation and lead
them through an explanation of what taxable income is for businesses.
–– Use a variety of probing questions to guide them through the topic and
examples in the student book;
–– Afterward, help students complete application activity 1.4 and
determine if the learning objectives have been met.

Answers for Activity 1.4

Even if Muhire is Managing Director and founder of Urumuri Ltd but

under the law Muhire is far separate with Umururi Ltd. This means that
the income or expenses related to Muhire or his relatives should not
be included in the income or expenses of Urumuri Ltd. Hence, the total
taxable income of Urumuri Ltd for the year ended 31st December 2022 is
computed as follows:

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 31

 Details Amount in FRW
Net profit reported 13,100,000
Add expenses deducted but not related to
business
School fees for Muhire’s daughter 2,000,000
Purchase of home foods and Services 8,000,000
Total adjusted profit 23,100,000
Less income included but not related to business
Muhire’s Salary (5,000,000)
Muhire wife’s Salary (3,500,000)
Total taxable income 14,600,000

e) Answers for the application activity 1.4

Total taxable profits
Working FRW’000
Adjusted trade profits 1 181,500
Less tax depreciation 2 (40,000)
Interest income 5,000
Rental income 3 36,000
Total taxable profits 182,500

Workings
1 Adjusted trade profits FRW’000
Profit per accounts 162,500
Plus disallowed expenses :
Depreciation 60,000
Bad debts 0
eneral provision 2,500
Wages and Salaries 0
Legal and professional fees - fine 1,500
Interest payable 0
Less non-trading income :
Rental income (40,000)
Interest (5,000)
Adjusted profit before tax depreciaiton 181,500

32 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 2 Tax depreciation FRW’000
Buildings : 5% straight line = 5% * 500,000,000 25,000
Other assets pool : 25% * 60,000,000 15,000
Total tax depreciation 40,000

3 Rental income FRW’000

Rental income 40,000
Wear and tear (10%) (4,000)
Taxable amount 36,000

Note. Tax depreciation is reflected in the amount calculated in Working 2.

Lesson 5: Corporate restructuring and tax on liquidation

a) Learning objective: Apply the principles of restructuring and liquidation
in corporate income tax
b) Teaching resources: Printed or soft Income Tax Law No 027/2022 of
20/10/2022, RRA Tax Guide (2019), calculator, student book and other
reference books to facilitate research.
c) Prerequisites/Revision/Introduction: Students will do well in this
lesson if they have a solid understanding of the content of business
profits computation.
d) Learning activities
–– Invite students individually to work on the activity 1.5 from the S5
Taxation student’s book;
–– Move around to support and guide students with difficulties in their
work where needed and provide further explanation of any challenges
they may encounter during their work.
–– Invite students to share their finding with their neighbours
–– Invite students individually to share their findings with the whole class
–– As a teacher, harmonize results from presentations and use various
probing questions to help students explore examples and student
book content to improve knowledge of taxable income and taxable
trading profits.
–– Invite students individually to comment on the general conclusion
drawn from the results

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 33

 –– Ask students to complete the application activity 1.5 and assess
whether the lesson objectives have been met to assess their
competencies.

Answers for Activity 1.5

1. Karangazi Ltd is doing the restructuring of their business activities
2.
• The appointee should recommend that the transfer of assets
by a company during restructuring is exempt from corporate
income tax.
• In case of restructuring of companies, the transferring
company is exempt from tax in respect of capital gains and
losses realized on restructuring. This means that if Kiramuruzi
bought Karangazi assets at high value than the net book
value, the capital gain raised from that transaction is exempt
and vice versa.
• Kiramuruzi Ltd should value the assets and liabilities involved
at their book value in the hands of the transferring company at
the time of restructuring and them according to the rules that
would have applied by Karangazi Ltd as if the restructuring
did not take place.

e) Answers for the application activity 1.5

C. The building will be transferred at its written down value of FRW
28,000,000 and Gakire Plc will claim 5% tax depreciation on the original
cost of FRW 40,000,000.
Assets are acquired at their book values (in this case FRW 28,000,000).
However, tax depreciation is claimed by the receiving company (Gakire
Plc) as if the transfer never occurred – so the depreciation allowable will
be 5% * FRW 40,000,000 per annum

34 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Lesson 6: Business loss reliefs
a) Learning objective: Explain when a company suffers a loss and what to
do
b) Teaching resources: Printed or soft Income Tax Law No 027/2022 of
20/10/2022, RRA Tax Guide (2019), calculator, student book and other
reference books to facilitate research.
c) Prerequisites/Revision/Introduction: Students will perform well in this
unit if they have learned well the content related to the calculation of
accounting profit or loss adjusted for tax purposes.
d) Learning activities
–– Invite students individually to work on the activity 1.6 from the S5
Taxation student’s book;
–– Move around to support and guide students with difficulties in their
work where needed and provide further explanation of any challenges
they may encounter during their work.
–– Invite students to share their finding with their neighbours
–– Invite students individually to share their findings with the whole class
–– As a teacher, harmonize results from presentations and use various
probing questions to help students explore examples and student
book content to improve knowledge of taxable income and taxable
trading profits.
–– Invite students individually to comment on the general conclusion
drawn from the results
–– Ask students to complete the application activity 1.6 and assess
whether the lesson objectives have been met to assess their
competencies.
Answers for Activity 1.6

The company should file its tax return and declare FRW 0, for the
subsequent years it has to deduct loss in the next five years.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 35

 e) Answers for the application activity 1.6
Year ended 31st December 2021 FRW

Taxable trading profits 120,000,000

Investment income 2,500,000
Rental income 5,000,000
Less loss carried forward (80,000,000)
Taxable income 47,500,000

Skills lab 1
Guidance on the skills lab activity. In conducting this skills lab activity, you
can either Invite students to make research in library for students to interview
him/her where needed.
i) Build
–– Invite students to make research in library
–– Remind students on the expected objective for the class attendance
–– Help them to be grouped and remember to mix both boys and girls
–– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings
ii) Practice
–– Guide students on listening resource person
–– Ensure that all are listening
–– Respond to any questions for clarification and support accordingly
iii) Present
–– Choose randomly any two teams to present their findings
–– Allow students to ask questions to resource person or their follows
iv) Conclusion

The teacher emphasizes on the objective of the visit reminding students that
they have to follow formula used to vat payable accordingly.

Compute corporate income tax related to the income tax

36 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

1.6. Summary of the unit
• Any company which receives taxable income will be required to register
for and pay corporate income tax unless the company is exempt.
• Dividends from overseas companies (for example a foreign subsidiary
of a Rwandan parent company) are liable to CIT in Rwanda; the amount
gross of overseas taxes should be included in taxable profit and then
the overseas tax suffered can be deducted from the CIT liability (as
double taxation relief ).
• Different income tax regimes apply to calculate corporate income tax
for companies’ dependent on their level of turnover. For companies
with turnover exceeding FRW 20,000,000 the real regime applies which
means that companies will need to calculate their taxable trading
profits. This is done by adjusting the accounting profits in exactly the
same way as we saw for a sole trader.
• In addition to the taxable trading profits, companies will also be taxed on
their investment income and rental income receivable during the year.
• All investment income in the form of interest, dividends and royalties
must be included unless these are non-taxable. These may have been
received net of withholding tax but the gross amount must be declared
in taxable income and then the tax withheld will be accounted for
when calculating the tax due.

1.7. Additional Information for Teachers

For more information, please refer to all official gazettes and books referenced
in the reference page.

1.8. End unit assessment

Answers to end unit assessment activities (This part will be part of the
Teacher’s Guide)
1.
FRW’000
Adjusted trade profits (W) 96,050
Less tax depreciation (7,000)
100 5,000
Royalty income ( FRW 4,250 * )
85
Rental income 1,200
Taxable profits 95,250

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 37

Working: Adjusted trade profits
FRW’000
Profit per accounts 74,500
Plus disallowed expenses:
Repairs (capital) 6,000
Depreciation 13,000
Entertaining – except football (2,000 + 7,200) 9,200
Increase in provision for bad debts 2,000
Dividends paid 2,000
Less non-trading income:
Dividend income (not taxable) (5,200)
Royalty income (4,250)
Rental income (1,200)
Adjusted profit before tax depreciation 96,050
2.
Losses on long-term contracts

B. It will be offset against total income in Year 2 of FRW 3,000,000,

and then the remaining FRW 2,500,000 will be offset against the
contract profit in Year 1.

The offset of the loss can be shown thus:

Year 1 Year 2
FRW FRW
Contract profit 3,500,000 0
Loss carried back FRW (5,500,000 – 3,000,000) (2,500,000)
Other business profits 3,000,000 2,750,000
Investment income 0 250,000
Contract loss (3,000,000)
Taxable income 4,000,000 0

38 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 6. Loss utilization
Year ended Year ended
31/12/2018 31/12/ 2019
Business profit 150,000,000 400,000,000
Loss brought forward – year ended 31 (150,000,000) (350,000,000)
December 2016
Loss brought forward – year ended 31 0 (50,000,000)
December 2017
Taxable business profit 0 0

Year ended Year ended

31/12/2016 31/12/ 2017
Loss incurred 500,000,000 200,000,000
Used in year ended 31 December 2018 (150,000,000)
Used in year ended 31 December 2019 (350,000,000) (50,000,000)
Loss carried forward 0 150,000,000

The loss of the year ended 31 December 2017 may be carried forward to the
year ended 31 December 2022, unless the company is granted permission
to extend this period or there is a change of 25% or more in the company’s
shareholders.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 39

1.9. Additional activities
1.9.1. Remedial activities
1. Which of the following statements is TRUE?
A. If a company receives income from agricultural or livestock activities,
then the first FRW 12,000,000 of its income is exempt from corporate
income tax.

B. Akeza Plc, a Rwandan resident company, will not need to pay

corporate income tax on profits from its business profits in Kenya.

C. Sanyu Ltd, a Ugandan resident company, will be liable to corporate

income tax on the profits of its Rwandan permanent establishment.

D. Nibakore Plc, a Rwandan resident company, will need to pay

corporate income tax on dividends that it receives from Barebe Plc,
another Rwandan resident company.

Answer:

C. C is true – Sanyu Ltd, a Ugandan resident company, will be liable

to corporate income tax on the profits of its Rwandan permanent
establishment.

2. A business incurs a loss of FRW 30,000,000 in the tax period to 31

December 2019 due to the loss of a major customer. How long can
this loss be carried forward?
A. Until the tax period to 31 December 2020
B. Until the tax period to 31 December 2024, unless the tax
administration permits an extension
C. Until the tax period to 31 December 2023, unless the tax
administration permits an extension
D. It cannot be carried forward
Answer:

B. Until the tax period to 31 December 2024, unless the tax

administration permit an extension.

40 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

1.9.2. Consolidation activities
Buhanda Ltd prepares its accounts to the year ended 31 December. In the year
its financial statements show the following:
–– Interest income of FRW 680,000, which is received net of 15% withholding
tax
–– Royalty income of FRW 595,000, also received net of 15% withholding
tax
–– Expenses of managing the investments at FRW 50,000
Required: Calculate the investment income which will be included in Buhanda
Ltd taxable income
Answer:
Investment income
FRW
100 800,000
Interest income ( FRW 680,000 * )
85
100 700,000
Royalty income (FRW 595,000 * )
85
Less expenses of managing the investments (50,000)
Investment income 1,450,000

1.9.3. Extended activities

Duhahe Plc records the following income in its financial statements for the
year ended 31 December:
• Royalty income of FRW 1,870,000 received net of 15% WHT
• Interest income of FRW 3,800,000 received net of 5% WHT from bonds
in a listed company
• Interest income of FRW 6,000,000 from a five-year deposit at a bank
Expenses of managing the investments are FRW 1,000,000.
What is the investment income to be shown in Duhahe Plc’s corporate
income tax declaration (to the nearest FRW’000)?

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 41

 A. FRW 12,259,000
B. FRW 12,200,000
C. FRW 10,670,000
D. FRW 11,200,000
Answer
D. FRW 11,200,000
FRW
100 2,200,000
Royalty income ( FRW 1,870,000 * )
85
100 4,000,000
Interest income (FRW 3,800,000 * )
95
6,000,000
Interest from bank on long-term deposit
Less expenses of managing the investments (1,000,000)
Investment income 11,200,000

42 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Unit 2 WITHHOLDING TAXES

2.1. Key unit competence: Use different percentages to compute related

withholding taxes

2.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in senior 4 (unit 3) to the Taxation of employment
income, (unit 5) to the Taxation of investment income and (unit 6) to the
Taxation of individual business profit (PIT) so, with this prior knowledge,
skills, attitudes and values it should help them to appreciate the features of
withholding.

2.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones. You can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance
of environmental protection and the importance of withholding taxes
procedures in reducing harmful imports such as polythene paper while
promoting other environmentally friendly businesses e.g. use of renewable
energies (solar energy).

Gender education: Emphasis throughout this unit has to be put on how both
males and females have the equal opportunities to understand and explain
the withholding taxes system in Rwanda. So that this will encourage people
to take the first step in paying their withholding taxes to the government.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 43

Inclusive education: In addition to all having equal opportunities to carry
out business activities, emphasis has to be put on how we all regardless of
our background, economic or social setup have right to develop an ethical
understanding of withholding taxes that do not discriminate. Students need
to understand that the withholding taxes procedures should not discriminate
but promote inclusiveness of all etc.

Peace and Values: You need to emphasize to learners the need to live in
peace and harmony with others. Students need to appreciate the feature
of withholding taxes in promoting peace and patriotism in the community
avoiding activities that are illegal e.g. smuggling and make sure that every
trade they plan to have is legal and contributes to national development
goals.

Standardization culture: You need to emphasize to students the need for

standard in a business legal aspect. This will help them to abide by standards
of withholding taxes as prospective business legal aspects.

2.4. Guidance on introductory activity

Follow the guidance about the introductory activity:

Students in small groups, pairs or individual read and analyse the case study
and based on above case is JOHN liable to pay taxes and based above case
which goods and services will be taxable?

During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.

Students share their findings, responses or answers to the activity using an

appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.

Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’ book.

44 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

You can support student’s answers by referring to possible answers to the
introductory activity below:

Possible answers for introductory activity (case study)

Note: These responses may be shared or not with the students. They are
specifically to guide you while harmonizing students’ responses during
presentation.

Q1. Yes
Q2: Shares from BK (15%), Machine Tractors and Construction materials (18%)

2.5. List of lessons/sub-heading

Headings No Lesson title/ Learning objectives Number
sub-heading (from the syllabus of
or set according to periods
the lesson title)
2.1The feature Introductory activity Arouse the curiosity 1
withholding of students on the
taxes and content of unit 2
Import, public 1 The features Explain the 1
Tenders of withholding different features of
taxes withholding taxes
2 Import and Identify different 1
Public Tenders. withholding taxes
on import and Public
Tender.
2.2 Person 1 Person List different persons 2
exempted from exempted from exempted from
withholding withholding withholding taxes
taxes and others taxes
payments
2 Other payments Describe other 3
subject to payments subject to
withholding withholding taxes
taxes

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 45

2.3 Withholding 1 Withholding Demonstrate 3
taxes on gaming taxes on gaming withholding taxes
activities and activities on gaming activities
Double Taxation and Discuss the
Agreement Double Taxation
(DTA). Agreement.

2.4 End Unit Assessment 3

Lesson 1: The feature of withholding taxes, imports and public tenders

a) Learning objective:
–– Explain the different feature of withholding taxes.
–– Identify different withholding taxes on import and Public Tender.
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, official gazette, text books, resourceful person and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

d) Learning activities
Activity 2.1

Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have

46 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

understood the instructions, prompt and probe them through question and
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:
Answers to Activity 2.1
The carriers/ Activities of KEVINE:
Legal expert
Importer, Businessman bids tenders
Application activities 2.1

This activity can be given as a normal individual activity, where students

explain the different features of withholding taxes and Identify different
withholding taxes on import and Public Tender.

Depending on the purpose of the application activity, choose an appropriate

method to assess student’s findings, answers or responses. Depending on
the performance or results, you may decide to give remedial or extension
activities.
Answers to Application Activity 2.1
Q.1:
a) Withholding taxes is a deduction of tax levied at source of income as
advance payment on income. It applies on income received by non
–registered business or registered business without a recent income
taxes declaration.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 47

 b) - Withholding taxes 3% must be withheld on publics tenders
- Withholding Taxes 5% is levied on imports

Lesson 2: Person exempted from withholding taxes and others payment

a) Learning objectives:
-- List different persons exempted from withholding taxes
-- Describe other payments subject to withholding taxes
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
In previous lesson, lesson 1 Students studied for the feature withholding
taxes, Import and public tenders.

That will help to list different persons exempted from withholding taxes and
describe other payments subject to withholding taxes. Leant in this lesson.

d) Learning activities
Activity 2.2
–– Put students in small groups and give clear instruction about the activity
–– Ask them to observe the pictures in student book and answer the
questions provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when to list different
persons exempted from withholding taxes and describe other payments
subject to withholding taxes relating Person exempted from withholding
taxes and others payment. Answers or address any questions or challenges
about the activity. Guide them to make notes in referring in their students’
book.

48 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answer to Activity 2.2
NO,

The following taxpayers are exempted from withholding taxes:

1. those whose business profit is exempted from taxation;
2. those who have tax clearance certificate issued by the Tax Administration;
3. those who are newly registered during the concerned annual tax period.
Application activities 2.2
This activity can be given as a normal individual activity, where students
explain taxpayers are exempted from withholding taxes and others payment
subject to withholding taxes.
Monitor the activity to ensure students are on track and actively participating.
You make correction of paper assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work.

Answers to application activity 2.2

Q1.
a) Performance income
b) Tax paid is: (24,000,000* 15 ) = FRW 3,600.000
100
Q2. Withholding tax paid is: (3,500,000* 15 ) = FRW 525,000
100

Lesson 3: Withholding taxes on gaming activities and Double Taxation

Agreement (DTA)
a) Learning objective
-- Demonstrate withholding taxes on gaming activities
-- Discuss the Double Taxation Agreement.
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 49

 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 2.3
–– Put students in small groups and give clear instruction about the activity
–– Ask them to show the pictures in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when to demonstrate
Withholding taxes on gaming activities and Discuss Double Taxation
Agreement (DTA). Answers or address any questions or challenges about the
activity. guide them to make notes in referring in their students’ book.
Answer to Activity 2.3
Do you think that the betting company will pay tax? And why

YES, because betting companies perform business income related

activities

Application activities 2.3

This activity can be given as a normal individual activity, where students

demonstrate withholding taxes on gaming activities and Discuss the Double
Taxation Agreement

Monitor the activity to ensure students are on track and actively participating

You make correction of paper assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work.

50 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answers to Application Activity 2.3

Q1. Double Taxation Agreement is international taxation involves taxation

which is cross border.
Q2. The purpose of Double Taxation Agreement is “the avoidance of double
taxation with respect to taxes on income and on capital”.Skills lab
activity 2

Guidance on the skills lab activity:

In conducting this skills lab activity, you can either invite a resource person
from RRA to share with students on the calculation of withholding tax for
imports and public tenders and ask students to apply using an illustration to
compute withholding taxes then share findings
i) Build
Given that students visit the RRA:
–– Remind students on the expected objective for the class attendance
–– Help them to be grouped and remember to mix both boys and girls
–– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings
–– Distribute questions for their research
–– Check their understanding of the assignment
–– Remind them that everybody full participation is mandatory
ii) Practice
During research on internet, care about the following concerns:
–– Guide students on accessing the real website
–– Ensure that internet is connected for all
–– Respond to any questions for clarification and support accordingly
Experimental Version 89 to facilitate the presenter to prepare his presentation,
send him a concept note describing what has been covered during the class
lesson and state what are students and teacher’s expectations.
iii) Present
During the group presentation, the teacher must assess whether the student
participation in the skills lab activity was effective by:

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 51

 –– Selecting randomly anyone in all groups to present the report on behalf
of team members.
–– Allowing students to ask question to their fellows. All team members
being presenting are expected to contribute to the plenary by answering
some questions that the presenter is not covering as well as expected.
iv) Conclusion
The teacher emphasizes on the objective of the research reminding students
that they were expected to be able to compute PAYE and all RSSB contributions,
to file their related declarations, to discover the payment mode so as to meet
all

2.6. Summary of the unit

• The features of withholding taxes
Definition of withholding taxes: Withholding taxes is a deduction of
tax levied at source of income as advance payment on income. Within the
rwandan tax system, certain types of payment are liable to withholding taxes.
Withholding taxes is due to be paid on or before the15th days of the month
following the relevant payment that is subject to withholding taxes.
• Import and Public Tenders.
a) Withholding tax on goods imported for commercial use
An import is the name for the purchases from another’s country. When goods
are imported into Rwanda for commercial use, they are held at customs until
the purchaser collects them. The purchaser of the goods retains (and pays to
the taxes administration) withholding tax of 5% on such purchase.

b) Withholding tax on public tenders

A public tender is a bidding process for goods and services being provided to
public tender.

When a public body requires goods or services, they will usually get several
quotes from different supplies, this is called public tender. The public body will
award the tender to a supplier and pay the quoted fee. Note that the public
body is note obliged to approach more than one supplies all contracts with
public bodies are covered by the same withholding rules.

52 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

The public body will deduct withholding tax from the payment at a rate of 3%
of the value added tax VAT-exclusive value of the contract.

™™ Person exempted from withholding taxes and others payment

 Persons exempted from withholding taxes

The following taxpayers are exempted from withholding taxes:
1. those whose business profit is exempted from taxation;
2. those who have tax clearance certificate issued by the Tax
Administration;
3. those who are newly registered during the concerned annual tax
period.

The Tax Administration may revoke a tax clearance certificate at any time
if the conditions required by the tax administration are not fulfilled.

 Types of payment subject to withholding tax

Payments subject to the withholding tax of fifteen percent (15%) are related
to the following:
Financial interests
Dividends
Royalties;
Service fees
Performance payments

™™ Withholding taxes on gaming activities and Double Taxation

Agreement(DTA)

 Withholding tax on gaming activities.

The fifteen per cent (15%) tax is withheld by a company that carries out
gaming activities on the difference between winnings of the player and
amount invested by the player.

 Double Taxation Agreement (DTA)

Definition of (DTA): Double Taxation Agreement in international taxation
involves taxation which is cross border.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 53

It can arise from individual having taxable income or assets in two countries or a
business operating in two (or more) countries. Due to increased globalization,
the glowing level of business trading international around the globe and
increased personal mobility, international taxation is becoming prevalent

2.7. Additional information for teachers

™™ Quitus Fiscal certificate
A Quitus Fiscal certificate is available, upon request, to taxpayers who have
demonstrated a history of correct tax compliance. The benefit of Quitus Fiscal
is that certified taxpayers are not required to have WHT 3% withheld and paid
on their behalf. The procedure and requirements for applying for a Quitus
Fiscal certificate are listed.

™™ Declaring withholding taxes (with 15% and with 3%)

The declaration process for withholding taxes is similar to other domestic
taxes, see guide to declaration domestic taxes using E-tax.

Firstly, download the withholding annexures from the e-tax website, it is

important to note that each type of withholding tax (including the different
types of income subject to withholding 15%) must complete their own
annexure and declaration separately. The whole declaration process should
be completed for each type of withholding tax before beginning the next
type.

The withholding annexures file has three tabs. Only the’ withholdings’ Tab
needs to be completed, validated and saved for withholding taxes.

™™ Who must pay withholding taxes penalties and fines

Any penalties and fines are the liability of the ‘withholding agent’ where the
withholding agent is defined as the source of taxable income who is required
to declare and pay the withholdings tax.

™™ What if the withholding agent fails to withhold tax?

A withholding agent who fails to withhold tax at the point of transaction, is
still liable to declare and pay the withholding tax, including any penalties
and fines. However, the withholding agent is entitled to recover the principal
amount from the recipient of income.

54 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

2.8. Answers to end unit assessment activities
Q1. 1 and 5 are true
Q2. Payment to a Rwandan registered business that does not hold a tax
clearance certificate.
A and C would be charged at a rate of 15% not 3% and holder of a tax
clearance certificate is exempt from withholding tax on public tender
income.
Q3. C is 10%
Q4. 2 and 3 these would incur rates of 5% and 10% respectively.

Q5.

1. The location of the shareholder.

If resident in Rwanda or elsewhere in the EAC, the standard withholding
tax rate is 5%.
If resident in a country with which Rwanda has a DTA, the rate could be
7.5% (Barbados or Singapore), 10% (Mauritius, South Africa or Jersey) or
15% (Belgium).
If the shareholder is resident anywhere else in the world, the rate would
be 15%.

2. Does the shareholder have a tax identification number (TIN) with the
Rwanda Revenue Authority? If so, no withholding tax is required.

2.9. Additional activities

2.9.1. Remedial activities
Questions:
1. What is the taxpayer?
2. Give any 2 Conditions required for withholding taxes?
3. With percentage tax rate identify three examples of withholding taxes.
Answers
1. Taxpayer is person who pay taxes
2. Two conditions required for withholding taxes are:

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 55

 a) The withholding agent must be Rwandan resident (note however
that they may be a tax-exempt body) or the permanent establishment
of a non-resident company
b) the recipient is either:
–– Not register with the Rwandan tax administration
–– Registered
3. Withholding tax of public tender: Tax rate is 3%
Withholding tax of import: Tax rate is 5%
Withholding tax of interest income: Tax rate is 15%

2.9.2. Consolidation activities

Q.1 NERSON a legal expert resident in Rwanda has been awarded a contract for
law writing services for the Rwandan central government with a value of
Rwf 250,000 plus VAT at 18%. Betty is register with the tax administration
and is up to date in all her tax declarations and record- keeping.

What amount of withholding tax will the Rwandan central government

deduct from this fee?

A RWF 7,500

B RWF 8,850

C RWF 44,250

D RWF 37,500

Q.2 ABC Ltd Company pay a gross dividend of FRW 250,000 to shareholder.
Calculate withholding tax must be deducted by ABC Ltd Company.

Q.3 Differentiate Services fees and royalty income.

Answers:
Q1. Public tenders
A FRW 7,500

Q2. Withholding tax to be deducted by ABC Ltd Company : (FRW 250,000*15%)

= FRW 37,500

56 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q.3.
Services fees is subject to withholding taxes of 15%. Services fees includes
payments of any kind to any person other than an employee, In considerations
for any services of managerial, technical or consultancy nature.

Royalty income is subject to withholding taxes of 15%. Royalty income

include all payments of any kind received for the use or right to use for
example scientific work (T V, Radio.), design…….

2.9.3. Extended activities

Question:

You work for a large company with many Rwandan and overseas shareholders.
The company listed on the Rwandan capital market and has recently declared
a dividend to its shareholders.

List the factors you need to consider when determining the rate of withholding
tax to deduct on the dividends, and how these will impact the withholding
tax rate.
Answer:
a) The location of the shareholder.
If resident in Rwanda or where in the EAC the standard withholding tax rate
is 5%
If resident in a country with which Rwanda has a DTA, the rate could be 7.5%
(Singapore), 10% (Mauritius, South Africa or Jersey) and 15% (Belgium).
If the shareholders are resident anywhere else in the world, the rate would
be 15%.
b) Does the shareholders have a tax identification number (TIN) with Rwandan
Revenues Authority? If so no withholding tax is required

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 57

 TAXES AND FEES OF DECENTRALIZED
Unit 3 ENTITIES

3.1. Key unit competence: To compute taxes and fees collected by

decentralized entities

3.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in senior 4 (unit 1) to the Rwandan tax system, in
senior 5 (unit 1) to the taxation of corporate business profit. So, with this prior
knowledge, skills, attitudes and values it should help them to appreciate the
role of taxes and fees of decentralized entities in the development of local
administration.

3.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones you can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance of
environmental protection and the importance of to compute taxes and fees
collected by decentralized entities promoting other environmentally friendly
businesses e.g. use of renewable energies (solar energy).

Gender education: Emphasis throughout this unit has to be put on how both
males and females have the equal opportunities to understand and to compute
taxes and fees collected by decentralized entities. So that this will encourage
people to take the first step in paying their duties to the government.

58 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Inclusive education: In addition to all having equal opportunities to carry
out business activities, emphasis has to be put on how we all regardless of
our background, economic or social setup have right to develop an ethical
understanding of Rwandan system that do not discriminate. Students need
to compute taxes and fees collected by decentralized entities should not
discriminate but promote inclusiveness of all etc.
Peace and Values: You need to emphasize to learners the need to live in peace
and harmony with others. Students need to appreciate the role to compute
taxes and fees collected by decentralized entities in promoting peace and
patriotism in the community avoiding activities that are illegal e.g. smuggling
and make sure that every trade they plan to have is legal and contributes to
national development goals.
Standardization culture: You need to emphasize to students the need for
standard in a business legal aspect. This will help them to abide by standards
of customs procedures as prospective business legal aspects.

3.4. Guidance on introductory activity

Follow the guidance about the introductory activity:
Students in small groups, pairs or individual read and analyse the case study
and identify the role of the tax administration seen in the picture especially
property owners and business people on December 31st, every year, what
makes the property owners so anxious to know the probable changes on the
rates of plot of land and to business people to be ready in the first month of
the coming year to make payment of trading license.
During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.
Students share their findings, responses or answers to the activity using an
appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.
Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’ book.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 59

You can support student’s answers by referring to possible answers to the
introductory activity below:

Possible answers for introductory activity

Note: These responses may be shared or not with the students. They are
specifically to guide you while harmonizing students’ responses during
presentation.

1. The person standing in the village is tax administration coming to

collect taxes.
2. Taxable activities found in the picture are the following:
–– Plots
–– Buildings
–– Trading activities in the market

3.5. List of lessons/sub-heading

Headings # Lesson title/ Learning Number of
sub-headings objectives periods
3.1 Definition of Introductory activity Arouse the curiosity 1
key terms used of students on the
in decentralized content of unit 3.
taxes and fees 1 Different key Explain the 2
terms used in different key
decentralized terms used in
taxes decentralized taxes
3.2 Sources of 1 Sources of Describe different 2
revenue and revenue and sources of revenue
property of property of and property of
decentralized decentralized decentralized
entities entities entities
3.3 Types of 1 Immovable Calculate 4
Taxes and Fees Property Tax immovable
to be paid to property tax
Decentralized
Entities

60 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 2 Trading Calculate trading 3
License Tax license tax
3 Rental Income Calculate rental 4
Tax income tax
4 Local Compute the local 4
government government fees
fees
3.4 Other 1 Loans, Explain other 2
Sources of Investments, different sources
Revenue for Government of revenue of
Decentralized subsidies decentralized
Entities entities
3.5 End unit assessment 3

Lesson 1: Definition of key terms used in decentralized taxes and fees

a) Learning objective
Explain the different key terms used in decentralized taxes

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

d) Learning activities
Activity 3.1

Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 61

with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question and
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:
Answers to Activity 3.1

Explain to students that the owner of the property is the one liable to pay tax
as is the one registered as owner of an immovable property or a holder of
other rights on the property.

e) Application activities 3.1

Students analyse and discuss about the questions either in groups or in pairs
and come up with possible answers. This activity may be given as a research
question or homework.

Depending on the purpose of the application activity, choose an appropriate

method to assess student’s findings, answers or responses. Depending on
the performance or results, you may decide to give remedial or extended
activities.

62 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answers to application activity 3.1

1.
a) Micro enterprise is a business having less than five hundred
thousand Rwandan francs (FRW 500,000) as net capital investments,
less than three hundred thousand Rwandan francs (FRW 300,000)
as annual turnover and having between one (1) and three (3)
employees; while, Medium enterprise is a business having from
fifteen million Rwandan francs (FRW 15,000,000) to seventy million
Rwandan francs (FRW 70,000,000) as net capital investments, from
twelve million Rwandan francs (FRW 12,000,000) to fifty million
Rwandan francs (FRW 50,000,000) as annual turnover and having
from thirty-one (31) to one hundred (100) employees. The key
difference between them is money invested in capital and number
of employees they have employed.
b) Commercial building is a house for which the competent authority
has authorized the construction for commercial purposes; while,
Industrial building is a house for which the competent authority
has authorized the construction for industrial purposes
2. The decentralized entities are responsible for a range of vital services
for people and businesses in defined areas. Among them are well
known functions such as social care, schools, housing and planning
and waste collection, but also lesser known ones such as licensing,
business support, registrar services and pest control.

Lesson 2: Sources of revenue and property of decentralized entities

a) Learning objective
Describe different sources of revenue and property of decentralized entities

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 63

 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)
In the previous lesson, lesson 1, students explored several key terms used in
decentralized taxes and fees. That will help them to describe different revenue
streams and properties of decentralized entities.

d) Learning activities
Activity 3.2
–– Divide students into small groups and provide clear directions about
the activity
–– Ask them to read the scenario in the student book and answer the
questions asked in the activity
–– Guide students’ discussion and make sure that everyone participates
–– Invites students to share their findings
–– Invite students individually to comment on the general conclusion
drawn from the results
–– Harmonize their results or answers and link the results to the learning
objective. Help them draw conclusions/summaries on when to talk
about revenue streams and property of decentralized entities.
–– Answers or address questions or challenges about the activity. Encourage
them to take notes as they consult their student book.
–– Ask students to complete application activity 3.2 and assess whether
the lesson objectives have been met to assess their competencies.

Answer to Activity 3.2

The revenues collected by RRA on behalf of decentralized entities are

i. Revenues from: Taxes and fees paid in accordance with the
decentralized tax structure
ii. Funds obtained from issuance of certificates and their extension by
decentralized entities;
iii. Profits from investment of decentralized entities and interests from
their own shares and income-generating activities;
iv. Administrative fines;

64 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 v. Loans;
vi. Government subsidies;
vii. Donations and bequests;
viii. Fees from partners;

e) Application activities 3.2

Students can be given an activity to discuss about the questions in groups,
give clear instructions and ensure a balance in the groups. Students are to
give a report of their findings. Monitor the activity to ensure students are on
track and actively participating.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.
Answers to application activity 3.2
Other sources of income for Burera District are as follows:

–– Revenue from fines

–– Revenues from cleaning fees
–– Revenues from property taxes
–– Loans
–– Funds obtained from issuance of certificates and their extension by
decentralized entities;
–– Profits from investment of decentralized entities and interests from their
own shares and income-generating activities.

Lesson 3: Types of Taxes to be paid to Decentralized Entities

a) Learning objective
Use Rwandan tax law to calculate the immovable property tax, trading license
tax, rental income tax and local government fees.

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 65

other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 3.3
–– Individually, invite students to work on the activity 3.3 from the S5
Taxation student’s book;
–– Move around for facilitating students where necessary and give more
clarification on eventual challenges they may face during their work;
–– Invite students to share their results to their neighbours
–– Individually, invite students to share their findings to the whole class
–– As a teacher, harmonize the findings from presentations and use
different probing questions to help students to explore examples and
the content given in the student’s book to enhance skills on taxable
income and taxable trading profits.
–– Invite students individually to comment on the general conclusion from
findings
–– Ask students to do the application activity 1.2 and evaluate whether
lesson objectives were achieved to assess their competences.

Answer to Activity 3.3

Property Tax is paid by the owner of Property, so the Siblings are liable to pay
property tax.

According to Article 8 of Law 75/2018, if immovable property is owned by

more than one (1) co-owner, the co-owners appoint and authorize one of
them or any other person to represent them jointly as a group of taxpayers. If
co-owners of immovable property have not appointed a co-owner or a proxy
to represent them jointly as a group of taxpayers, the tax obligations related
to the immovable property will be settled in accordance with laws regulating

66 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

co-owned property, so the siblings will authorize one of them to represent
them.

e) Application activities 3.3

This activity can be given as a normal individual or group activity, where

students use Rwandan tax law to compute the trading license tax, rental
income tax and local government fees.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.
Answers to Application Activity 3.3
1.
From 1st April to 31st December 2021
From 1st January to 31st December 2022
From 1st January to 31st March 2023.
By 7th April 2023, Tubyine Fun Pub will need to declare and pay Trading
License Tax for April to December 2023.
The deadline for declaring and paying Trading License Tax for 2024 will
be 31st January 2024.
2. Due to the fact that Dukore is only in business for ten out of the twelve
months that year, his Trading License Tax due is: FRW 30,000 x 10 =
12
FRW 25,000
3. Computation of Rental Income and Tax of Mwiza for the Year Ended
31/12/2022
Property One: Workings Amount FRW
Gross income 1,200,000 * 12 14,400,000
Less: Allowable expenses 50% * 14,400,000 (7,200,000)
Less: Interest expenses 17% * 20,000,000 (3,400,000)
Taxable rental income 3,800,000
Property Two:
Gross income 1,200,000 * 12 14,400,000
Less: Allowable expenses 50% * 14,400,000 (7,200,000)
Taxable rental income 7,200,000

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 67

 Total taxable rental income 11,000,000
Tax Liability Rate
0 – 180,000 0% -
180,001 – 1,000,000 20% 164,000
1,000,001 – 11,000,000 3,000,000
Tax Liability 3,164,000
Tax Declaration

Any person who earns an income referred to in Article 52 of Law 75/2018 of

Rwanda tax law must, on or before January 31st each year, file an official tax
declaration as provided for by laws.

4.
Items Amount FRW
Nyabugogo market fees 10,000
Shyorongi market fees 3,000
Total market fees 13,000

The market fees to be paid by Kazungu is FRW 13,000

Lesson 4: Other Sources of Revenue for Decentralized Entities

a) Learning objective
Explain other different sources of revenue of decentralized entities

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

68 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 d) Learning activities
Activity 3.4
–– Organize students into small groups;
–– Invite students to work on the questions for activity 3.4 in small groups.
–– Walk around to help and guide students who are having difficulty with
their assignment.
–– Invite each group to share their answers with another group, and
encourage each another when they have greater difficulty completing
this activity 3.4
–– During a class discussion, ask the group leader to present their findings
to the whole class.
–– As a teacher, harmonize the students’ different responses to Activity 3.4
–– Have students review application activity 3.4 and assess whether the
objectives of the lesson have been met.

Answer to Activity 3.4

Decentralized entities can generate other sources of revenue from loans,

investments or from government subsidies.

e) Application activities 3.4

An activity can be given to students to discuss the questions in groups, giving

clear instructions and maintaining balance in the groups. The students should
report on their results. Monitor the activity to ensure students are on track
and actively participating.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.
Answers to Application Activity 3.4
Every year, the Government transfers to the decentralized entities at least 5%
of the domestic revenue of the previous tax period in order to support the
activities budgeted by them.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 69

Skills lab activity 3

Guidance on the skills lab activity:

In conducting this skills lab activity, you can either arrange for students
accompanied field visit to the nearest office of RRA to meet with Domestic Taxes
Department manager to attend a presentation on collection of decentralized
taxes and fees in Rwanda and challenges faced by tax administration.
i. Build
Given that students visit the RRA office,
–– Remind students on the expected objective for the field visit
–– Help them to be grouped and remember to mix both boys and girls
–– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings
–– Distribute questions for their research
–– Check their understanding of the assignment
–– Remind them that everybody full participation is mandatory.
Instruct students to be in school uniform so as to facilitate the security officers
to differentiate students from usual clients known as taxpayers.
ii. Practice
For the visit to RRA office, a concept note is needed to describe what has been
covered during the class lesson and state what are students and teacher’s
expectations.
iii. Present
During the group presentation, the teacher must assess whether the student
participation in the skills lab activity was effective by:
–– Selecting randomly anyone in all groups to present the report on behalf
of team members.
–– Allow students to ask question to their fellows.
–– All team members being presenting are expected to contribute to the
plenary by answering some questions that the presenter is not covering
as well as expected.

70 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 iv. Conclusion
The teacher emphasizes on the objective of the research reminding students
that they were expected to discover and understand all the types of taxes
and fees collected by the decentralized entities. After this discovery, students
should be able to file the return, to apply all the payment facilities and comply
with all deadlines per tax as indicated in the tax law.

3.6. Summary of the unit

1. Definition of key terms used in decentralized taxes and fees
The Rwandan tax structure is categorised into two that is, the decentralised
tax structure and the centralised tax structure. The centralised tax structure is
the one that is collected by the central government whereas the decentralised
tax structure is the one that is collected by the local administration.

2. Sources of revenue and propety of decentralized entities

The revenue and property of decentralized entities come from the following
sources:

Taxes and fees paid in accordance with the decentralized tax structure, funds
obtained from issuance of certificates and their extension by decentralized
entities; profits from investment of decentralized entities and interests from
their own shares and income-generating activities; administrative fines; loans;
Government subsidies; donations and bequests; etc,…

3. Types of taxes to be paid to Decentralized Entities

Taxes to be paid to decentralized entities include the following:
i. Immovable property tax;
ii. Trading licence tax;
iii. Rental income tax.
4. Other sources of revenue for decentralized entities
Decentralized entities can generate other sources of revenue from loans,
investments or from government subsidies.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 71

3.7. Additional information for teachers
Additional Information
All revenue projections of decentralized entities are included in their annual
budget.
The owner who lives abroad can have a proxy in Rwanda. Such a proxy must
fulfil the tax liability that this Law requires from the owner. Misrepresentation
is considered as if it is done by the owner.
Taxpayers of immovable property tax
The immovable property tax is assessed and paid by the owner, the
usufructuary or any other person considered to be the owner.
Person liable for the trading license tax
The trading license tax is paid by any person for each place in which he/she
opens a business activity within a District.
Rental income tax base
The rental income tax is charged on income generated by an individual or any
other person who is not subject to corporate tax from a rented immovable
property located in Rwanda.
Fees levied by decentralized entities
Fees to be paid to decentralized entities are all fees entitled to them by the
Law No 75/2018 of 07/09/2018 and other laws.

3.8. End unit assessment (Answers)

Q1.
Particular Market value Working Tax
Residential building 200,000,000 Exempted
occupied by the
owner and his
family
Apartment with 450,000,000 0.25% * 450,000,000 1,125,000
two floors
Apartment with 800,000,000 0.25% x 50% * 800,000,000 1,000,000
five floors

72 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Commercial 500,000,000 0.2% * 500,000,000 1,000,000
building
Total tax 3,125,000

Q2.
6,000,000,000
Turnover of each branch = Average from the total turnover= =
15
FRW 400,000,000
Decentralized District Trading license Tariff (FRW) Trading tax payable
tax base (FRW) (FRW)
Agaciro Bank 6,000,000,000 250,000 250,000
Nyarugenge District 400,000,000 250,000 250,000 * 6 = 1,500,000
Kicukiro District 400,000,000 250,000 250,000 * 5 = 1,250,000
Gasabo district 400,000,000 250,000 250,000 * 4 = 1,000,000
Total trading license tax 4,000,000

Q3.
Computation of Rental income and Tax of Uwineza for the Year Ended
31/12/2015
Items Workings Amount FRW Amount FRW
Property One:
Gross income 3,500,000 * 12 42,000,000
Less allowable expenses 50% * 42,000,000 21,000,000
Less interest 50,000,000 * 15% 7,500,000 (28,500,000)
Taxable income 13,500,000
Property Two:
Gross income 3,500,000 * 8 28,000,000
Less allowable expenses 50% * 28,000,000 14,000,000
Taxable income 14,000,000
Total taxable income 27,500,000
Tax liability Rate Tax
0 – 180,000 0% 0
180,001 – 1,000,000 20% 164,000
1,000,001 – 27,500,000 30% 7,950,000
Tax liability 8,114,000

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 73

3.9. Additional activities (Questions and Answers)
3.9.1. Remedial activities
Q1. Explain the term trade license tax and who is liable to pay the tax.
Answer:

Trading license tax, is a tax levied on any person or business conducting profit-
oriented activities.

Any person or business conducting profit-oriented activities in Rwanda is required

to register and make payment of the trading license tax.

Q2. Rugwiza rents a house to tenants in the year 2019. He receives gross rental
income of FRW 4,800,000 during the tax year. He has a bank loan for that
house, and paid FRW 400,000 interest in the year 2019. Compute his taxable
income and tax liability.
Answer:
Particulars Workings Amount FRW
Gross income 4,800,000 4,800,000
Less allowable expenses 50% * 4,800,000 (2,400,000)
Less interest expenses 400,000 (400,000)
Taxable rental income 2,000,000
Tax liability
0 -180,000 0% 0
180,001 – 1,000,000 20% 164,000
1,000,000 30% 300,000
Tax Liability 464,000

3.9.2. Consolidation activities

Munyana has a supermarket business. She has a warehouse where goods are
kept, two shops where goods are sold and a delivery truck that consumers
can pay an additional fee to have the goods delivered.

Required: Explain if she will pay the trading license tax for all the premises or
some of them.

74 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answer:
Munyana does not have to declare and pay Trading License Tax for the warehouse,
but is required to declare and pay Trading License Tax for each of the two shops
and the delivery truck.

3.9.3. Extended activities

Q1.
Iraguha Christian, a resident in Rwanda, owns rental apartment in Kagugu,
Kigali. He completed the construction of the apartments in December, 2021
and the first occupants entered the apartments in January 2022. The total
cost of construction of the apartments was 1.2 billion. Part of the construction
costs was funded by mortgage loan from Bank of Kigali of FRW 500,000,000
repayable in 15 years at an interest of 15% per annum. There is sufficient
documentation to support the interest paid during the year. The rental
income earned for the year ended 31st December 2022 was FRW 185,250,000.
The expenses incurred during the year were:

FRW
Cleaning and garbage disposal 8,000,000
Security services 52,000,000
Other general maintenance expenses 70,000,000
Total 130,000,000

Required

Compute the taxable rental income and tax payable by Iraguha Christian for
the year ended 31st December, 2022 and state the due date of payment.
Answer
Items Workings Amount FRW Amount FRW
Gross income 185,250,000 185,250,000
Less allowable expenses 50% * 185,250,000 92,625,000
Less interest expenses 500,000,000 * 15% 75,000,000 (167,625,000)
Total taxable income 17,625,000
Tax Payable Rate Tax

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 75

 0 -180,000 0% 0
180,001 – 1,000,000 20% 164,000
1,000,000 – 17,625,000 30% 4,987,500
Tax payable 5,151,500

Q2.
In 2021, Mrs. Benie has an obligation to pay the rental income as required by Law
N° 75/2018 of 07/09/2018 defining the revenue and property of decentralized
entities after receiving the rental income from 4 rented immovable property
as their contracts show below:
i. Alexis’s contract starts on 30th April 2021 for a payment of FRW
450,000 /Month
ii. Gad’s contract starts in September 2021 for a payment of FRW
360,000 /Month
iii. Safia’s contract starts in January 2021 for a payment of FRW 255,000
/Month
iv. Emmanuel’s contract starts in June 2021 for a payment of FRW
275,000 /Month

N.B. In 2020, Benie contracted a loan from Umwarimu Sacco for a period of
3 years, to make some improvements in these 4 assets rented. The monthly
interest paid for the loan received is FRW 140,635.

Required:
a) Compute the total rental income received by Mrs. U. Benie for FY
2021.
b) Compute the taxable income.
c) Compute the tax due (rental income tax) for the tax department for
the year 2021.

76 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answer:
Items Workings Amount FRW Amount FRW
(Alexis = 8 months) 8 x 450,000 3,600,000
(Gad = 4 months) 4 x 360,000 1,440,000
(Safia = 12 months) 12 x 255,000 3,060,000
(Emmanuel = 7 months) 7 x 275,000 1,925,000
Total rental income 10,025,000
Less allowable expenses 50% x 10,025,000 5,012,500
Less interest expenses 140,635 x 12 1,687,620 (6,700,120)
Total taxable income 3,324,880
Tax Payable Rate Tax
0 -180,000 0% 0
180,001 – 1,000,000 20% 164,000
1,000,000 – 3,324,880 30% 697,464
Tax due 861,464

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 77

Unit 4 CUSTOMS AND CONSUMPTION TAX

4.1. Key unit competence: Compute the Customs and consumption

taxes

4.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in senior 2 (unit 5) to the Taxes in Rwanda, in senior
3 (unit 5) to the role of Rwandan customs procedures, taxation s4 accounting
(Unit 1) to introduction to Rwanda tax system. So, with this prior knowledge,
skills, attitudes and values it should help them to appreciate the customs and
consumption tax when importing or exporting.

4.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones. You can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance of
environmental protection and the importance of customs procedures and
consumption in reducing harmful imports such as polythene paper while
promoting other environmentally friendly businesses e.g. use of renewable
energies (solar energy).

Gender education: Emphasis throughout this unit has to be put on how both
males and females have the equal opportunities to understand and explain the
process of customs and consumption procedures. So that this will encourage
people to take the first step in paying their duties to the government.

78 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Inclusive education: In addition to all having equal opportunities to carry
out business activities, emphasis has to be put on how we all regardless of
our background, economic or social setup have right to develop an ethical
understanding of customs ,consumption tax and that do not discriminate.
Students need to understand that the customs procedures should not
discriminate but promote inclusiveness of all etc.

Peace and Values: You need to emphasize to learners the need to live in
peace and harmony with others. Students need to appreciate the role of
customs procedures and consumption in promoting peace and patriotism in
the community avoiding activities that are illegal e.g. smuggling and make
sure that every trade they plan to have is legal and contributes to national
development goals.

Standardization culture: You need to emphasize to students the need for

standard in a business legal aspect. This will help them to abide by standards of
customs procedures and consumption as prospective business legal aspects.

4.4. Guidance on introductory activity

Follow the guidance about the introductory activity:

Students in small groups, pairs or individual read and analyse the scenario
and give the things are you seeing and what do you think Mr. KAMARI will
present to border for his

During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.

Students share their findings, responses or answers to the activity using an

appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.

Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’ book.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 79

You can support student’s answers by referring to possible answers to the
introductory activity below:

Possible answers for introductory activity (case study)

Note: These responses may be shared or not with the students. They are
specifically to guide you while harmonizing students’ responses during
presentation.

1.
a. Customs duties
b. Import
c. Export

2.
a. Certificate of origin
b. CIF computation documents

4.5. List of lessons/sub-heading

Headings # Lesson title/ Learning objectives Number
sub-headings of periods
4.1 EAC origin, Introductory activity Arouse the curiosity 1
objectives of students on the
content of unit 5.
1 EAC origin Discuss general 2
overview of East
Africa Community
Customs Management
Act (EACCMA)
2 Objectives of Identify the objectives 1
EAC customs of EAC customs union
union
4.2 Description 1 Definition of Identify the customs 1
of customs customs duties and the person who
duties and the person can import or export
who can import
or export

80 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 2 Types of Identify on types of 2
Customs duties Customs duties
3 Valuation Identify the valuation 1
of imported of imported and
and exported exported goods
goods
4 The documents Identify the 1
required when documents required
importing or when importing or
exporting exporting
4.3 The taxes 1 Import Duty Discuss Import Duty 2
that are 2 Withholding Identify withholding 1
specifically Tax of 5% tax of 5% and
paid on And explain infrastructure
imports Infrastructure development levy
Development
Levy
3 Strategic Discuss the Strategic 1
Reserves Levy Reserves Levy and
and African African Union Levy
Union Levy
4 Motor Vehicle Explain Motor Vehicle 2
Registration Registration Fees
Fees (MVF) and (MVF) and Road Toll
Road Toll
5 Fuel Levy and Identify Fuel Levy and 1
Export Duty on Export Duty on Raw
Raw Hides and Hides and Skins
Skins
6 Computer Identify Computer 1
Processing Processing Fee,
Fee, Quality Quality Inspection
Inspection Fees (QIF) and
Fees (QIF) and Warehousing Fees
Warehousing
Fees

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 81

 1 Definition of Explain the excise 1
excise duty duty and the person
and the person required to register
required to for excise duty
register for
excise duty
2 The obligations Explain the 2
of excise obligations of excise
registered registered taxpayers
taxpayers and valuation
and valuation methods of excise
4.4 The methods of duty
excise duty excise duty
(consumption 3 The taxable Identify the taxable 3
tax) products, rates products, rates of
of excise duty excise duty and
and Excise Compute Excise duty
computation
4 The Explain the 1
exemptions for exemptions for excise
excise duty duty
5 The deadline to Identify the deadline 1
declare and pay to declare and pay
excise duty excise duty
6 Excise duty Identify Excise duty 2
penalties and penalties and fines
fines
4.5 End unit assessment 3

82 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Lesson 1: EAC origin, objectives
a) Learning objective
• Discuss general overview of East Africa Community Customs
Management Act (EACCMA)
• Identify the objectives of EAC customs union
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, official gazette, RRA Tax Guide (2019),
Protocol on the establishment of the East African Customs Union of 2004, text
books resourceful person and any other trustworthy and reliable resources to
enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

d) Learning activities
Activity 4.1
Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question-and-
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 83

work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:
Answers to Activity 4.1
–– Elaborating EAC Management Act
–– Economic integration
–– Common external tariff
–– Free trade area
–– Trade facilitation
–– Automation
e) Application activities 4.1
Students analyse and discuss about the questions either in groups or in pairs
and come up with possible answers. This activity may be given as a research
question or homework.

Depending on the purpose of the application activity, choose an appropriate

method to assess student’s findings, answers or responses. Depending on
the performance or results, you may decide to give remedial or extension
activities.
Answers to application activity 4.1
Q1.
a) Rules of origin: those are criteria needed to determine the national
source of product. It can be defined also as the law’s regulation and
administrative determination of the country of origin
b) There are two types of rules of origin:
–– Preferential rules of origin
–– Non –preferential rules of origin

84 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q2.
a) True
b) True
c) False
Q3.
• It helps in the proper classification of goods
• Help to collect import and other duties.
• It facilitates the determination of the correct values for the goods
• It helps in the collection of accurate trade statistics
Q4.
Mineral products extracted from the soil or seabed of the member state
–– Vegetable product harvested within member state
–– Products obtained from live animals within member state
–– Live animals born and raised within member state
–– Products obtained from hunting or fishing conducted within member
states
–– Products from the sea, lakes, rivers within member states
–– Products manufactured in a factory of a member state
–– Scrap and waste resulting from manufacturing operations within a
member state
–– Materials containing no element imported from outside partner states
which are of under-mined origin.

Lesson 2: Description of customs duties

a) Learning objective
• Identify the customs and the person who can import or export
• Identify on types of Customs duties
• Identify the valuation of imported and exported goods
• Identify the documents required when importing or exporting

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 85

 b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, official gazette, RRA Tax Guide (2019),
Protocol on the establishment of the East African Customs Union of 2004, text
books, resourceful person and any other trustworthy and reliable resources to
enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
In previous lesson, lesson 1 Students studied for EAC origin, objectives, That
will help identify the customs and the person who can import or export,
identify on types of customs duties, identify the valuation of imported and
exported goods and identify the documents required when importing or
exporting leant in this lesson.

d) Learning activities
Activity 4.2
Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question-and-
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be

86 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:
Answer to Activity 4.2

Q1. Customs duties are defined as all taxes, duties, levies and fees
that are required to be paid to Revenue Authority on imported or
exported goods.
Q2. A registered investor investing in products used in export processing
zones shall be exempted from Customs taxes and duties according
to the provisions of Customs rules and regulations of the East African
Community.
Application activities 4.2

Students can be given an activity to discuss about the questions in groups,

give clear instructions and ensure a balance in the groups. Students are to
give a report of their findings. Monitor the activity to ensure students are on
track and actively participating.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.
Answers to application activity 4.2

Q1.
–– Value Added Tax (VAT)
–– Excise Duty
–– Import Duty
–– Withholding Tax of 5% (WHT 5%)
–– Infrastructure Development Levy (IDL)
–– Strategic Reserves Levy (SRL)
–– African Union Levy (AUL)
–– Export Duty on Raw Hides and Skins
–– Computer Processing Fee
–– Quality Inspection Fee (QIF)

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 87

Q2. The ReSW is an online portal aimed at facilitating trade by ensuring all trade
related information required by government institutions is submitted
only once. This reduces the compliance burden and time taken when
importing or exporting goods. The ReSW also increases transparency by
clearly showing when information was submitted, changed or approved,
and by whom.
The ReSW is used by Clearing Agents, Customs Officials and other
government institutions as required. Clearing Agents use the ReSW on
behalf of taxpayers during the importing and exporting process.

Q3. Government imposes tax on importation to control what comes in the

country and to reduce the difference in balance of payment by protecting
local industries
Q4.
a) XYZ enterprise sell to the local market and regional market because it
located in East African community where we have EAC, etc…
b) The money goes to the local businesses, which helps local market to
grow.
• It creates employment because local businesses employ people
from the local community
• The product does not need to be transported for long distance and
pollution is therefore reduced Food grown locally is fresher than
food that has been transported from somewhere else.
c) The challenges that KAMANZI needs to overcome to sell fresh flowers
to other countries are: Analyze the competitors in regional market.
Improve the quality of products

88 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Lesson 3: The taxes that are specifically paid on imports
a) Learning objective
• Discuss Import Duty
• Identify withholding tax of 5% and explain infrastructure
development levy Identify the taxable
• Discuss the Strategic Reserves Levy and African Union Levy
• Explain Motor Vehicle Registration Fees (MVF) and Road Toll
• Identify Fuel Levy and Export Duty on Raw Hides and Skins
• Identify Computer Processing Fee, Quality Inspection Fees (QIF)
and Warehousing Fees
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, official gazette, RRA Tax Guide (2019),
Protocol on the establishment of the East African Customs Union of 2004, text
books, resourceful person and any other trustworthy and reliable resources to
enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 4.3
–– Put students in small groups and give clear instruction about the
activity
–– Ask them to show the pictures in student book and answer the
questions provided in the activity
–– Guide students’ discussion and make sure that everyone is
participating
–– Invites students to share their findings

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 89

Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when to compute the
customs and consumption taxes to Discuss import duty, identify withholding
tax of 5% and explain infrastructure development levy identify the taxable,
discuss the strategic reserves levy and African union levy, explain motor
vehicle registration Fees (MVF) and road toll ,identify fuel levy and export
duty on raw hides and skins and identify computer Processing fee ,quality
inspection fees (QIF) and warehousing Fees

Answers or address any questions or challenges about the activity. Guide

them to make notes in referring in their students’ book.
Answer to Activity 4.3
CET rates are:
–– Capital goods and raw materials = 0%
–– Intermediate goods = 10%
–– Finished goods = 25%
–– Sensitive Goods = Varying rate
e) Application activities 4.3
This activity can be given as a normal individual or group activity, where
students to compute the customs and consumption taxes to Discuss import
duty, identify withholding tax of 5% and explain infrastructure development
levy identify the taxable, discuss the strategic reserves levy and African union
levy, explain motor vehicle registration Fees (MVF) and road toll ,identify fuel
levy and export duty on raw hides and skins and identify computer Processing
fee ,quality inspection fees (QIF) and warehousing Fees

Monitor the activity to ensure students are on track and actively participating.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.
Answers to Application Activity 4.3
Q1, CIF = (USD 30,000 + USD 400 + USD 150) * 850 = FRW 25,967,500.
Q2. C.I.F = 6,000 + 1,000 + 300 = 7,300 pounds * FRW 1,400 = FRW 10,220,000
Import duty = 7,300 * 0.25 = 1,825 pounds * FRW 1,400 = FRW 2,555,000

90 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Handling fee 500kg * 10 = FRW 5,000
Total FRW 12,780,000
VAT = 12,780,000 x 18% = FRW 2,300,400

Lesson 4: The excise duty (consumption tax)

a) Learning objective
• Explain the excise duty and the person required to register for excise
duty
• Explain the obligations of excise registered taxpayers and valuation
methods of excise duty
• Identify the taxable products, rates of excise duty and Compute Excise
duty
• Explain the exemptions for excise duty
• Identify the deadline to declare and pay excise duty
• Identify Excise duty penalties and fines
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, official gazette, RRA Tax Guide (2019),
Protocol on the establishment of the East African Customs Union of 2004, text
books, resourceful person and any other trustworthy and reliable resources to
enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 4.4
–– Put students in small groups and give clear instruction about the activity
–– Ask them to read the scenario in student book and answer the questions
provided in the activity

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 91

 –– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
–– Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary for showing type of tax
YXZ should pay and give the rate of excise duty for this product. Answers
or address any questions or challenges about the activity. Guide them
to make notes in referring in their students’ book.
Answer to Activity 4.4
a. VAT, excise duty etc….
b. The rate of excise duty for wine produced from local input is 30%
applied on the turnover and the rate of VAT is 18% applied on
turnover to.
e) Application activities 4.4
This activity can be given as a normal individual activity, where students
Explain the excise duty and the person required to register for excise duty,
explain the obligations of excise registered taxpayers and valuation methods
of excise duty, identify the taxable products, rates of excise duty and Compute
Excise duty

Monitor the activity to ensure students are on track and actively participating.

You make correction of papes Assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work.

Answers to Application Activity 4.4

Q1.
Amount Amahoro must pay ad valorem Excise Duty =FRW 4,000,000 * 5% =
FRW 200,000.
Q2.
The rates of excise duties can be charged on a ‘specific basis’, ‘ad valorem basis’
or ‘mixed’ basis
• A specific Excise Duty charges a certain amount of tax per unit of the
product.
• ad valorem Excise Duty charges a percentage of the taxable value of
the produc

92 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • A mixed Excise Duty charges both a certain amount of tax per unit and
as a percentage of the taxable value of the product
Q3.
C.I.F = 6,000 + 1,000 + 300 = 7,300 pounds * FRW1,400 = FRW10,220,000
Import duty = 7,300 * 0.25 = 1,825 pounds * FRW1,400= FRW2,555,000
Handling fee = 500kg * 10 = FRW5,000
Total value= 10,220,000 + 2,555,000 + 5,000 = FRW12,780,000
VAT = 12,789,000 * 18% =FRW 2,300,400
Skills lab 4
Guidance on the skills lab activity. In conducting this skills lab activity, you
can either invite a resource person (RRA for Customs officer) for students to
interview him/her where needed.

i) Build
Given that students listen resource person (RRA for Customs officer)
–– Remind students on the expected objective for the class attendance
–– Help them to be grouped and remember to mix both boys and girls
–– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings
–– Practice
–– Guide students on listening resource person
–– Ensure that all are listening
–– Respond to any questions for clarification and support accordingly
ii) Present
–– Choose randomly any two teams to present their findings
–– Allow students to ask question to resource person or their follows
iii) Conclusion
The teacher emphasizes on the objective of the visit reminding students that
they have to follow formula used to compute import and consumption tax
accordingly.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 93

The following are key areas for reference:
–– EAC origin, objectives
–– Description of customs duties
–– The taxes that are specifically paid on imports
–– The excise duty (consumption tax)

4.6. Summary of the unit

™™ EAC customs union origin
1. Meaning of the East African Community Customs Union
a. The East African Community (EAC) Customs Union
Meaning of customs union

The Customs Union is the first Regional Integration milestone and critical
foundation of the East African Community (EAC), which has been in force
since 2005, as defined in Article 75 of the Treaty for the Establishment of the
East African Community.

The East African Community (EAC) Customs Union is formed of Kenya, Tanzania,
Uganda, Burundi, Rwanda, Democratic Republic of Congo and South Sudan
b. Trade related aspects
• Rules of Origin
• National treatment
• Anti-dumping measures
• Subsidies
• Countervailing measures
• Safeguard measures
• Restriction and prohibitions to trade
• Re-exportation of goods
• East African Community Committee on Trade Remedies
2. The main features of EAC Customs union
• A shared set of import duties applied on goods from countries outside
the EAC. This is referred to as the common External Tariff (CET)
• Zero rate of import duty, and no quotas, applied on goods from
countries within the EAC with valid certificate of origin

94 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • Shared procedures, safety measures, valuation methods, trade policy
and terminology governed by the EAC Customs Management Act
(CMA).
™™ Description of customs duties
Definition of Customs duties and the person who can import or export
3. Definition of Customs duties
Customs duties are defined as all taxes, duties, levies and fees that are required
to be paid to Revenue Authority like Rwanda Revenue Authority (RRA) in
Rwanda on imported or exported goods.

™™ Meaning of importing and exporting

• Importing is when goods are brought into Rwanda from an external
country.
• Exporting is when goods are taken from Rwanda into an external
country.
The person who can import or export: any taxpayer may import or export
goods.
Types of Customs duties:
1. Taxes paid on imports that are also paid on domestic goods
2. Taxes that are specifically paid on imports
3. Taxes that are specifically paid on exports
4. Small fees on imports and exports
™™ Valuation of imported and exported goods
Imports are valued as Cost, Insurance and Freight (CIF) while exports are
released free on board (FOB)

™™ The documents required when importing or exporting

The importing or exporting taxpayer must provide the Clearing Agent with
valid documents proving the value and authenticity of their consignment.
A. The mandatory documents that taxpayers importing goods
originating from within the EAC must provide are:
1. Commercial Invoice or equivalent document

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 95

 2. Packing List
B. There are two additional mandatory documents that taxpayers
importing goods originating from outside the EAC must provide to
RRA:
1. Freight Invoice
2. Bill of Lading / Airway Bill
C. Rates in force

The different import duty rates also allow for certain types of goods to be
prioritized. In general, CET rates are:
–– Capital goods and raw materials = 0%
–– Intermediate goods = 10%
–– Finished goods = 25%
–– Sensitive Goods = Varying rate
™™ The excise duty (consumption tax)
Definition of excise duty and the person required to register for excise
duty

1. Definition of excise duty

Excise duty is a tax applied to specific products.
2. The person required to register for excise duty
Any manufacturer of a product that is subject to Excise Duty is required to
register for excise purposes, to declare it and pay for it.

™™ The obligations of excise registered taxpayers

–– Submit an excise duty declaration and pay tax due within 5 days after
the end of the tax period.
–– Keep a register of raw materials to be used in manufacturing of taxable
products.
–– Notify RRA of any changes to business premises.
–– Notify RRA, within ten (10) days, of any interruption to manufacturing
activities
–– Attach appropriate products with a tax stamp

96 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 ™™ Compute Excise duty
The excise duty to be paid on a specific basis is calculated by an amount of tax
per unit of the product. The excise duty to be paid on an ad valorem basis is
calculated as follows:

Excise duty = (CIF + Import Duty + HF) * Excise Rate

™™ The deadline to declare excise duty

For the purposes of Excise Duty declaration, each month is divided into three
tax periods:
–– Tax Period 1 – From 1st to 10th of each month
–– Tax Period 2 – From 11th 20th of each month
–– Tax Period 3 – From 21st to the end of each month
Excise Duty must be declared and paid within five days of the end of each tax
period. This means it must be declared and paid by the 15th, 25th of that month
and 5th of the following month.
Meaning of tax stamps
A tax stamp is a sign affixed on a product subject to Excise Duty to show
retailers and consumers that tax has been paid.

4.7. Additional information for teachers

Additional Information
• Customs administration involves the management of imports and
exports.
Objectives of the Customs Services Department:
The primary function of Customs Services Department is to assess, collect
and account for import duties and taxes due on imports. Apart from its fiscal
responsibilities, Customs Services department is responsible for the following:
i. Enforcement of Customs legislation and other relevant laws;
ii. Facilitation of legitimate trade;
iii. Protection of society from illegal entry and exit of prohibited goods;
iv. Compilation of trade statistics for economic planning;
v. Take all actions necessary to identify and combat evasion of duties

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 97

 and to combat fraud in its many forms;
vi. Ensure efficiency and effectiveness of the Customs Services
department through enhanced management controls, training and
increased accountability.
Import Procedures
In order to facilitate trade, RRA Customs Services Department adopted some
special regimes. These include, Direct Delivery, Clearance on Truck, and Quick
Release Regime offloads and Re-load of goods.

Quick Release (Q.R): Quick release can be classified into two that is; quick
release with deposit and quick release without a deposit.
Quick Release with Deposit
This is where goods can be granted quick release after payment of the deposit,
such goods include:
• Perishable goods
• Factory machinery spare parts or other factory material that may stop
the functioning of the factory in case of shortage
• Goods with doubtable origin in case investigations are being conducted
on the certificate of origin
• Fragile goods that can be damaged when offloaded e.g. glasses
• Goods that are not offloaded in Kigali due to Contracts between the
importer and the transporter e.g. Malt for BRALIRWA offloaded at
GISENYI.
Quick Release without Deposit
This is where the goods are granted Q.R special regime without payment of
the deposit. These goods include the following:
• Goods exempted from payment of duties and taxes
• Goods that belong to the Government of Rwanda
• Bank coins and notes
Clearance of Goods on Truck (“D.S.C”)
Goods, which can be granted this regime, fall into:
i. Identical goods that can be easily identified and verified when
loaded on the trucks e.g. Sugar and Rice.

98 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 ii. Goods that are not allowed in the Public Warehouse due to their
nature e.g. Cement and Salt.
iii. Heavy and bulky items that can be easily identified and examined
when loaded on the trucks e.g. Machines and rolls for making iron
sheets
Trade Liberalisation
Internal Tariff
1. As provided in Article 11 of the Protocol, the Partner States eliminate all
internal tariffs and other charges of equivalent effect on trade among
them, in accordance with the provisions of Article 14 of the Protocol.
2. The Council may, at any time, decide that any tariff rate should be
reduced more rapidly or eliminated earlier than is provided for in
accordance with paragraph 1 of Article 11.
Common External Tariff
1. The Partner States hereby establish a three-band common external
tariff with a minimum rate of 0 per centum, a middle rate of 10 per
centum and a maximum rate of 25 per centum in respect of all products
imported into the Community.
2. The Partner States hereby undertake to review the maximum rate of
the common external tariff after a period of five years from the coming
into force of the Customs Union.
3. The Council may review the common external tariff structure and
approve measures designed to remedy any adverse effects which any
of the Partner States may experience by reason of the implementation
of this part of the Protocol or, in exceptional circumstances, to safeguard
Community interests.
Exportation or importation by post office and other recognised agencies
Importation and Exportation by Post, the Commissioner of RRA may
waive entries for goods imported by post:
1) Where goods are imported in postal articles, the Commissioner may
in his or her discretion, accept the Customs declaration on the form
provided by the postal administration in the country of origin, for
the purpose of assessing the duty on the goods, in lieu of the entry

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 99

 required under the provisions of the customs laws.
2) In the case of goods exported by post, any form or label affixed to
the parcel on which a description of the contents and their value is
declared shall be deemed to be the entry required under the Act.
Customs Declaration on Postal Articles
1) A Customs declaration made by a sender of goods imported by parcel
post should be accompanied, or be securely attached to each parcel
or to one of the parcels where the goods are packed in more than one
parcel.
2) The declaration should give an accurate description of the quantity or
weight, the country of origin and value of the contents of the parcel or
consignment.
3) Where the parcel contains goods of a commercial nature, an invoice or
a statement showing full particulars of the goods should be enclosed
in the parcel; and where the goods are enclosed in two or more parcels,
an invoice or a statement showing full particulars of the goods should
be enclosed in one of the parcels, which should be clearly marked
“invoice or statement enclosed”.
4) Where the invoice or statement cannot be conveniently enclosed
inside the parcel, it should be securely attached to it.
Production of Postal Articles
1) All postal articles should, where the Commissioner so requires,
be produced by an officer of the post office to a proper officer for
examination, either at the port of arrival in, or departure from the
Community, as the case may be, or at any other place in the Community
as the Commissioner may direct.
2) For the purpose of production of postal, the officer of the post office
should be deemed to be the agent of the importer or exporter.

4.8. End unit assessment (answers)

Q1.
a. Rules of origin: are the criteria used to establish and authenticate
the nationality of a product. They are used to determine whether
imported products will receive preferential treatment or not
b. Certificate of origin: is a document used to establish the
authenticity of the originating country of items being shipped
(imported/exported)

100 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c. Country of origin: the country where the product was manufactured
or last underwent a substantial change or modification.
d. Risk management: refers to the systematic application of
management procedures and practices which provide customs with
the necessary information to address movements or consignments
that present a risk.
e. Customs offence: Means any breach or attempted breach of
customs laws.
f. Import duties: Means any customs duties and other charges of
equivalent effect levied on imported goods;

Q2. CIF (Cost, Insurance and Freight) = 50,000 USD x FRW 880 = FRW 44,000,000
Import duty = 44,000,000 x 25% = 11,000,000
Excise tax = (44,000,000 + 11,000,000) * 70% = 38,500,000
Q3. The excise tax on Cigarette is calculated on the retail price.
Retail value 2,000,000 packets x FRW 1000 = FRW 2,000,000,000
Excise tax =FRW 2,000,000,000 x 36% + (2,000,000 packets x FRW 130) =
FRW 980,000,000
Q4.
–– COMESA certificate of origin (goods for COMESA market)
–– EAC certificate origin (goods for EAC market)
–– Simplified certificate of origin
–– EURO certificate of origin (goods for European)
Q5.
–– Preferential trade area
–– Free trade area
–– Customs union
–– Common market
–– Economic monetary union
–– Political federation
Q6.
Customs union occurs when a group of countries agree to eliminate tariffs
between themselves and set a common external tariff on import from the

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 101

rest of the word, while a common market establishes free trade in goods and
service, set common external tariffs among members and also allows for the
free mobility of capital and labor across countries.

Q7.
-- It helps to solve trade disputes between member states in terms of trade
policy
-- It facilitates the determination of correct value of goods
-- They are used for compiling the economic statistics
-- They are used to determine tariff treatment (preferential)development
issues
-- Rules of origin are uncontroversial and mental tools for implementing
discriminatory trade policies
Q8. Proposed answer
a) Import taxes
Rwanda is a member of the East African Community (EAC) and therefore the
country’s customs tax regime is governed by the East African Community
Customs Management Act (“EACCMA”) and the Common External Tariff (CET).
Generally, the taxes applicable on importation of goods are:
i. Import duty ranging from 0% to 25%;
ii. Value added tax (VAT) of 18%;
iii. Consumption tax/Excise duty ranging from 5% to 150%;
iv. Withholding tax (WHT) of 5%;
v. Infrastructure Development levy (IDL) of 1.5%;
vi. Quality Inspection Fees (QIF) of 0.2%
vii.African Union fees of 0.2%
b) Computation of import taxes in computing import taxes, the
following order is adopted by the customs department:
• Import duty is levied on the CIF value
• Consumption tax is levied on the CIF value + import duty
• VAT is levied on CIF value + import duty + consumption tax
• WHT is levied on CIF value
• IDL is levied on CIF value

102 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • QIF is levied on CIF value
• AU fess is levied on CIF value
Below is computation of the import taxes applicable on imported goods with
CIF value equivalent to FRW 100,000. I have assumed a 25% import duty and
5% consumption tax is applicable on the imported goods.

Details Duty/Tax calculation FRW

Import duty (100,000 * 25%) 25,000
Consumption tax (100,000 + 25,000) * 5% 6,250
VAT (100,000 + 25,000 + 6,250) * 18% 23,625
WHT (100,000 * 5%) 5,000
IDL (100,000 * 1.5%) 1,500
QIF (100,000 * 0.2%) 200
AU Levy (100,000 * 0.2%) 200
Total tax on goods 61,775
imported

c) The main features of the East African Customs Union include the
following:
According to the EAC Customs Union Protocol and its annexures, Common
Customs Law (and regulations) and the Treaty, the main features of the EAC
Customs Union are:
i) A common set of import duty rates applied on goods from third
countries (Common External Tariff, CET).
ii) Duty-free and quota-free movement of tradable goods within the
customs territories.
iii) Common safety measures for regulating the importation of goods
from third parties e.g., food standards.
iv) A common set of customs rules and procedures including
documentation.
v) A common coding and description of tradable goods (Common Tariff
Nomenclature, CTN).
vi) A common valuation method for tradable goods for tax (duty)
purposes (Common Valuation system).

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 103

 vii) A structure for collective administration of the Customs Union.
viii) A common trade policy that guides the trading relationships with
third countries/trading blocs outside the EAC Customs Union i.e.,
guidelines for entering into preferential trading arrangements such as
Free Trade Area’s etc. with third parties.
d) Explaining the EAC rules of Origin
• For purposes of the East African Custom’s protocol, goods are accepted
as eligible for EAC tariff treatment if they originate in the Partner States;
• Goods are considered to originate in the Partner States if they meet the
criteria set out in the Rules of Origin. For the purposes of implementing
these Rules, the EAC Partner States are considered as one territory.
Origin Criteria
Goods are accepted as originating in a Partner State if the goods are
i. Wholly produced in the Partner State;
ii. Produced in the Partner State incorporating materials which have
not been wholly obtained there, provided that such materials have
undergone sufficient working or processing in the Partner State.

4.9. Additional activities

4.9.1. Remedial activities
Q1. Akandi limited produced 30,000 boxes of water. The factory price is FRW
2,500 per box. Compute the excise tax
Q2. What is EAC rules of origin?
Q3. State the purpose of certificate of origin
Possible answer
Q1. The factory value = 30,000 Boxes * FRW 2500 = 75,000,000
Excise tax 75,000,000 * 10% = 7,500,000

Q2. EAC rules of origin refers to the sent criteria used to destination between
goods that are produced within the EAC customs.
Q3.
–– To verify the country in which goods were manufactured.
–– Determination whether the certificate of origin is needed depends on
the commodity being exported in its destination.

104 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

4.9.2. Consolidation activities
Q1. Mugisha is a business man in Kigali, during the month of June he imported
30,000Kg of powdered milk from Denmark. The FOB was 30,000USD,
marine insurance 4,500USD and transport to Mombasa was 8,000USD.
The exchange rate for the period was 1USD = 830RWF.

TAX Rate
Excise tax 10%
Import duty 25%
Required compute the import duty
Possible answer
CIF = FOB + I + F
CIF = 40,000 + 4,500 + 8,000 = 52,500 USD
Change in FRW = 52,500 USD * FRW 830 = FRW43, 575,000
Import duty = CIF * Rate
FRW43, 575,000 * 25% = FRW 10, 893,750
Excise tax = (CIF+ import duty) * 10%
Excise tax = (FRW 43,575,000 + FRW10,893,750) *10% = FRW 5,446,875
4.9.3. Extended activities
Question
Zu-Kang Ltd is a Chinese Vehicles and other merchandize dealer that has
recently opened operations in Rwanda, strategically to target future green
mobility due to recent incentives on Electric Vehicles. The Company has
recently imported different consignments with details below:
- 2 Containers of high-quality wines for whole sale purposes in Rwanda from
South Africa, each container carries 2,000,000 Litres of Wine, with each Liter
purchased at $5 from the factory in South Africa, price includes sea flight &
port charges to Dar es Salaam port.
- 2 Containers of hybrid electric saloon cars imported from China, at a cost of
$14,000 per unit CIF-Kigali. Each container carries 3 units.
Consider the following; - Road transport + Insurance from Dar es Salaam port
to Kigali is $2,000 per container - The exchange rate to be used is FRW 1,250:
USD - Import duty is 25%

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 105

Required: Calculate the related import taxes on the importation of wines
consignment?
Proposed solution
Details Volume
Containers 2
Litres per container 2,000,000
Total Volumes (Litres) 4,000,000

Price per Litres ($) 5

Total cost to port Dae es Salama ($) 20,000,000

Total cost in FRW - Port Dar es Salaam @ exchange FRW 25,000,000,000

rate of FRW 1,250: USD
CIF cost FRW 25,000,000,000

Import duty @25% FRW 6,250,000,000

FRW 31,250,000,000
Excise duty (70% on wines) FRW 21,875,000,000
FRW 53,125,000,000
Import VAT (18%) FRW 9,562,500,000

106 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Unit 5 VALUE ADDED TAX (VAT)

5.1. Key unit competence: Compute VAT and file returns in a timely
manner

5.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in senior 2 (unit 5) to the Taxes in Rwanda, in senior
3 (unit 5) to the role of Rwandan customs procedures for the lesson called
different types of taxes taxation s4 accounting (Unit 1) to introduction to
Rwanda tax system. So, with this prior knowledge, skills, attitudes and values
it should help them to appreciate the importance of VAT in revenue collection.

5.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones. You can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance of
environmental protection and the importance of VAT in increasing government
revenue while promoting other environmentally friendly businesses e.g. use
of renewable energies (solar energy).

Gender education: Emphasis throughout this unit has to be put on how both
males and females have the equal opportunities to understand and Compute
VAT and file returns in a timely manner. So that this will encourage people to
take the first step in paying their VAT to the government.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 107

Inclusive education: In addition to all having equal opportunities to carry
out business activities, emphasis has to be put on how we all regardless of
our background, economic or social setup have right to develop an ethical
understanding of Rwandan system that do not discriminate. Students need to
understand that the VAT should not discriminate but promote inclusiveness of
all etc.

Peace and Values: You need to emphasize to learners the need to live in peace
and harmony with others. Students need to appreciate the importance of VAT
in revenue collection in promoting peace and patriotism in the community
avoiding activities that are illegal e.g. smuggling and make sure that every
trade they plan to have is legal and contributes to national development goals.

Standardization culture: You need to emphasize to students the need for

standard in a business legal aspect. This will help them to abide by standards
of VAT as prospective business legal aspects.

5.4. Guidance on introductory activity

Follow the guidance about the introductory activity:

Students in small groups, pairs or individual read and analyse the scenario and
analyse the type of tax that will be paid by that client who is shopping? , why
is that client who is supposed to pay that tax not HABANA?, At the end of the
month, accountant make some computations related to tax for complying,
which computations do you think an accountant is supposed to do?, for the
image cashier is giving a paper to client, what is the type of that paper and
try to list information appear on that paper. Within products sold by HABANA
Supermarket, are there any products exempts to the tax? Which type of that
tax?

During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.

Students share their findings, responses or answers to the activity using an

appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.

108 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’
book. You can support student’s answers by referring to possible answers to
the introductory activity below:

Possible answers for introductory activity (case study)

Note: These responses may be shared or not with the students. They are
specifically to guide you while harmonizing students’ responses during
presentation.

1. VAT, Because VAT law says that VAT is paid by last consumer not trader.
2. Accountant is doing computations related to VAT, by calculating input
VAT and output VAT, at the end he finds if he will be in VAT payable
position or in VAT refund position.
3. The paper above is EBM Invoice receipt. It shows the following
information:
• The word ‘tax invoice’, in a prominent place
• The name of the supplier
• The address of the supplier
• The VAT registration number of the supplier
• The serial number of the invoice
• The and date the invoice was issued
• The quantity or volume of the goods or services supplied
• A description of the goods of services supplied
• The selling price, excluding VAT
4. Education Materials are exempted to VAT tax

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 109

5.5. List of lessons/sub-heading
Headings # Lesson title/ Learning objectives Number of
sub-headings periods
Description of Introductory Arouse the curiosity 1
the value added activity of students on the
tax content of unit 5.
1 Definition Identify definition of 4
of the value the value added tax
added tax
2 Key terminology Explain key 3
for VAT terminology for VAT
3 Goods and Identify the Goods 2
services and services,
4 Compensation Explain 2
Compensation with
the examples
5 Exempted and Identify Exempted 4
zero-rated and zero-rated goods
goods and and services
services
5.2. VAT 1 Registration Identify the 3
registration laws related on Registration laws
compliance Vat related on Vat
1 input and Explain and compute 4
5.3.VAT
output vat the input and output
Computation
vat
2 General Identify General 1
apportionment apportionment
method method
3 Attribution Justify the direct 2
method attribution method
and Special method

110 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

5.4 . VAT offences, 1 VAT offences Explain VAT evasion 2
VAT penalties and VAT avoidance
and fines 2 VAT penalties Justify VAT penalties 4
and fines and fines

5.5 End unit assessment 3

Lesson 1: Description of the value added tax

a) Learning objective
• Identify definition of the value added tax
• Explain key terminology for VAT
• Identify the Goods and services,
• Explain Compensation with the examples
• Identify Exempted and zero-rated goods and services

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, Official gazette, RRA Tax Guide (2019), text
books, resourceful person and any other trustworthy and reliable resources to
enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

d) Learning activities
Activity 5.1
Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 111

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question-and-
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:
Answers to Activity 5.1

The VAT inclusive price means the price of the goods or service including VAT.

The VAT exclusive price means the price of the goods or service that is not the
final cost, to which VAT has not yet been added.
a) Application activities 5.1
Students analyse and discuss about the questions either individual, groups
or in pairs and come up with possible answers. This activity may be given as a
research question or homework.

Depending on the purpose of the application activity, choose an appropriate

method to assess student’s findings, answers or responses. Depending on
the performance or results, you may decide to give remedial or extension
activities.

112 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answers to application activity 5.1
Q1.
a) Definition of VAT:
–– VAT is an indirect tax which is paid at every stage of production in
increasing the value of a product
–– The one who is liable to pay the VAT is the final consumer.
b) Characteristics of VAT:
–– VAT is tax on expenditure paid by the last consumer
–– VAT is neutral tax (the taxpayer recovers the whole of VAT).
–– VAT is a transparent tax
–– It is indirect tax because its incidence can be shifted to another person.
It is paid when there is transaction occurred.
–– It is paid on the value of goods & services supplied.
–– It is multistage tax
–– Its standard rate is 18% in Rwanda
–– It is proportional tax
–– It is paid by final consumer
Q2.
18
VAT= * FRW 1,416,000 =FRW 216,000
118
Q3.
i. Zero-rated goods and services
• Exported goods and services
• Goods and services intended for diplomats accredited to Rwanda that
are used in their diplomatic missions provided those countries give the
same privileges to Rwandan diplomats
• Goods and services intended for international organizations that have
signed agreements with Rwanda
• Goods and services intended for projects funded by partners that have
signed agreements with the Government of Rwanda.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 113

 ii. Exempted goods and services
• Goods and services related to health purposes
• Educational materials and services
• Books, newspapers and magazines
• Transportation services
• Financial and insurance services
• Energy supply equipment
• Unprocessed agricultural and livestock products
• Locally processed milk
• Industrial machinery
• Mobile telephones and SIM cards.

Lesson 2: VAT Registration compliance

a) Learning objective
Identify the Registration laws related on Vat

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, official gazette, text books, resourceful person and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
In previous lesson, lesson 1 Students studied description of the value added
tax that will help to d

Identify the registration laws related on VAT leant in this lesson.

d) Learning activities
Activity 5.2
–– Put students in small groups and give clear instruction about the activity
–– Ask them to observe the pictures in student book and answer the
questions provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings

114 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when identify the
Registration laws related on VAT. answers or address any questions or
challenges about the activity. Guide them to make notes in referring in
their students’ book.

Answer to Activity 5.2

Turnover required for VAT registration:
• On quarterly basis : FRW 5,000,000 (realized during the previous
quarter)
• On annual basis : FRW20,000,000 (realized during the previous year)
e) Application activities 5.2
This activity can be given as a normal individual activity, where Identify the
Registration laws related on Vat. Monitor the activity to ensure students are
on track and actively participating.

You make correction of papes Assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work.

Answers to application activity 5.2

Q1. Turnover required for VAT registration:
• On quarterly basis :FRW 5,000,000 ( realized during the previous
quarter)
• On annual basis : FRW20,000,000 (realized during the previous year)
Q2.
a. True
b. False
c. False
d. True

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 115

Lesson 3: VAT Computation
a) Learning objective
• Explain and compute the input and output vat
• Identify General apportionment method
• Justify the Attribution method
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, official gazette, RRA Tax Guide (2019), text
books, resourceful person and any other trustworthy and reliable resources to
enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 5.3
–– Put students in small groups and give clear instruction about the activity
–– Ask them to show the pictures in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when to explain and
compute the input and output vat, identify general apportionment method,
justify the attribution method

Answers or address any questions or challenges about the activity. Guide

them to make notes in referring in their students’ book.

116 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Answer to Activity 5.3
Q1.
Input VAT is a VAT on purchase While Output VAT is a VAT on sales

Q2.
i. VAT payable: is the difference between Output VAT and input VAT
ii. Output > input
iii. VAT Refundable: is when input VAT is greater than output VAT
received
iv. VAT claimable: is VAT claimed by a legal trader when he /she has
paid input VAT to the supplied in case of selling she/he didn’t collect
output VAT from final consumer/customer

e) Application activities 5.3

This activity can be given as a normal individual or group activity, where
students explain and compute the input and output vat, identify general
apportionment method and justify the attribution method

Monitor the activity to ensure students are on track and actively participating.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.

Answers to Application Activity 5.3

Q1.
18
VAT= * FRW 800,000 =FRW 122,034
118
Q2.
S/N Items Quantity Total VAT AMOUNT
1 Flour 500 kg 25,000 4,500 29,500
2 Rice 100 kg 60,000 10,800 70,800
3 Akandi 288 kg 73,220 13,180 86,400
158,220 28,480 186,700

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 117

Q3.
a) In put VAT
FRW
Cost of goods 2,450,000
Customs duties paid 24,500,000*10% 245,000
Value supply (VAT exclusive) 2,695,000
VAT (18% of FRW 2695000) 485,000
Total input VAT inclusive 3,180,000
b)Total output VAT
Total import VAT Exclusive 2,695,000
Add Transport 110,000
Commission of (5% of FRW 2,450,000 122,500
Total output exclusive VAT 2,927,500
VAT output (18%) 526,950
VAT PAYABLE 41,950
Output VAT - Input VAT
FRW 526,950 – FRW 485,000

Q4.
7,080,000 x18
Output VAT = = FRW 1,080,000
118
7,080,000 x18
Input VAT = = FRW198, 000
118
VAT payable = 1,080,000 – 198,000 = FRW 882,000

Lesson 4: VAT offences, VAT penalties and fines

a) Learning objective
• Explain VAT evasion and VAT avoidance
• justify VAT penalties and fines
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, office gazette, text books, RRA Tax Guide
(2019), resourceful person and any other trustworthy and reliable resources
to enhance learning.

118 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 5.4
–– Put students in small groups and give clear instruction about the activity
–– Ask them to observe the pictures in student book and answer the
questions provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when Explain VAT evasion
and VAT avoidance and justify VAT penalties and fines
• Answers or address any questions or challenges about the activity.
Guide them to make notes in referring in their students’ book.

Answer to Activity 5.4

Tax related offences punishable are:
i. Non registration with VAT
ii. Non use of Electronic Billing Machine(EBM)
iii. Late declaration
iv. Late payment
v. Declaring less than the corrected tax due
vi. Paying less than the tax due declared

e) Application activities 5.4

This activity can be given as a normal individual or group activity, where
students discuss the right and obligation of taxpayer. Monitor the activity to
ensure students are on track and actively participating.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 119

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.

Answers to Application Activity 5.4

Q1.
a. Penalties: punishment for someone doing something that is against law

b. fines: is the amount of money that the court of law or other authority
decides has to be paid as punishment for the crime or offense.
Q2.
It is important to note that taxpayers are still required to pay any taxes
or penalties within the original deadlines. Failure to do so will result in
penalties and interest applying as normal. If the appeals are successful,
taxpayers will receive refunds or credit notes
Q3.
Fine of 10% to 60% of the late paid amount (depending on the days of delay);
Interest of 1.5% monthly and administrative fine of 100,000 to 500,000
depending of the size of the business
Q4. Ubumwe’s penalty for declaring late is:
–– FRW 80,000 x 20% = FRW 16,000
–– FRW 80,000 x 1.5% x 1 month = FRW 1,200 interest
–– FRW 100,000 administrative fine
In addition to the FRW 80,000 tax due, Ubumwe must pay: FRW 16,000 + FRW
1,200 + FRW 100,000 = FRW 117,200.
Skills lab activity 5
Guidance on the skills lab activity. In conducting this skills lab activity, you can
either invite a resource person (RRA) for students to interview him/her where
needed.
i) Build
Given that students listen resource person (Accountant)
–– Remind students on the expected objective for the class attendance
–– Help them to be grouped and remember to mix both boys and girls

120 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings
ii) Practice
–– Guide students on listening resource person
–– Ensure that all are listening
–– Respond to any questions for clarification and support accordingly
iii) Present
–– Choose randomly any two teams to present their findings
–– Allow students to ask question to resource person or their follows
iv) Conclusion
The teacher emphasizes on the objective of the visit reminding students that
they have to follow formula used to vat payable accordingly.
The following are key areas for reference:
–– Description of the value added tax
–– The Nature of supplies
–– VAT registration compliance
–– VAT offences, VAT penalties and fines

5.6. Summary of the unit

• Definition of the value added tax
VAT is the tax charged on turnover at each stage in a production process, but
in such a way that the burden is borne by the final consumer.

Example: Wholesale Retail Last consumer.

• The tax rate of VAT
The normal rate of VAT is 18%. There is also a zero-rate (0%) and exemptions
applicable for certain types of goods and services.
• Characteristic of VAT
a) VAT is a consumption tax i.e. the consumer of taxable goods or
services pays VAT.
b) VAT is an indirect tax.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 121

 c) VAT is a multi-stage tax of transaction from importer or manufacturer
to a wholesaler and finally to the consumer.
d) Its standard rate is 18% in Rwanda
e) It is proportional tax
• Key terminology for VAT
1. Tax period
Value added tax period: calendar month or quarter.
purpose or used as exempted goods and services occurs on the date on which
goods or services are consumed.

2. The deadline to declare and pay VAT

The quarters for taxpayers declaring VAT on a quarterly basis concern the tax
period between:
–– March 1st to May 31st must be declared and paid by 15th June.
–– June 1st to August 31st must be declared and paid by 15th September.
–– September 1st to November 30th must be declared and paid by 15th
December.
–– December 1st to February 28th (or 29th if a leap year), must be declared
and paid by 15th March.

3. Tax point
A tax point is the date on which VAT becomes due on a particular transaction.
The tax point depends on several factors, such as:
–– Whether the business is invoice accounting or cash accounting for VAT.
–– When the goods were supplied or the services carried out.
–– When the VAT invoice was issued to the customer.
• VAT Inclusive
The VAT inclusive price means the price of the goods or service including VAT.
• VAT Exclusive
The VAT exclusive price means the price of the goods or service that is not the
final cost, to which VAT has not yet been added.

122 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • Application of VAT inclusive or VAT exclusive price of taxable
goods and services

d) VAT inclusive
COST OF GOOGS * VAT Rate
VAT=
100 + VAT Rate
e) VAT exclusive
Cost of goods * Vat rate
VAT =
100
• Zero-rated goods and services
Article 5 of Law No 37/2012 of 09/11/2012 establishing the value added tax is
modified and complemented as follows:

He following goods and services shall be zero-rated:

1. exported goods and services;
2. minerals that are sold on the domestic market;
3. international transportation services of goods entering Rwanda and
transportation services of goods in transit in Rwanda to other countries,
including related services;
4. goods sold in shops that are exempted from tax as provided for by the
law governing customs;
5. services rendered to a tourist for which value added tax has been paid;

VAT Computation
1. Input vat
Input VAT is the VAT on purchases

2. Output Vat
Output VAT is the VAT on the sales.
VAT payable or claimable = output VAT – input VAT
• Value added tax refund
VAT offences, VAT penalties and fines
–– VAT offences
–– VAT evasion
–– VAT avoidance

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 123

5.7. Additional information for teachers
Input VAT Allowance
An input tax is allowed when the taxable goods are acquired or imported.
However, if at the time of a value added tax declaration for a tax period in
which an input tax would otherwise be allowed under this Law, a taxpayer
who does not have the relevant documents for input tax claim, the input tax is
not allowed in that period but instead it is allowed in the first value added tax
period in which the taxpayer holds such documents provided that they are
not exceeding two (2) years after the time of the taxable goods are acquired
or imported for which the credit relates.
VAT Refund
Tax refund is a result of having taxes withheld on earnings that amount to
more than what a person owes in income taxes for a calendar year. There are
times when a taxpayer pays more than what he/she is required to pay. When
tax administration receives excess payment of taxes from any taxpayer, it cross
checks the documents of the tax filed and verifies the cause of over payment,
and the surplus amount discovered is what is referred to as tax refund.

If during a particular prescribed taxation period, the input tax exceeds the
output tax, the Commissioner General shall refund the supplier the due
amount to which the supplier stands in credit by reason of the excess, on
receipt of the relevant tax return document within thirty (30) days:
1. After one day from the expiry of the prescribed period for tax
declaration;
2. After receipt of proof of the last outstanding tax declaration
Prior to payment, the Commissioner General may order for verification of the
claim for refund or deduction submitted to him/ her. In such a case, the period
for the response to be communicated shall not exceed three (3) months from
the date when the claim was lodged.
For Large Taxpayers

When the amount to be refunded is less than FRW 200,000, the taxpayer shall
deduct that amount during the next filing period;

When the requested refund is between FRW 200,000 and FRW 2,000,000, as
well as the money that was retained in the Office of the treasury, the taxpayer

124 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

shall be refunded that money by the Rwanda Revenue Authority before any
audit is carried out

When a taxpayer requests for refund of more than FRW 2,000,000, or between
FRW 200,000 and FRW 2,000,000 for more than three consecutive times or
even suspected of not rightfully demanding for the VAT refund, the RRA
carries out an audit to verify the validity of refund request;

Prior to the refund, the auditor is required to carry out desk audit without
going to the taxpayer’s premises.
For Medium Taxpayers
When the amount to be refunded is less than FRW 100,000, the taxpayer shall
deduct that amount during the next filing period;

When the amount to be refunded is between FRW 200,000 and FRW 1,000,000,
as well as the money that was retained by the Office of the treasury, the
taxpayer shall be refunded that money by the Rwanda Revenue Authority
before any audit is carried out.
For Small Taxpayers
When the amount to be refunded is less than FRW 50,000, the taxpayer shall
deduct that amount during the next filing period;

When the amount to be refunded is more than FRW 50,000 and less than FRW
500,000, the authority refunds that amount with immediate effect;

When a taxpayer requests for refund of more than FRW 500,000, for more than
three consecutive times, the RRA carries out an audit to verify the validity of
refund request; and this is done in a period of three months

When a taxpayer requests for refund of more than FRW 500,000, before that
money is refunded, the RRA carries out an audit to verify the validity of refund
request. Prior to the audit, the taxpayer is informed in writing of the audit to
be done in not less than seven working days

Privileged and exempted persons such as diplomats, projects funded by

international organizations and Non-Governmental Organizations that have a
convention with the Government of Rwanda of not paying taxes are refunded
the money paid as VAT not less than ten working days after filing the form
obtained at RRA offices.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 125

The requirements include an authentic document allowing him/her that
exemption or a service card for these Diplomats representing their countries
in Rwanda, copies of all invoices and proof of payment for an amount more
than FRW 100,000.
Taxable Persons
The term ‘person’ includes individuals, partnerships (which are treated as
single entities, ignoring the individual partners) and companies. If a person is
in business making taxable supplies, then the value of these supplies is called
the taxable turnover. If a person’s taxable turnover exceeds certain limits then
he is a taxable person and should be registered for VAT.
™™ VAT Reverse Charge
If tax payer consumes a service from abroad (imported service) he/she pays
input vat on that service and if that service was existing locally in Rwanda
that input vat will not be allowable but if they prove that a service was not
supplied in Rwanda a tax payer will be refunded the input vat, that is what we
call VAT reverse charge.

5.8. End unit assessment (answers)

Q1. VAT registered taxpayers must:
• Display clearly the VAT registration certificate in plain view at the place
of business.
• Use an Electronic Invoicing System (EIS), a type of EBM to issue VAT
invoices.
• Issue an EBM invoice to all customers with every transaction.
• Submit a monthly or quarterly VAT declaration within fifteen days after
the end of the tax period.
• Be available at all times to receive RRA officers and to make available
books of accounts.
Q2. Requirements of a valid tax invoice are:
• The word ‘tax invoice’, in a prominent place
• The name of the supplier
• The address of the supplier

126 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • The VAT registration number of the supplier
• The serial number of the invoice
• The and date the invoice was issued
• The quantity or volume of the goods or services supplied
• A description of the goods of services supplied
• The selling price, excluding VAT
• The total amount of VAT charged
• The selling price, including VAT.
• Attached to EBM receipt.
Q3. Exempt Supplies: Are goods or services exonerated on tax-by-tax
Administration
While zero –rated supplies are goods or services paid to zero rated
18
Q4. Input VAT = FRW 750,000* = FRW 135,000
100
18
Output VAT = FRW 1,062,000 * = FRW 162,000
100
VAT to be paid = FRW 162,000 - FRW 135,000 = FRW 27,000
Q5. Since there is no similar service that is available in Rwanda, the VAT is
18
considered an input VAT Input VAT = FRW 20,000,000 * = FRW
118
3,050,845

Q6. CIF = FOB + I + F

CIF = 40,000 + 4,500 + 8000
52,500 * 830 = FRW 43,575,000
Import duty = CIF x rate
43,675,000 * 25% = FRW 10,918,750
Excise tax = (CIF + import duty) (43,675,000 + 10,918,750) 10% = FRW
5,459,375
Port charges (10FRW per kilogram) 30,000 x10 = 300,000
VAT = (CIF +import duty + excise tax + port charges) 18%

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 127

 (43,675,000 + 10,918,750 + 6,459,376 +300,000) 18%
VAT = FRW 10,809,563
Q7.
a) VAT ACCOUNT
DR VAT ACCOUNT CR
Date Account FRW Date Account FRW
Input VAT Output VAT
1-Jan Mukiza 36,000 1-Feb Gasabo 27,000
1-Apr Cash 21,600 1-Mar Dubai 45,000
1-Feb Import 18,000 20-Jan Ganza 18,000
1-Feb Telephone 11,340 31-Jan Musoni 45,000
31-Jan Electricity 36,000
Balance 12,060
Total 135,000 Total 135,000

b) VAT paid to RRA: FRW 12,060

120,000
Q8. Correct amount to be paid: * 100 = FRW 133,333
90
Or use equation: 120,000 + 10% X = X
120,000
X= = FRW 133,333
0.9
Amount paid: FRW 120,000
Unpaid amount: FRW 13,333
Rate of unpaid amount: (13,333/133,333) *100 = 10%
Penalty: 13,333 * 0.1 = 1,333
Interest 13,333*1.5% * 3 = 600
Administrative fine FRW 100,000
Total amount to pay: 13,333 + 1,333 + 600 +100,000 = FRW 115,266

128 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

5.9. Additional activities (Questions and answers)
5.9.1. Remedial activities
Q1. Shanika is a business woman in Kigali. During the quarter ended 31/5/2018,
she hired a foreign consultant to install new business management
software; similar consultants who can offer similar services are available
in Rwanda. The consultant was paid FRW 10,000,000 exclusive of VAT
compute the VAT.
Q2. John sold the goods 200,000 to Moses and he offered him a discount of
1%. Determine the amount of VAT to be paid.
We first determine the amount of discount and then we determine VAT on net
of discount.

Q3. From the following details, calculate VAT paid by each taxpayer (VAT
inclusive)

Supplier Manufacturer Retailer

Purchase 2,500,000 3,700,000 4,300,000
Sales 3,700,000 4,300,000 5,000,000
Proposed Answers:

Q1. Since similar services can be offered in Rwanda then it is considered as an

output VAT Output VAT = FRW 10,000,000 * 18% = FRW 1,800,000
Q2. Net of discount = FRW 200,000 – (FRW 200,000 *1%) = FRW 198,000
Then we Apply 18% VAT = FRW 198,000 *18% = FRW 35, 640
Q3.
input output VAT Paid
supplier 381355.9322 564406.7797 183050.8475
manufacturer 564406.7797 655932.2034 91525.42373
retailer 655932.2034 762711.8644 106779.661

5.9.2. Consolidation activities

Q1. CIMERWA produces cement. During a fiscal year 2020, this company
produced and sold to SENEZA at FRW 472,000 VAT included. SENEZA sold
the cement to KAZUNGU at the price of FRW 708,000 VAT included who
sold the products to the RETAILERS at FRW 850,000 VAT excluded. At the

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 129

 last stage, the retailers sold the products to the last customer at a price of
FRW 1,000,000 VAT excluded.
Required:
Using INPUT and OUTPUT VAT METHODS, calculate the total VAT payable to
Rwanda Revenue Authority using the VAT rate in Rwandan law.
Q2. MUGISHA bought different products from England valued 6,000 pounds.
He pays transport cost of 1000 pounds up to MOMBASSA port and
assurance of 300 pounds. He also paid 25% of import duty. If these goods
weight 500kg, determine the amount of VAT that RRA will tax Mr. MUGISHA
at the entrance border of RUSUMO. (EXCHANGE RATE 1POUND= FRW
1400)

Proposed Answers
Q1.
• CIMERWA: Input VAT= FRW 0
18
Output VAT= FRW 472,000 * = FRW 72,000
118
Payable VAT: FRW 72,000 – FRW 0 = FRW 72,000
• SENEZA: Input VAT = FRW 72,000
18
Output VAT= FRW 708,000 * = FRW 108,000
118
Payable VAT: FRW 108,000 - FRW 72,000 = FRW 36,000
• KAZUNGU: Input VAT = FRW 108000
18
Output VAT= FRW 850,000 * = FRW 153,000
100
Payable VAT: FRW 153,000 - FRW 108,000 = FRW 45,000
• RETAILERS: Input VAT = FRW 153,000
18
Output VAT= FRW 1,000,000 * = FRW 180,000
100
Payable VAT: FRW 180,000 - FRW 153,000 = FRW 27,000
Total payable VAT: FRW 0+ FRW 72,000 + FRW 36,000 + FRW 45,000 +
FRW 27,000 = FRW 180,000
Q2. C.I.F = 6,000 + 1,000 + 300 = 7,300 pounds * FRW 1,400 = FRW 10,220,000
Import duty = 7,300 * 0.25 = 1,825 pounds * FRW 1,400= FRW 2,555,000
Handling fee = 500 Kg * 10 = FRW 5,000

130 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 Total = FRW 10,220,000 + FRW 2,555,000 + FRW 5,000 = FRW 12,780,000

VAT = 12,780,000 * 18% = FRW 2,300,400

5.9.3. Extended activities

Q1. BAKUNDUKIZE is producing juice locally. He used FRW 2,000,000 to buy
raw materials and pays FRW 500,000 to labour. He also paid FRW 200,000 of
overheads. The production he got for a period was 10,000 bottles that he
packed in boxes of 12 units. He sold all the production locally and earns a
profit of 25% mark-up. The VAT amounts were inclusive in all the prices
Determine the VAT paid by BAKUNDUKIZE for the period
Q2. Innocent designs and manufactures clothes. He sells within Rwanda but
also exports some to Uganda. The goods sold within Rwanda are subject to
VAT as normal. The goods exported to Uganda are zero-rated. He pays input
VAT on the material used in the manufacturing.
He sells FRW 236,000 (VAT inclusive) within Rwanda, with VAT paid on inputs
of 10,000 FRW.
He exports FRW 300,000 (VAT exclusive) to Uganda, with VAT paid on inputs of
FRW 30,000. Calculate VAT to be paid.

Proposed Answer
Q1. Proposed answer
2,000,000
Input VAT = *18 =305,085
118
Output VAT: Production cost: 2,000,000 + 500,000 + 200,000 = 2,700,000
Selling price: 2,700,000 + (2,700,000 * 0.25)
2,700,000 + 675,000 = FRW 3,375,000
3,375,000
VAT = *18 = FRW 514,830
118
VAT paid = 514,830 -305,085 = FRW 209,745

Q2. The total (VAT exclusive) sales is therefore:

236,000
(FRW ) + FRW 300,000 = FRW 200,000 + FRW 300,000 = FRW 500,000.
1.18

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 131

The taxable sales exclude the exports so is 200,000 FRW. The output VAT is
therefore:

FRW 200,000 * 18% = FRW 36,000.

The input VAT includes the VAT paid for the taxable sales, as well as the zero
-rated sales.

The input VAT is therefore:

FRW 10,000 + FRW 30,000 = FRW 40,000 Therefore, Innocent’s VAT due is
equal to: FRW 36,000 – FRW 40,000 = - FRW 4,000.

Innocent requests a VAT refund from RRA of FRW 4,000

132 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Unit 6 ELECTRONIC BILLING MACHINE (EBM)

6.1. Key unit competence: Use electronic billing machine

6.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in senior 4 (unit 2) to the Laws related to business
activities. So, with this prior knowledge, skills, attitudes and values it should
help them to apply law related to business activities.

6.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones. You can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance of
environmental protection and the importance of electronic billing machine
in reducing harmful imports such as polythene paper while promoting other
environmentally friendly businesses e.g. use of renewable energies (solar
energy).

Gender education: Emphasis throughout this unit has to be put on how both
males and females have the equal opportunities to understand and explain the
process of customs procedures system in Rwanda. So that this will encourage
people to take the first step in paying their duties to the government.

Inclusive education: In addition to all having equal opportunities to carry

out business activities, emphasis has to be put on how we all regardless of

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 133

our background, economic or social setup have right to develop an ethical
understanding of electronic billing machine that do not discriminate. Students
need to use electronic billing machine should not discriminate but promote
inclusiveness of all etc.

Peace and Values: You need to emphasize to learners the need to live in peace
and harmony with others. Students need to appreciate the use of electronic
invoicing in promoting peace and patriotism in the community avoiding
activities that are illegal e.g. smuggling and make sure that every trade they
plan to have is legal and contributes to national development goals.

Standardization culture: You need to emphasize to students the need for

standard in a business legal aspect. This will help them to abide by standards
of Electronic Invoicing System as prospective business legal aspects.

6.4. Guidance on introductory activity

Follow the guidance about the introductory activity:

Students in small groups, pairs or individual read and analyse the case study
and explained their mother that the information regarding to invoice roles
got it from the Radio Rwanda and RTV publicities.

During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.

Students share their findings, responses or answers to the activity using an

appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.

Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’ book.

You can support student’s answers by referring to possible answers to the

introductory activity below:

134 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Possible answers for introductory activity (case study)
Q1. YES
Q.2.
For the buyer, it protects the products bought (security).
For the country, it helps the country to have different infrastructure such
as: Hospitals, schools, roads,

Q.3. No it is her right.

6.5. List of lessons/sub-heading

Headings Lesson title/sub- Learning Number of
headings objectives periods
6.1. The Introductory activity Arouse the 1
electronic curiosity of
invoicing students on the
system content of unit 6.
(Electronic 1 Meaning of Explain the 2
Billing electronic meaning of
Machine) invoicing system electronic invoicing
and the concepts system
related to EBM
2 Requirements Identify the 1
to obtain EBM requirement
and The benefits to obtain EBM
of Electronic version and explain
Information the benefits
System: RRA and of electronic
Taxpayer information
system to RRA and
Taxpayer
3 Process used to Explain the ways 2
obtain version taxpayer used to
EBM. obtain EBM
4 The components Identify the 1
of EBM and components of
Receipt data EBM and Identify
requirements the receipt data
requirement

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 135

 1 The ways used Explain the ways 2
to produce EBM used to produce
Invoice and The EBM Invoice and
action done when the action done
the taxpayer when the taxpayer
enters wrong enters wrong
information on information an
6.2 The ways
EBM invoice by EBM invoice by
used to set
error. error.
EBM
2 The actions done Explain the actions 2
taxpayer if EBM done by taxpayer if
is not working EBM is not working.
and Obligations
of a Certified
Electronic Billing
Machine User
6.3 EIS/EBM 1 EIS/EBM penalties Identify EIS/EBM 1
penalties and and fines penalties and Fines
fines
6.4 End unit assessment 2

Lesson 1: Meaning of electronic invoicing system and the concepts

related to EBM
a) Learning objective
–– Explain the meaning of electronic invoicing system
–– Identify the requirement to obtain EBM version and explain the benefits
of electronic information system to RRA and Taxpayer.
–– Explain the ways taxpayer used to obtain EBM
–– Identify the components of EBM and identify the receipt data
requirement
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, official gazette, text books, resourceful person and
any other trustworthy and reliable resources to enhance learning.

136 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

d) Learning activities
Activity 6.1
Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question-and-
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:

Answers to Activity 6.1

a) Invoice
b)
1. Taxpayer’s Name ;

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 137

 2. Taxpayer identification number ;
3. Address at which the sale takes place;
4. Optional tax identification number of the client;
5. Receipt type and transaction type;
6. Serial number of the receipt, from an uninterrupted ascending number
series per receipt type;
7. Registerred items or services with description, quantity, price, with any
other action that may be done, such as cancellations or corrections;
8. Total sales amount;
9. Tax rates applied;
10. The tax added to the sale amount;
11. Means of payment;
Application activities 6.1
This activity can be given as a normal individual activity, where students
Explain the meaning of electronic invoicing system, Identify the requirement
to obtain EBM version and explain the benefits of electronic information
system to RRA and Taxpayer, Explain the ways taxpayer used to obtain EBM,
Identify the components of EBM and Identify the receipt data requirement.

Monitor the activity to ensure students are on track and actively participating.

You make correction of paper assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work.

Depending on the purpose of the application activity, choose an appropriate

method to assess student’s findings, answers or responses. Depending on
the performance or results, you may decide to give remedial or extension
activities.

Answers to application activity 6.1

Q1.
–– Improving bookkeeping and stocktaking for taxpayers through using
EIS/EBMs to record the exact items and prices being sold.
–– Simplifying the audit process, reducing the time and interruption of
taxpayer’s daily operations

138 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q2.
–– A letter requesting the installation of EBM software
–– A copy of RDB Full Registration Certificate or copy of Notice of Taxpayer
Identification Number (TIN) registration in case the business is not
registered in RDB.
–– A copy of Value Added Tax (VAT) Certificate.
–– A copy of identification number. Number or Passport of the person who
signed the letter requesting the installation of EBM software.
–– Form must be signed by the person who signed the letter requesting
the installation of EBM software.

Lesson 2: The ways used to set EBM

a) Learning objective
–– Explain the ways used to produce EBM Invoice and the action done
when the taxpayer enters wrong information an EBM invoice by error
–– Explain the actions done by taxpayer if EBM is not working.
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, text books, official gazette, resourceful person and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
In previous lesson, lesson 1 Students studied for meaning of electronic
invoicing system and the concepts related to EBM That will help to explain
the meaning of electronic invoicing system

Leant in this lesson.

d) Learning activities
Activity 6.2
–– Put students in small groups and give clear instruction about the activity
–– Ask them to observe the pictures in student book and answer the
questions provided in the activity
–– Guide students’ discussion and make sure that everyone is participating

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 139

 –– Invites students to share their findings
Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when to from the above
scenario, what do you think Ms. Yvonne was supposed to do? answers or
address any questions or challenges about the activity. Guide them to make
notes in referring in their students’ book.

Answer to Activity 6.2

1. For the invoice recorded erroneously, Mr. Kamali was supposed to
correct it by reversing the transaction and re-enter the correct value
to avoid fines.
2. For invoices not issued to customers, Mr. Kamali was supposed to issue
EBM invoices as per taxpayer obligations to issue the EBM Invoice; fail
to do this, will result into fines and penalties.
3. For the EBM which was not working, Mr. Kamali was supposed to notify
RRA and hand-write invoices to the consumer, and keep a duplicate,
until the EIS/EBM is working again
Application activities 6.2
This activity can be given as a normal individual activity, where students
Explain the ways used to produce EBM Invoice and the action done when
the taxpayer enters wrong information an EBM invoice by error, Explain the
actions done by taxpayer if EBM is not working.

Monitor the activity to ensure students are on track and actively participating.

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.

Answers to application activity 6.2

Q1. EBM must be used to produce EBM invoice for every sales transaction,
whether to her business or to final consumers.

Q2.
–– To purchase certified set of electronic billing machines from a licensed
supplier;

140 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– To install certified electronic billing machines at the sales location;
–– To issue receipt generated by certified electronic billing machines to
every customer purchasing items or service;

Lesson 3: EIS/EBM penalties and fines

a) Learning objective:
Identify EIS/EBM penalties and Fines

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, text books, official gazette, resourceful person and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 6.3
–– Put students in small groups and give clear instruction about the activity
–– Ask them to show the question in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary on when to EIS/EBM
penalties and Fines to explain the judicial sanctions imposed on taxpayer
who:
i. Does not have an EBM/EIS, but is required to have
ii. Fail to comply with any other EIS/EBM user obligations
iii. Has an EIS/EBM but issues an undervalued EIS/EBM invoice

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 141

Answers or address any questions or challenges about the activity. guide
them to make notes in referring in their students’ book.

Answer to Activity 6.3

a) A taxpayer who does not have an EIS/EBM for a sales location that requires
an EIS/EBM is subject to a penalty of:
–– FRW 200,000 for a first-time offence.
–– FRW400,000 FRW for any repeat offences.

b) A VAT taxpayer who fails to comply with any other five EIS/EBM user
obligations, including indicating the true name of the goods, notify RRA
of EIS/EBM failure and refraining from deleting invoices inappropriately, is
subject to a penalty of:
–– FRW 200,000 for a first-time offence.
–– FRW400,000 for any repeat offences.
c) A taxpayer who has an operational EIS/EBM but issues an undervalued
EIS/EBM invoice is subject to a penalty of:
–– Ten (10) times the value of the evaded VAT for a first-time offence.
–– Twenty (20) times the value of the evaded VAT for any repeat offences.
Application activities 6.3
This activity can be given as a normal individual or group activity, where
students Identify EIS/EBM penalties and Fines

Students share their findings to the large group. Assess their answers
depending on the purpose of the application activity. Refer to the possible
answers below as you assess their work.
Answers to Application Activity 6.3
The penalties Lucia paid: 9,000 *10 = FRW 90,000
Skills lab activity 6
Guidance on the skills lab activity:

In conducting this skills lab activity, you can either invite a resource person
(accountant of school) for students to interview him/her where needed.

142 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 i. Build
Given that students listen resource person (accountant):

–– Remind students on the expected objective for the computer lab

attendance
–– Help them to be grouped and remember to mix both boys and girls
–– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings
–– Distribute questions for their research
–– Check their understanding of the assignment
–– Remind them that everybody full participation is mandatory.
ii. Practice
–– Guide students on listening resource person
–– Ensure that all are listening
–– Respond to any questions for clarification and support accordingly
iii. Present
–– Choose randomly any two teams to present their findings
–– Allow students to ask question to resource person or their fellows
iv. Conclusion
The teacher emphasizes on the objective of the visit the school accountant to
share with students the way used to programmer EBM Version and produce
EBM invoices also ask students to describe them then share their findings.

The following are key areas for reference:

–– The electronic invoicing system (Electronic Billing Machine)

–– The ways used to set EBM
–– EIS/EBM penalties and fines

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 143

6.6. Summary of the unit
• Meaning of electronic billing machine
An electronic billing machine comprises of two components; there is a
certified invoicing system (CIS) and a sales data controller (SDC).
There are two versions of EBMs: EBM 1 and EBM 2.0. extended to 2.1
The new EBM version 2.0 (EBM 2.0) is a form of software now available
for taxpayers to install onto desktop or laptop computers. VSDC can be
incorporated with privately provided billing systems
• Purposes of EBM
i. Combating tax evasion
ii. Combating corruption in the tax system
iii. Providing a market balance and make equal business opportunities
for every entrepreneur
™™ Requirement to obtain EBM and the benefits of EIS/EBMs: RRA,
Taxpayer
Requirement to obtain EBM
i. Required tools: The EBM software is installed in a computing device
(Desktop, Laptop, Tablet or POS) with windows operating system
from 8 and above or Android operating system.
ii. Required documents

The below listed documents have to be scanned and sent to ebm2.installation@

rra.gov.rw
a) A letter requesting the installation of EBM software.
b) A copy of RDB Full Registration Certificate or copy of Notice of
Taxpayer Identification Number (TIN) registration in case the
business is not registered in RDB.
c) A copy of Value Added Tax (VAT) Certificate
d) A copy of Identification Number or Passport of the person who
signed the letter requesting the installation of EBM software
e) Fill, stamp and sign the acknowledgement and commitment Form1
that can be downloaded from this link: https://ebm2.rra.gov.rw/api/
ConfirmForm

144 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 ™™ The way taxpayers use to obtain Version EBM
If you would like to obtain EBM bring to RRA Headquarters:
–– RDB Business Registration Certificate
–– VAT Registration Certificate
–– If you are the owner of the company, your National ID or Passport
–– If you are not the owner of the company, the Power of Attorney and
National or Passport of the Owner. Taxpayers will have EBM 2.0 installed
on their machine
™™ The components of EBM and Receipt data requirements
i. The components of EBM
The EBM 1 uses specific EBM hardware, made up of two components, a
Certified Invoicing System (CIS) and a Sales Data Controller (SDC). These can
be integrated into one item (‘All in One EBM’), or kept separate but connected
by cable.

ii. Receipt data requirements

The data enumerated in items below as minimum required information:

1. taxpayer’s name;
2. taxpayer identification number;
3. address at which the sale takes place;
4. optional tax identification number of the client;
5. receipt type and transaction type;
6. serial number of the receipt, from an uninterrupted ascending number
series per receipt type;
7. registered items or services with description, quantity, price, with any
other action that may be done, such as cancellations or corrections;
8. total sales amount;
9. tax rates applied;
10. the tax added to the sale amount;
11. means of payment.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 145

 ™™ The ways used to produce EBM invoices and the action done when
the taxpayer enters an EBM invoice incorrectly
• The ways used to produce EBM invoices
EBMs must be used to produce EBM invoices for every sales transaction,
whether to other businesses or to final consumers. The exact process varies
slightly for different types of EBM. The licensed suppliers are trained to help
show taxpayers how to use their EBMs.
• The action done when the taxpayer enters an EBM invoice
incorrectly
If the taxpayer wishes to refund a consumer, or makes a mistake when
entering a transaction, they can cancel a specific item, or the whole receipt.
Alternatively, if the taxpayer wishes to enter any discount, this can be done at
the end of the transaction, before printing the invoice
• The action taxpayers do if the EBM is not working
If there is any period where the EIS/EBM is not working, for whatever reason,
taxpayers must notify RRA and hand-write invoices for the consumer, and
keep a duplicate, until the EIS/EBM is working again. Further actions depend
upon the type of problem. Once the EIS/EBM is working again, enter all the
hand-written invoices into the EIS/EBM.
• Obligations of a Certified Electronic Billing Machine User
Users of certified electronic billing machines shall be subject to the following
obligations:

1. To issue receipt generated by certified electronic billing machines to

every customer purchasing items or service;
2. To ensure that certified electronic billing machines is placed at a place
which is accessible and easily seen by customers;
3. To ensure that all items or services sold through certified electronic
billing machine have clearly defined name and appropriate tax rate.
4. To include client’s TIN on the receipt upon request from the client who
performs the payment prior to start issuing a receipt;

146 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 ™™ EIS/EBM penalties and fines
The penalties and fines relating to the lack of or misuse of EIS/EBMs are
explained below. These may be applied separately, or in addition to, any
penalties and fines relating to Value Added Tax (VAT).

™™ Different EBM Penalties and Fines

• A taxpayer who does not have an EIS/EBM for a sales location that
requires an EIS/EBM is subject to a penalty of:
–– FRW200, 000 for a first-time offence.
–– FRW400, 000 for any repeat offences
• A VAT taxpayer who fails to comply with any other five EIS/EBM user
obligations, including indicating the true name of the goods, notify RRA
of EIS/EBM failure and refraining from deleting invoices inappropriately,
is subject to a penalty of:
–– FRW 200,000 for a first-time offence.
–– FRW 400,000 for any repeat offences
• A VAT taxpayer who has an operational EIS/EBM but fails to issue an EIS/
EBM invoice when required is subject to a penalty of:
–– Ten (10) times the value of the evaded VAT for a first-time offence
–– Twenty (20) times the value of the evaded VAT for any repeat offences
• A non-VAT taxpayer who has an operational EIS/EBM bit fails to issue an
EIS/EBM invoice when required is subject to a penalty of:
–– Twice (2) times the value of the transaction.
–– Four (4) times the value of the transaction for any repeat offences
• A taxpayer who has an operational EIS/EBM but issues an undervalued
EIS/EBM invoice is subject to a penalty of:
–– Ten (10) times the value of the evaded VAT for a first-time offence.
–– Twenty (20) times the value of the evaded VAT for any repeat offences.
• A non-VAT taxpayer who has an operational EIS/EBM bit fails to issue an
EIS/EBM invoice when required is subject to a penalty of:
–– Two (2) times the value of the transaction.
–– Four (4) times the value of the transaction for any repeat offences

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 147

 • Additional penalties available to RRA for non-compliance with EIS/EBM
requirements can include:
–– Closure of business activities for a period of thirty (30) days.
–– Being barred from bidding for public tenders.
–– Being named in nationwide newspapers

6.7. Additional Information for Teachers

• Virtual Sales Data Controller (VSDC)
A VSDC can be used to integrate local sales management systems/private
billing system with the requirements of EBM. Businesses can then continue
to use their own retail management software package, while complying with
the modalities of EBM requirements
• Process of generating EBM Invoice
Step 1: Enter the Sales tab in EBM.
Step 2: Select New to create a new invoice. Electronic Invoicing System (EIS)
Here For You, To Serve - Call the RRA Call Centre on 3004 220
Step 3: Add the Customer ID, as supplied by the consumer. Customer details
must be created in the Customer Management tab of EBM. This
includes the TIN number of the customer. If the customer does not
have a TIN, record the mobile phone number of that customer.
Step 4: Add the Item Code for the sale. Items must be created in the Item
Management tab of EMB. Item records include the price, taxable
value and tax rate for an item.
Step 5: Enter the item quantity in the Sales Qty field of the pictured transaction.
Press ‘Confirm’ to add the item.
Step 6: Repeat steps 3 to 5 for each type of item/service being sold.
Step 7: Press ‘Save’ in order to save the receipt in your records.
Step 8: To approve the receipt and issue an invoice, double click on ‘waiting’
invoice. Select ‘Approve’ on the subsequent window.
For further information and training on EBM Version, please visit the RRA EBM
training center at RRA HQ.

148 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

6.8. End unit assessment
Q1.
Mukamana penalties paid: 122,000*20= FRW 244,000

Q2.
Certified Invoicing System (CIS)”: electronic system designed for use in
business for efficiency management controls, in areas of sales analysis and
stock control system which fulfill the requirements

Sales Data Controller (SDC)”: device connected to CIS used for processing
and storing receipts

Q3.
“POS”: Point of Sale;
“TIN”: taxpayer identification number;

Q4.
A VAT taxpayer who has an operational EIS/EBM but fails to issue an EIS/EBM
invoice when required is subject to a penalty of:
–– Ten (10) times the value of the evaded VAT for a first time offence.
–– Twenty (20) times the value of the evaded VAT for any repeat offences.
Q5.
–– Penalties: Punishment for someone doing something that is against law.
–– Fines: Is the amount of money that the court of law or other authority
decides has to be paid as punishment for the crime or offense.
Q6.
a) EBM stands for Electronic Billing Machine
b) EBM is machine which is used to generate invoice or receipt
electronically.
c) Two types of EBM are:
–– VERSION 1: Machine used to generate invoice
–– VERSION 2.0: Software or Certified Invoicing System or Sales Data
Controller.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 149

6.9. Additional activities
6.9.1. Remedial activities
Q 1. Write in full the following terms related to Electronic Billing Machine:
–– EIS
–– VAT

Answers :
EIS : Electronic Invoicing System
VAT : Value Added Tax

Q2. Answer by True or False

a) Medium taxpayer”: any taxpayer whose turnover is more than fifty
million (50,000,000) Rwandan francs during the previous tax period
and not designed as a large taxpayer by the Authority; TRUE
b) Micro taxpayer”: any taxpayer whose turnover is equal or less than
twelve million (12,000,000) Rwanda francs during the previous tax
period million. TRUE
Q3. Identify the Purposes of Electronic Billing Machine.
–– Combating tax evasion
–– Combating corruption in the tax system
–– Providing a market balance and make equal business opportunities for
every entrepreneur.

6.9.2. Consolidation activities

Q .1
a) What does EBM stand for?
b) Define the term EBM
c) Explain two (2) Types of EBM.

Answers:
a) EBM stands for Electronic Billing Machine
b) EBM is machine which is used to generate invoice or receipt
electronically.
c) Two types of EBM are:

150 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– VERSION 1: Machine used to generate invoice
–– VERSION 2.0: Software or Certified Invoicing System or Sales Data
Controller
Q2. Identify three (3) Obligations of a Certified Electronic Billing Machine user

Answer:
–– To ensure that certified electronic billing machines is placed at a place
which is accessible and easily seen by customers;
–– To ensure that all items or services sold through certified electronic
billing machine have clearly defined name and appropriate tax rate.
–– To include client’s TIN on the receipt upon request from the client who
performs the payment prior to start issuing a receipt;
Q3. Explain the ways taxpayer used to obtain Electronic Billing Machine.

Answer:
If you would like to obtain EBM bring to RRA Headquarters:
–– RDB Business Registration Certificate
–– VAT Registration Certificate
–– If you are the owner of the company, your National ID or Passport
If you are not the owner of the company, the Power of Attorney and National or
Passport of the Owner. Taxpayers will have EBM 2.0 installed on their machine.

Q.4 What are the penalties for a taxpayer who has an EBM but fails to issue an
EIS/EBM invoice?

Answer:
A VAT taxpayer who has an operational EIS/EBM but fails to issue an EIS/EBM
invoice when required is subject to a penalty of:
–– Ten (10) times the value of the evaded VAT for a first-time offence.
–– Twenty (20) times the value of the evaded VAT for any repeat offences.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 151

6.9.3. Extended activities
Q.1. What are the penalties for a taxpayer who does not have an EIS/EBM, but
is required to have?

Answer: A taxpayer who does not have an EIS/EBM for a sales location that
requires an EIS/EBM is subject to a penalty of:
–– FRW 200,000 for a first-time offence.
–– FRW 400,000 for any repeat offences.
Q.2. What are the penalties for a taxpayer who has an EIS/EBM but issues an
undervalued EIS/EBM invoice?

Answer: A taxpayer who has an operational EIS/EBM but issues an undervalued

EIS/EBM invoice is subject to a penalty of:
–– Ten (10) times the value of the evaded VAT for a first-time offence.
–– Twenty (20) times the value of the evaded VAT for any repeat offences.
–– A non-VAT taxpayer who has an operational EIS/EBM bit fails to issue an
EIS/EBM invoice when required is subject to a penalty of:
–– Two (2) times the value of the transaction.
–– Four (4) times the value of the transaction for any repeat offences

152 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Unit 7 TAXATION OF CROSS BORDER ACTIVITIES

7.1. Key unit competence: Compute taxation of cross border activities

7.2. Prerequisites (knowledge, skills, attitudes, and values)

In addition to Unit 6 on Taxation of Individual Business Profits covered in
S4, where they were introduced to the meaning of business profit, students
were introduced to taxes in Rwanda in senior 2 (unit 5) and in senior 3
(unit 5) introduced into the role of Rwandan Customs procedures. This
prior knowledge, skill or competency should help students to calculate the
corporate income tax (CIT) related to the company’s operations and to file the
appropriate declaration.

7.3. Cross-cutting issues to be addressed:

• Inclusive education: Encourage the participation of all students during
the teaching and learning process
• Peace and value education: During group activities, the teacher
encourages students to respect their peers’ opinions
• Gender education: From the beginning to the end of class, provide
all students with equal opportunities for girls and boys to participate
actively in class.
• Financial education: Remind students to be financially competent so
they can understand and use effectively various financial skills including
personal financial management, budgeting, and investing. Know how
to manage your money and save responsibly.

7.4. Guidance on the introductory activity 1

–– Lead small groups of students to work on introductory activity 1.
–– During the class discussion, have students think of different possible
solutions to trade types and justify them in front of the whole class

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 153

 –– The teacher should visit all groups and offer support when needed.
–– After a set time, ask the students to present and harmonize their results.
–– Explain to students that they may get different answers to the given
task based on the sentences they are looking at. Make an effort to keep
students interested in the first unit material.
–– Ask students to complete application activity 7.1 and assess whether
the lesson objectives have been met to assess their competencies

Answers for introductory activity 1

Answer to Scenario 1
Mr Robert is doing business that cover one territory (Trading in a country)
and crossing to another (Trading with a country) as well. The 2 business of Mr.
Robert are related businesses, the one from Rwanda it can be considered as
main business while the other one from Uganda and Kenya can be considered
as the second businesses but all have a strong relationship because the control
and management lies within one hand of Mr. Robert.

Answer to Scenario 2
The dilemma however, is in what country does the tax liability fall, and how
is that decided? And a further issue that may arise is that if Joe is taxed in
Rwanda and in Tanzania, then Joe has effectively been taxed twice on the
same income. If such a situation were to prevail, it could materially inhibit the
development of international trade.

So, for example, Rwanda will argue that Joe is a citizen and a resident, he lives
with his wife and family here, and every citizen is expected to make his/her
contribution to the various public services they enjoy. Thus, they will argue,
Joe should be taxed on his income in Rwanda, according to the rules that
prevail here.

But Tanzania will argue that Joe should pay his income tax in their country,
because the income originated there, and their rules state that anyone earning
an income in their country should be taxed there.

The dilemma for Joe is that he could end up being taxed in both countries on
the same income which is a bit unfair on Joe. The dilemma for both Countries
is that they could end up not taxing Joe in either country. And if it is to be only

154 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

one, which one? and how is that decided?

To answer the above question, let us assume two case A & B:

(A) Where there is a double taxation agreement in place between Rwanda and
Tanzania.

(B) Where there is not.

Case (A)
In case (A) (where there is a tax treaty, on avoidance of double tax and
prevention of fiscal evasion), between Rwanda and Tanzania, the treaty
generally will specify in a clear wording that the right to tax is with Tanzania,
because this is the country in which the income arises i.e. the “source” country.
Rwanda, which taxes on worldwide incomes, i.e. income arising from Rwanda
and Tanzania, will then compute tax payable. Rwanda will provide credit for
the tax paid to Tanzania i.e., the country where the incomes were sourced. It is
thus, through this arrangement that double taxation is avoided.

Case (B)
In case (B) (where there is no existing tax treaty on avoidance of double tax
and prevention of fiscal evasion) Tanzania will tax Joe on incomes arising from
Tanzania, because that is the source of the incomes. When he goes back to
Rwanda, Rwanda may give Joe credit for the tax paid in Tanzania. However,
Rwanda may only do this on a unilateral basis, and is not obliged to do so.
Thus, the certainty created for Joe, and other taxpayers in case A is absent
here.

It is desirable, and indeed necessary, in the field of international taxation, that

there are rules agreed between different countries as to which tax jurisdiction
takes what portion of tax, and why a given tax jurisdiction should forego in
whole or in part what it considers to be its revenues. Having such agreements
creates taxation certainty for businesses and individuals who operate
internationally. Also, such agreements can include provision for cooperation
and sharing of information which can assist in tackling tax evasion.

So, to help Joe for not being taxed twice, Rwanda has either to enter into
agreement with Tanzania for double taxation or it may opt to do unilateral
relief in case bilateral conventions or agreements relief is not possible. In this
situation, and since the source of income is on worldwide basis, Rwanda will

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 155

grant to Joe a foreign tax credit up to the level of what Joe was supposed to
pay domestically. Granting him more than that would mean that Rwanda is
financing the other country.

7.5. List of lessons and lesson development

Headings #Lesson title/ Learning objectives Number of
sub-headings periods
7.1 Distinction Introductory Arouse the curiosity 1
between trading activity of students on the
in and trading content of unit 7.
with a country 1 Trading in a Explain the trading in 1
country a country
2 Trading with a Explain trading with a 1
country country
7.2 Double 1 Double Explain double 2
Taxation Taxation Taxation
Agreements

2 Double Identify double 1

taxation taxation agreements
agreements
3 Foreign tax Explain Foreign tax 1
credit credit
1 Meaning of Explain what is East 1
East African African Customs
Customs Union
7.3 East African Union
Customs Union 2 Features of Explain the features 1
a Customs of a Customs Union
Union
3 Objectives of Explain objectives of 1
the Customs the Customs Union
Union

156 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 1 Transfer Explain transfer 1
pricing pricing principles
principles
7.4 Transfer 2 Definition of Identify definition of 1
pricing related person related person
3 Impact of Explain impact of 1
transfer pricing transfer pricing rules
rules
4 Thin Discuss thin 1
capitalization capitalization
7.5 Computation 1 Compute the Compute the tax 2
of tax for cross tax relating to relating to cross
border activities cross border border activities for
activities for an an individual
individual
2 Compute the Compute the tax 2
tax relating to relating to cross
cross border border activities for a
activities for a company
company
7.6 End unit assessment 2

Lesson 1: Distinction between trading in and trading with a country

a) Learning objective: Explain different types of trading
b) Teaching resources: ICPAR, Advanced Taxation 2nd Edition February
2020 calculators, students’ book, and other reference textbooks to
facilitate research.
c) Prerequisites/Revision/Introduction:
Students will perform well in this unit if they have learned well the content of
Senior 4 unit 6 and Senior 5 unit 1 of Taxation

d) Learning activities
–– Invite students to sit in small groups;
–– Invite students to work in groups and do activity 7.1 from in their student
book;

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 157

 –– Move around the class to facilitate when needed and bring more clarity
to any challenges they may encounter during their work;
–– Identify groups with different work steps.
–– Invite each group with different activities to present their answers in a
class discussion;
–– As a teacher, harmonize the learnings from the students’ presentation
and ask them to provide other real-life examples of problems involving
the use of company profits
–– Guide them to explore examples from the student book

Answers for Activity 7.1

This person sells mango on the first part in their home country, but by
approaching the second party, they cross the border into Uganda to sell their
product as well. In fact, he trades in his country and also with Uganda.

e) Answers for the application activity 7.1.

Trading in, refers to the business or trading that are made within the territory
of the country i.e., both buyer and seller are in the same country. For example:
Mr Kamali has a retail shop in his village where he used to buy and sell the
local products to the citizens around the shop.

Cross border activities, refers to the activities of buying or selling the property,
goods and services between individuals or business entities who reside
in different Jurisdictions/ Countries. For example: Ubwiza enterprise is a
manufacturing company that produce and sell Mango juice both in Rwanda
and outside of Rwanda.

Lesson 2: Double taxation agreement

a) Learning objectives: Explain where there is a double taxation
agreement in place and where there is not.
b) Teaching resources: BPP Learning Media Ltd, Taxation First Edition
August 2019 and ICPAR, Advanced Taxation 2nd Edition February
2020, calculator, student book and other reference books to facilitate
research.

158 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c) Prerequisites/Revision/Introduction:
Students will perform well in this unit if they have learned well the content of
unit 1 in the subject of Taxation found in senior 5.

d) Learning activities
–– Individually, invite students to work on the activity 7.2 from the S5
Taxation student’s book;
–– Move around for facilitating students where necessary and give more
clarification on eventual challenges they may face during their work;
–– Invite students to share their results to their neighbours
–– Individually, invite students to share their findings to the whole class
–– As a teacher, harmonize the findings from presentations and use
different probing questions to help students to explore examples and
the content given in the student’s book to enhance skills on taxable
income and taxable trading profits.
–– Invite students individually to comment on the general conclusion from
findings
–– Ask students to do the application activity 1.2 and evaluate whether
lesson objectives were achieved to assess their competences.

Answers for Activity 7.2

They exchange documents that appear to have agreed to do something
between them. Since the photo contains some words like tax duty, customs
and withholding, it shows that people agree on tax matters.
e) Answers for the application activity 7.2
Step1:
Calculate the gross income received by Hellene from Rwanda and Kenya.
FRW 720,000+ FRW (5,400+780) *100 = FRW 720,000+FRW 618,000= FRW
1,338,000

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 159

Step 2:
Tax band Tax rate Taxable base Amount (FRW)
A B C = B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 1,138,000 341,400
Total Tax Liability 365,400

Step 3:
Compute the tax liability on Local income (Income from Rwanda); FRW 720,000
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 520,000 156,000
Total Tax Liability 180,000

Step 4:
The tax for foreign income (Tax that should have been paid) = Tax liability on
the total income (Local and Foreign) - Tax liability on local income only.
FRW 365,400 - FRW 180,000= FRW 185,400
Step 5:
Exchange the foreign tax liability into the local currency to get the actual tax
paid in foreign country. Note: This is applicable only if you have been given
the foreign tax liability in foreign currency.

In Kenya Hellene paid KES 780 as tax, by exchanging into Rwandan Francs, is
equal to FRW 780*100= FRW 78,000.
Step 6:
Computation of the double taxation relief/ foreign tax credit;
This is equal to the lower between the tax for foreign income and the actual
tax paid in foreign country.

160 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Tax for foreign income FRW 185,400
The actual Tax paid in Kenya FRW 78,000
Thus, the lower is FRW 78,000. This means that the double taxation relief/
foreign tax credit due to Hellene is FRW 78,000.

Lesson 3: East African Customs Union

a) Learning objective:
–– Explain what is East African Customs Union
–– Explain the features of a Customs union
–– Explain objectives of the Customs Union
–– Explain the scope of Cooperation in the Customs union
b) Teaching resources: RRA Tax Guide (2019), Protocol on the
establishment of the East African Customs Union of 2004, calculator,
student book and other reference books to facilitate research.
c) Prerequisites/Revision/Introduction:
Students learn this lesson better if they have a good basic knowledge of
mathematical calculations.

d) Learning activities
–– Organize students into small groups;
–– Invite students to work on the questions for activity 7.3 in small groups.
–– Walk around to help and guide students who are having difficulty with
their assignment.
–– Ask each group to share their answers with another group, and
encourage each other if they are having more difficulty completing this
activity 7.3
–– During a class discussion, ask the group leader to present their findings
to the whole class.
–– As a teacher, harmonize the students’ different responses to Activity 7.3
–– Have students go through application activity 7.3 and assess whether
the objectives of the lesson have been met.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 161

Answers for Activity 7.3
As you see the photo is showing the people who are in the meeting and it
shows the flags of East African Community members, and also there is word
import and export, this means that the meeting is discussing on import and
export matters within the EAC Members.

e) Answers for the application activity 7.3

The objectives of the Customs Union include:
i. Further liberalise intra-regional trade in goods on the basis of mutually
beneficial trade arrangements among the Partner States; for example;
Traders from Rwanda can go to Uganda and purchase products there
and come back in Rwanda for retailing without being charged customs
duties as long as he/she represented the certificate of origin.
ii. Promote efficiency in production within the Community; for example,
A company located in Rwanda produces the products and sell them
on Rwandan market and other markets from other countries, this
make that company to be more efficient in production as the demand
is high and no products can wasted due to not having the market.
iii. Enhance domestic, cross border and foreign investment in the
Community; for example, business owner from Kenya can expand
his/ her business to Rwanda as long as Rwandan like or prefer his/ her
products.
iv. Promote economic development and diversification in industrialisation
in the Community for example, as long as the demand is high, more
demand more supply hence more revenue, as the revenue increases
more tax as well and this promote economic development and due to
the customer demand, a company can also expand its production and
diversify it as per customer preference.

Lesson 4: Transfer pricing

a) Learning objective: Explain what is a transfer pricing
b) Teaching resources: RRA Tax Guide (2019), Ministerial Order Nº
003/20/10/TC of 11/12/2020, calculator, student book and other
reference books to facilitate research.

162 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c) Prerequisites/Revision/Introduction:
Students will perform well in this unit if they have a good command of the
content of the previous lesson and also have a good basic knowledge of
mathematical calculations.

d) Learning activities
–– Invite students to work in groups on Activity 7.4 found in their student
book;
–– Move around the class to moderate if necessary and provide further
explanation of any challenges they may encounter during their work
–– Invite members from each group to give a presentation of their results/
calculations;
–– As a teacher, bring together the results of the presentation and lead
them through an explanation of what taxable income is for businesses.
–– Use a variety of probing questions to guide them through the topic and
examples in the student book;
–– Afterward, help students complete application activity 7.4 and
determine if the learning objectives have been met.
Answers for Activity 7.4
People from headquarter are transferring something which is in envelope to
people in branch

e) Answers for the application activity 7.4

Transfer pricing adjustment is equal to the difference between an arm’s-
length price taken to be the amount charged to other subsidiaries and the
actual price charged.

The difference between an arm’s-length price (taken to be the amount

charged to other subsidiaries, FRW 50,000,000 * = FRW 40,000,000) and the
actual price charged of FRW 50,000,000 must be added on to A plc’s profit.
A plc’s taxable income is understated due to the high price charges by the
French parent company. So, A plc’s will adjust its taxable income upwards by
FRW 10,000,000.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 163

Lesson 5: Computation of tax for cross border activities
a) Learning objective:
Calculate the taxes levied on cross-border activities

b) Teaching resources:
ICPAR, Advanced Taxation 2nd Edition February 2020, calculator, student book
and other reference books to facilitate research.

c) Prerequisites/Revision/Introduction:
Students will do well in this lesson if they have a solid understanding of the
content of business profits computation.

d) Learning activities
–– Invite students individually to work on the activity 7.5 from the S5
Taxation student’s book;
–– Move around to support and guide students with difficulties in their
work where needed and provide further explanation of any challenges
they may encounter during their work.
–– Invite students to share their finding with their neighbours
–– Invite students individually to share their findings with the whole class
–– As a teacher, harmonize results from presentations and use various
probing questions to help students explore examples and student book
content to improve knowledge of taxable income and taxable trading
profits.
–– Invite students individually to comment on the general conclusion
drawn from the results
–– Ask students to complete the application activity 7.5 and assess whether
the lesson objectives have been met to assess their competencies.

Answers for Activity 7.5

That person is computing or calculating something which earned from
Rwanda and foreign country.

164 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 e) Answers for the application activity 7.5
Question 1
Step 1
Gross income (Rwanda and UK) received by Daniel is equal to FRW
1,765,000+(480+96) *1,400 = FRW 1,765,000+ 806,400=FRW 2,571,400.
Step 2
Compute the tax liability on gross income; FRW 2,571,400
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 2,371,400 711,420
Total Tax Liability 735,420

Step 3
Compute the tax liability on Local income (Income from Rwanda); FRW
1,765,000
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 1,565,000 156,000
Total Tax Liability 469,500

Step 4
The tax liability that should have been paid in UK= FRW 735,420 - FRW 469,500
= FRW 265,920
Step 5
Tax paid in UK exchanged in Rwandan Francs= 96*1400= FRW 134,400 (Actual)

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 165

Step 6
Computation of double taxation relief is equal to the lower between the tax
liability that should have been paid in UK and the actual tax paid.
Tax that should have been paid in UK FRW 265,920
Actual tax paid FRW 134,400
The lower between the two is FRW 134,400. This means that the double
taxation relief is FRW 134,400
Step 7
Computation of the tax liability due to Daniel
Gross tax liability FRW 735,420
Less double taxation relief FRW (134,400)
Tax liability/Tax payable FRW 601,020

Answer to question 2
Step 1
Total profit before tax received by Maurice Enterprise Ltd= FRW 4,500,000 +
100
(FRW 17,000,000 * ) = FRW 24,500,000
85
Step 2
Tax liability on total profit before tax= FRW 24,500,000 * 30%= FRW 7,350,000
Step 3
Tax liability on PBT received by Maurice Enterprise Ltd in Rwanda only = FRW
4,500,000 * 30%= FRW 1,350,000
Step 4
The tax liability that Maurice Enterprise should have been paid in Mauritius =
FRW (7,350,000 -1,350,000) = FRW 6,000,000
Step 5
Tax liability on income received by Maurice Enterprise Ltd in Mauritius = FRW
17,000,000 * 15 = FRW 3,000,000
85

166 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Step 6
Computation of double taxation relief; would be the lower between tax
liability that should have been paid in Mauritius and actual tax paid.

Tax liability that should have been paid in Mauritius: FRW 6,000,000
Actual Tax paid in Mauritius: FRW 3,000,000
The lower is FRW 3,000,000; this means that the double taxation relief is FRW
3,000,000
Step 7
Computation of tax liability Maurice Enterprise Ltd should pay to Rwanda
Revenue Authority (RRA) = Total Tax liability - Double taxation relief = FRW
7,350,000 - FRW 3,000,000 = FRW 4,350,000.
Skills lab activity 7
Through the field visit of one of the companies that do business crossing
out of Rwanda’s territory, student will be required to prepare a report on the
following questions:
How that company do declaration of an income received from outside of
Rwanda?
How much of tax paid in the foreign country that company operating in?
What are the challenges of trading with other countries faced by that
company?
What was the facilitation of Rwanda in the business process of that company?

7.6. Summary of the unit

• Trading in a country.
This refers to the trading made within the territory of the country i.e., both
buyer and seller are in the same country.
• Trading with a country.
This refers to the trading with other territories i.e., the seller is in one country,
and the buyer is in another “international” trade.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 167

 • Double taxation
As we have seen in the introductory activity, if an individual or a company
is resident in Rwanda, they will be charged Rwandan income tax on their
Rwandan and overseas taxable income sources. Foreign source income may
have already suffered taxation overseas, according to the tax rules of the
overseas jurisdiction.
• Double taxation agreement
International Taxation involves taxation which is cross border. It can arise from
an individual having taxable income or assets in two countries, or a business
operating in two (or more) countries. Due to increased globalisation, the
growing level of businesses trading internationally around the globe, and
increased personal mobility, international taxation is becoming more and
more prevalent.
• Double taxation arrangements may take the form of:
–– Bilateral conventions or agreements relief;
–– Unilateral relief;
• Foreign tax credit
Foreign tax credit is also known as Double Taxation Relief. Actually, a foreign
tax credit or double taxation relief is given to eliminate the effects of double
taxation where income that has suffered tax in one country is also subjected
to tax in another country.
Steps in computing double taxation relief
1. Calculate the total income received in resident and foreign country
2. Compute the tax liability of the total income earned from resident and
foreign country
3. Compute the tax liability of the income earned from resident country
4. Compute the tax liability that should have been paid in resident country
(Tax liability of the total income- Tax liability of the income earned from
resident country
5. Computation of the double taxation relief/ Foreign tax credit; This
should be equal to the

168 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

7.7. Additional information for teacher
1. BPP Learning Media Ltd, Taxation First Edition August 2019, Protocol
on the establishment of the East African Customs Union of 2004,
Ministerial Order Nº 003/20/10/TC of 11/12/2020,
2. Refer to Institute of Certified Public Accountants of Rwanda’s Materials
(books) for both Certified Accounting Technician (CAT) - Hard copies
and Certified Public Accountants (CPA)- Soft copies, available at https://
icparwanda.com/study-resources-cpa/
™™ Trade liberalisation
• Internal Tariff
1. As provided in Article 11 of the Protocol, the Partner States eliminate all
internal tariffs and other charges of equivalent effect on trade among
them, in accordance with the provisions of Article 14 of the Protocol.
2. The Council may, at any time, decide that any tariff rate should be
reduced more rapidly or eliminated earlier than is provided for in
accordance with paragraph 1 of Article 11.
• Common External Tariff
1. The Partner States hereby establish a three band common external
tariff with a minimum rate of 0 per centum, a middle rate of 10 per
centum and a maximum rate of 25 per centum in respect of all products
imported into the Community.
2. The Partner States hereby undertake to review the maximum rate of
the common external tariff after a period of five years from the coming
into force of the Customs Union.
3. The Council may review the common external tariff structure and
approve measures designed to remedy any adverse effects which any
of the Partner States may experience by reason of the implementation
of this part of the Protocol or, in exceptional circumstances, to safeguard
Community interests
4. For purposes of this Article, the Partner States use the Harmonised
Customs Commodity Description and Coding System referred to in
Article 8 of the Protocol.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 169

 • Non-tariff Barriers
1. Except as may be provided for or permitted by the Protocol, each
of the Partner States agrees to remove, with immediate effect, all the
existing non-tariff barriers to the importation into their respective
territories of goods originating in the other Partner States and,
thereafter, not to impose any new non-tariff barriers.
2. The Partner States formulate a mechanism for identifying and
monitoring the removal of non-tariff barriers.

7.8. End unit assessment

Solution 1.
The main features of a Customs Union include the following:
A common set of import duty rates applied on goods from third countries
(Common External Tariff, CET);
Duty-free and quota-free movement of tradable goods among its
constituent customs territories;
Common safety measures for regulating the importation of goods from
third parties such as phyto-sanitary requirements and food standards.
A common set of customs rules and procedures including documentation;
A common coding and description of tradable goods (common tariff
nomenclature, CTN);
A common valuation method for tradable goods for tax (duty) purposes
(common valuation system);
A structure for collective administration of the Customs Union.
A common trade policy that guides the trading relationships with third
countries/trading blocs outside the Customs Union i.e. guidelines for
entering into preferential trading arrangements such as Free Trade Area’s
etc. with third parties.
Solution 2.
A company is said to be thinly capitalized when its capital is made up of
a much greater proportion of debt than of equity. Under this context of
Transfer pricing in Rwanda, the thin capitalization occurs when the debt
is more 4 times of equity.

170 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Solution 3.
Bilateral conventions or agreements relief: These are bilateral agreements
for relief from double taxation. This involves countries affected
negotiating an agreement with a view to minimise or eradicate effects
of double taxation.
Unilateral relief: This is the situation where one country decides to
remove the burden of double taxation from international trade by opting
to give relief for foreign taxation on a unilateral basis i.e. without regard
to whether the other taxing country extended relief or not.
Solution 4.
Step 1
Gross income received by Mr. Alex = FRW1,200,000 + 3,600,000 = FRW
4,800,000

Step 2: Gross tax liability of FRW 4,800,000

Tax band Tax rate Taxable base Amount (FRW)

A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 4,600,000 1,380,000
Total Tax Liability 1,404,000

Step 3: Tax liability on income received from Rwanda of FRW 1,200,000

Tax band Tax rate Taxable base Amount (FRW)

A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 1,000,000 300,000
Total Tax Liability 324,000

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 171

 Step 4
The tax liability that should have been paid in Canada is equal to gross
tax liability minus tax liability on income received from Rwanda= FRW
1,404,000 - FRW 324,000 = FRW 1,080,000
Step 5
Double taxation relief; the lower between tax liability that should have
been paid and actual tax paid.
Tax liability that should have been paid: FRW 1,080,000
The actual tax paid: FRW 1,100,000

Double taxation relief is FRW 1,080,000, the lower between two.

Step 6
The tax liability
Gross tax liability FRW 1,404,000
Less double taxation relief FRW 1,080,000
Tax liability FRW 324,000
Solution 5.
Step 1
Total income received by CL Ltd = (FRW 15,000,000 - FRW 8,400,000) +
(600,000 * 5) = FRW 6,600,000 + FRW 3,000,000 = FRW 9,600,000.
Step 2
Total tax liability= FRW 9,600,000*30% = FRW 2,880,000
Step 3
Tax liability on income received from Rwanda= (FRW 15,000,000 – FRW
8,400,000) * 30% = FRW 1,980,000.
Step 4
Tax liability that should have been paid in South Africa= FRW 2,880,000 -
FRW 1,980,000 = FRW 900,000
Step 5
Double taxation relief; the lesser between Tax liability that should have
been paid in South Africa and actual tax paid:

172 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 Tax liability that should have been paid: FRW 900,000
Actual tax paid (210,000 * 5) = FRW 1,050,000
The lesser is FRW 900,000, Hence the double taxation relief is FRW 900,000
Step 6
The tax liability to be paid by CL Ltd for the year ended 31st December
2022 is equal to;

Total tax liability FRW 2,880,000

Less double taxation relief FRW 900,000
Tax liability FRW 1,980,000

7.9. Additional activities

7.9.1. Remedial activities

Q1. Transactions between which of the following parties could be subject to
transfer pricing adjustments?

1. Unmarried individual in a long-term relationship.

2. A parent company and its subsidiaries.
3. A company and the bank with which the company’s deposits are held.
4. A company and its controlling shareholder who is an individual.
a. 1 and 4
b. 2 and 3
c. 1 and 3
d. 2 and 4

Answer
The correct answer is d; both a parent company and its subsidiaries and a
company and its controlling shareholder who is an individual are subject to
transfer pricing adjustment in case transacted between them.

Q2. Kalisa, a Rwandan resident, had received an employment income of

FRW 500,000 from Akaseke, a non-profit making organization and also
received income from Mauritius equivalent to FRW 800,000 net of tax

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 173

 of FRW 250,000 for the month of January 2022. Rwanda had a double
taxation agreement with Mauritius.

Required: Calculate the double taxation relief that Rwanda granted to Kalisa
and the tax payable by Kalisa in Rwanda.

Answer

Step 1: Gross income received by Kalisa= FRW500,000 + FRW (800,000 +

250,000) = FRW 1,550,000

Step 2: Gross tax liability of FRW 1,550,000

Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 1,350,000 405,000
Total Tax Liability 429,000

Step 3
Tax liability on income received from Rwanda of FRW 500,000
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0 - 60,000 0% 60,000 0
60,001 - 100,000 10% 40,000 4,000
100,001 - 200,000 20% 100,000 20,000
Above 200,001 30% 300,000 90,000
Total Tax Liability 114,000

Step 4
The tax liability that should have been paid in Mauritius is equal to gross tax
liability minus tax liability on income received from Rwanda = FRW 429,000-
FRW 114,000 = FRW 315,000

174 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Step 5
Double taxation relief; the lower between tax liability that should have been
paid and actual tax paid.

Tax liability that should have been paid: FRW 315,000

The actual tax paid: FRW 250,000
Double taxation relief is FRW 250,000 the lower between two.

Step 6
The tax liability
Gross tax liability FRW 429,000
Less double taxation relief FRW 250,000
Tax liability FRW 179,000

7.9.2. Consolidation activities

Q1. Chris, a married Rwandan resident, had income of FRW 550,000 for year of
income 2022 and also received income from Zambia net of tax Zambian
Kwacha 80,000. The tax deducted in Zambia was Zambian Kwacha 30,000.

Note:
Rwanda has no double taxation agreement with Zambia.
1. Zambian Kwacha = FRW 58
Required
The tax payable by Chris in Rwanda
Explain the effect to Chris resulted from absence of double taxation agreement
between Rwanda and Zambia.

Answer
a)
Step 1
Gross income received by Chris = FRW550,000+ FRW (80,000+30,000) *58 =
FRW 550,000 + FRW 6,380,000= 6,930,000

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 175

Step 2
Gross tax liability of FRW 6,930,000
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0-720,000 0% 720,000 0
720,001-1,200,000 10% 480,000 48,000
1,200,001-2,400,000 20% 1,200,000 240,000
Above 2,400,001 30% 4,530,000 1,359,000
Total Tax Liability 1,647,000

Step 3
Tax liability on income received from Rwanda of FRW 550,000
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0-720,000 0% 550,000 0
720,001-1,200,000 10% - -
1,200,001-2,400,000 20% - -
Above 2,400,001 30% - -
Total Tax Liability 0

Step 4
The tax liability that should have been paid in Zambia is equal to gross tax
liability minus tax liability on income received from Rwanda= FRW 1,647,000
- FRW 0 = FRW 1,647,000

Step 5
Double taxation relief; the lower between tax liability that should have been
paid and actual tax paid.
Tax liability that should have been paid: FRW 1,647,000
The actual tax paid: (30,000*58) FRW 1,740,000

Double taxation relief is FRW 1,647,000 the lower between two but this would
not be deducted as double taxation relief because Rwanda has no double
taxation agreement with Zambia.

176 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Step 6
The tax payable
Gross tax liability FRW 1,647,000
Less double taxation relief FRW 0
Tax liability FRW 1,647,000
b)
Because Rwanda has no double taxation agreement with Zambia, Chris will
suffer double taxation, this means that Chris is supposed to pay an equivalent
of FRW 30,000*58= FRW 1,740,000 in Zambia and FRW 1, 647,000 in Rwanda as
well and in total, Chris is supposed to pay FRW 3,387,000, which is the loss to
Chris resulted from absence of double taxation agreement between Rwanda
and Zambia, because in case Rwanda has a double taxation agreement with
Zambia, Chris was supposed to pay only FRW 1,740,000 in Zambia and FRW
0 in Rwanda as he was supposed to get the double taxation relief of FRW
1,647,000.

Q2. Mulindi Company Ltd (MC Ltd) is a registered company in Rwanda which
manufactures and sells the construction materials. During the year ended
30 June 2021, MC Ltd generated an additional income equivalent to FRW
50,000,000 from Turkey and paid the tax there at rate of 28%. Rwanda has
signed the double taxation agreement with Turkey.

Required:
Compute the tax rate that MC Ltd is due on income received from Turkey.

Answer
The tax rate will be equal to different between Corporate Income Tax rate that
MC Ltd is supposed to pay in Rwanda and Tax rate relief paid in Turkey.

Thus,

CIT Rate in Rwanda is 30%

Tax rate relief (28%)
Tax rate that MC Ltd is due on income received from Turkey 2%

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 177

7.9.3. Extended activities
Q1. Mr. Moses was resident of Rwanda in the year of income 2021, during
that year he used to work some weekends in Belgium and where earned net
income amounted to Euro 650. Taxes paid on Belgium’s income amounted to
Euro 175. His gross employment income from Rwanda was FRW950,000 (PAYE
deducted FRW184,800). Further, he had provided monthly communication
allowance of FRW 40,000 used in both business and private activities.

Other income received by Mr. Moses:

Rental income of FRW 400,000 after deducting: cost of furniture and fittings
FRW 250,000, and caretakers’ wages FRW 12,000 per month.

Assume the applicable exchange rate was FRW 1,150 to Euro 1 and Rwanda
has signed a double taxation agreement with Belgium.

Required:
Double taxation relief (if any) due to Mr. Moses for the year of income 2021.
Tax payable (or refundable) by Mr. Moses for the year of income 2021.

Answer
Step 1
Income received by Mr. Moses from Belgium = FRW (650+175) *1,150= FRW
948,750
Income received by Mr. Moses from Rwanda:
Employment income
Gross Income FRW 950,000 plus communication allowance 20% (FRW
40,000*12) = FRW 950,000 + FRW 96,000 = FRW
1,046,000
Rental Income:
Net Income: FRW 400,000
Add back
Furniture and fittings FRW 250,000
Total FRW 650,000
Less

178 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Tax depreciation (250,000 * 25%) = FRW 62,500
Adjusted net rental income FRW 587,500

Income from Rwanda= FRW 587,500+ FRW 1,046,000= FRW 1,633,500

Total income from both Rwanda and Belgium= FRW 948,750 + FRW 1,633,500=
FRW 2,582,250
Step 2
Gross tax liability of FRW 2,582,250
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0-720,000 0% 720,000 0
720,001-1,200,000 10% 480,000 48,000
1,200,001-2,400,000 20% 1,200,000 240,000
Above 2,400,001 30% 182,250 54,675
Total Tax Liability 342,675

Step 3
Tax liability on income received from Rwanda of FRW 1,633,500
Tax band Tax rate Taxable base Amount (FRW)
A B C=B*A
0-720,000 0% 720,000 0
720,001-1,200,000 10% 480,000 48,000
1,200,001-2,400,000 20% 433,500 86,700
Above 2,400,001 30% - -
Total Tax Liability 134,700

Step 4
The tax liability that should have been paid in Belgium is equal to gross tax
liability minus tax liability on income received from Rwanda= FRW 342,675 -
FRW 134,700= FRW 207,975

Step 5
Double taxation relief; the lower between tax liability that should have been
paid and actual tax paid.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 179

Tax liability that should have been paid: FRW 207,975
The actual tax paid: (175*1,150) FRW 201,250
Double taxation relief is FRW 201,250 the lower between two.
Step 6
The tax payable/ Refundable
Gross tax liability FRW 342,675
Less:- Double taxation relief FRW 201,250
Less PAYE actually paid FRW184,800
Tax Refundable (FRW 43,375)
Q2. Syca Ltd is company registered in Rwanda and producing the IT equipment,
during the year ended 30 June 2022 its Profit or loss account shows the
following:

Details Amount in FRW Amount in FRW

Revenue 1,800,000
Expenses
Cost of goods sold 500,000
Purchase of Machine for fixing 600,000
the computer
Provision of bad debt 100,000
Wages and salaries 800,000
Donation to political party 50,000
Total expenses (2,050,000)
Profit or loss (250,000)

Additional information
Syca Ltd paid FRW 150,000 of tax installment for the year ended 20 June 2022
During that year Syca Ltd also received a net income of USD 1200 from the
other business in UK after deducting USD 200 of advertisement and tax of
USD 400. Rwanda and UK have a double taxation agreement.
1 USD = FRW 1,000

180 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Required:
Compute the tax due to Rwanda Revenue Authority by Syca Ltd for the year
ended 30 June 2022.

Answer
Step 1
Total taxable income received by Syca Ltd.
Taxable Income received from Rwanda

Details Amount in FRW Amount in FRW

Reported Loss (250,000)
Add non-deductible expenses
Purchase of Machine for fixing the 600,000
computer
Provision of bad debt 100,000
Donation to political party 50,000
750,000
Adjusted taxable income 500,000

Taxable income received from UK= FRW (1,200+400) * 1,000= FRW 1,600,000
Note: Advertisement has not added back because it is allowable expenses.
Total taxable income= FRW 500,000+ FRW 1,600,000= FRW 2,100,000
Tax liability on total taxable income= 30%* FRW 2,100,000= FRW 630,000
Step 2
Tax liability on taxable income in Rwanda= FRW 500,000*30%= FRW 150,000

Step 3
Tax that should have been pain in UK= FRW 630,000 - FRW 150,000 = FRW
480,000

Step 4
Computation of Double taxation relief
Tax that should have been paid in UK FRW 480,000

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 181

Actual tax paid FRW (400*1,000) = FRW 400,000
The double taxation relief is FRW 400,000, the lower between 2
Step 5
Tax due to RRA by Syca Ltd
Total tax liability FRW 630,000
Less
Double taxation relief FRW 400,000
Instalment FRW 150,000
Tax due to RRA FRW 80,000

182 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Unit 8 TAXES DECLARATIONS AND PAYMENT

8.1. Key unit competence: Prepare Taxes declaration and Payment

8.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in senior 2 (unit 5) to the Taxes in Rwanda where
they learned about obligation of tax payer. So, with this prior knowledge,
skills, attitudes and values it should help them to know about Tax declarations
and payments.

8.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones. you can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance
of environmental protection and the importance of tax payment that lead
growth of government revenues to be used in budget allocation where
environmental sector will be given a budget to protect environment.

Gender education: Emphasis throughout this unit has to be put on how

both males and females have the equal opportunities to understand and
explain the process of tax declaration and tax payment in Rwanda. So that
this will encourage people to take the first step in paying their duties to the
government.

Inclusive education: In addition to all having equal opportunities to carry

out business activities, emphasis has to be put on how we all regardless of

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 183

our background, economic or social setup have right to develop an ethical
understanding of Rwandan system that do not discriminate. Students need
to understand that the customs procedures should not discriminate but
promote inclusiveness of all etc.

Peace and Values: You need to emphasize to learners the need to live in
peace and harmony with others. Students need to appreciate the role of tax
payment in promoting peace and patriotism in the community, the main
government source of revenue is from taxes, so as taxes collection increase
as well as peace and values budget increase through different government
agencies such National Police, National Army and contributes to national
development goals.

Standardization culture: You need to emphasize to students the need for

standard in a business legal aspect and compliance of laws. This will help
them to abide by tax laws as prospective business legal aspects.

8.4. Guidance on introductory activity

Follow the guidance about the introductory activity:

Students in small groups, pairs or individual read and analyse the case study
and identify the reasons why business need to be registered, and types of
central taxes that a new business need to be registered on.

During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.

Students share their findings, responses or answers to the activity using an

appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.

Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’ book.

You can support student’s answers by referring to possible answers to the

introductory activity below:

184 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Possible answers for introductory activity (case study)

Note: These responses may be shared or not with the students. They are
specifically to guide you while harmonizing students’ responses during
presentation.

1. According to Article 9 of the Law Nº 027/2022 of 20/10/2022

establishing taxes on income, an individual who carries out taxable
income generating activities prepares an annual tax declaration in
accordance with procedures specified by the tax administration. That
why she is supposed to be registered in tax administration.
2. Ineza’ Enterprise should register for the following taxes:
–– Personal Income Tax
–– Pay As you Earn for the accountant and RSSB contributions of the
Accountant
–– Value Added Tax, by voluntary.
3. Yes, apart from taking cheque to bank, an accountant can also use the
following methods
• Payment by mobile service
• Payment by IREMBO services
• E-banking

8.5 List of lessons/sub-heading

Headings # Lesson title/sub- Learning objectives Number
heading (from the syllabus of periods
or set accoding to
the lesson title)
Introductory Arouse the curiosity 1
ativity of the student on the
content of unit 8
8.1Taxes 1 –Definition
– of Tax Define Taxes 3
declaration declaration and declaration and
Requirement Explain requirement
for the taxes of Taxes declaration
declaration

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 185

8.2 Process 1 Mandatory Identify Mandatory 4
of Taxes information information on
and RSSB on declaration, declararion , methods
Contribution Methods used for taxes and
declarations of Taxation RSSB Contributions
and RSSB declaration
Contributions
declaration
8.2 Process 1 Process of Taxes Interpret the process 3
of Taxes of tax declaration for
and RSSB direct taxes
contributions
declaration
2 RSSB Identify process 3
Contributions of Taxes and RSSB
declaration Contribution
declaration
8 3 Print 1 Process print out Produce print out a 3
out of a Tax a tax declaration tax declaration
declaration form and
and Methods Methods of Tax Identify the methods
of Tax payment of tax payment
payment
8.4 Filing 1 –Definition
– of Identify Importance 3
system filing system of filing system and
and The purpose the purpose of filing
of filing system
2 Methods of Identify methods 4
filing system, used of filing
Advantages and document ,
disadvantages advantages and
methods of filing disadvantages
methods of filing
3 –– Characteristics Identify the 3
of good filing characteristics of
system. good filing

8.5. End Unit Assessment 3

186 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Lesson 1: Tax declaration
a) Learning objectives
Definition of Taxes declaration and Explain requirement of Taxes declaration
and Identify Mandatory information on declaration, methods used for taxes
and RSSB Contributions declaration.

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

d) Learning activities
Activity 8.1
Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question-and-
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 187

students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:

Answers to Activity 8.1

Answers
INEZA Trading Ltd mandatory documents to attach the tax return:
–– Profit and loss account
–– Balance sheet
–– Transfer pricing document if any transfer pricing activities
–– Certified (audited) financial statements
–– Company representative form
Application activities 8.1
Students analyse and discuss about the questions either in groups or in pairs
and come up with possible answers. This activity may be given as a research
question or homework.

Depending on the purpose of the application activity, choose an appropriate

method to assess student’s findings, answers or responses. Depending on
the performance or results, you may decide to give remedial or extension
activities.

Answers to application activity 8.1

Q1. Tax declaration: Tax declaration is made by completing a form prepared

by the Fiscal Administration,

Q2. Identify income tax in Rwanda.

–– Professional income tax
–– Rental income tax
–– Individual income tax
–– Corporate income tax

188 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q3. The deadline to declare and pay Trading License Taxes: is 31st January of
current year

Lesson 2: Process of Taxes and RSSB Contribution declarations

a) Learning objective
Interpretation of the process of tax declaration for direct taxes.

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
In previous lesson, lesson 1 Students studied for meaning of tax declaration
and payment that will help to follow and understand each process of
declaration leant in this lesson.

d) Learning activities
Activity 8.2
–– Before the day of starting this lesson, give a student homework of
making research on declaration process.
–– At start of the lesson Put students in small groups and give clear
instructions about the activity.
–– Let each group share information about the findings
–– Pick out a correct step at side, try to input the missing steps and arrange
declaration steps by order.
Answer to Activity 8.2
Process of tax declaration:
–– Pay domestic Tax
–– Log in by TIN and Password
–– Tax Declaration
–– New Declaration
–– Choose original and submit

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 189

 –– Find pending Document Number and click on it
–– Fill Declaration form and save
–– Continue with uploading Annex
–– Compare annex with declaration form
e) Application activities 8.2
Students can be given an individual activity to carefully read the question
and understand it. give clear instructions such as avoiding all cheating ways.
Students are to submit their answer sheets to teacher. Teacher should monitor
the activity to ensure students are doing their own work.

Teacher makes correction of papers to assess their answers depending on the

purpose of the application activity. Refer to the possible answers below as you
assess their work.

Answers to application activity 8.2

Methods of declaration
1. M-declaration
M-Declaration is a system designed to allow certain types of taxpayers to
declare Income Tax through their mobile phones.

2. E-declaration
E-declaration is an online declaration using portal through which all domestic
tax types can be declared. This can be done online or with the help of staff at
RRA offices

Lesson 3: Print out of acknowledgement receipt for tax declaration and

Methods of Tax payment

a) Learning objective
Produce and print out acknowledgement receipt and identify the methods of
tax payment.

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

190 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 8.3
–– Put students in small groups and give clear instruction about the activity
–– Ask them to look at the picture in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
–– Harmonize their findings or answers, and link the findings to the
learning objective, help them draw conclusions/summary for showing
requirements that any taxpayer needs to start a shop. Answers or
address any questions or challenges about the activity. Guide them to
make notes in referring in their students’ book.
Answer to Activity 8.3

1. - Mobi cash, the way of payment taxes

- Computer to print out EBM Invoices
- Tax Administration logo and RSSB logo
2. Acknowledgement receipt / Invoice

Application activities 8.3

Activity 8.3
–– Group students into small groups
–– Take them to Computer lab.
–– Invite accountant of school and he printed the acknowledgement
receipts for one of declared taxes
–– Ask him to pay that tax by E-banking.
–– If school does not use E-banking ask an accountant to show student
how to fill cheque and payment order taken to bank.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 191

Answer: Modes of payment

1. Paying Taxes online using Internet Banking and E-Payment

Option 1: Using the banks’ internet banking systems
All commercial banks in Rwanda now offer internet banking services.

Option 2: Using the Domestic Taxes E-Payment system

In the case of domestic taxes, after submitting the declaration it is possible to
directly access the domestic taxes E-Payment system, by clicking ‘E-payment’.

2. Paying taxes on mobile phones using MTN Mobile Money

Paying taxes through mobile money is currently only available on MTN Mobile
Money.

To pay through an MTN Mobile Money agent, provide the agent with the RRA
Reference Number from the Acknowledgement Receipt and sufficient funds
to cover the amount payable, including transaction fees.

3. Paying taxes through agents with Mobicash

Paying taxes with Mobicash is currently only available through Mobicash
agents. The taxpayer does not need to register with Mobicash to pay taxes
through an agent.

4. Paying taxes at a Bank

Taxes can be paid at all registered commercial banks in Rwanda. This can be
done using a cash deposit slip or by bank cheque

Lesson 4: Filing system

a) Learning objective
Identify Importance of filing system and the purpose of filing.
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, text books and any other trustworthy and reliable resources to
enhance learning.

192 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 8.4
–– Put students in small groups and give clear instruction about the activity
–– Ask them to read the scenario in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
–– Harmonize their findings or answers, and link the findings to the
learning objective, help them draw conclusions/summary for showing
requirements that any taxpayer needs to start a shop. Answers or
address any questions or challenges about the activity. Guide them to
make notes in referring in their students’ book.
Answer to Activity 8.4
1. After payment he should file those proofs of payments with copy of
invoices.
2. Filing is all about classifying, arranging and storing record so that they
can be located when required. It is also the process of collecting and
arranging records or their copies in such a way so that whenever it is
needed it could be found very easily.
e) Application activities 8.4
Students can be given an individual activity to carefully read the question
and understand it. give clear instructions such as avoiding all cheating ways.
Students are to submit their answer sheets to teacher. Teacher should monitor
the activity to ensure students are doing their own work.

Teacher make correction of papers to assess their answers depending on the

purpose of the application activity. Refer to the possible answers below as you
assess their work.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 193

Answers to Application Activity 8.4

Answer 1.
Alphabetical classification
The filing method under which files and folders are arranged in order of
alphabets of the names of person or institution concerned with such file is
alphabetical classification. In case name of more than one person starts with
same letter then second letter of name is taken into consideration. It is flexible
method. It is used in both small and large organization.
Numerical classification
The filing method under which files and folders are arranged in order of
number is called numerical

classification. All files and folders are given separate numbers. It is indirect
method of classification of filing. In this filing alphabetical index is required. It
includes name, address, phone number, subject and other information along
with file number.

Answer 2
Advantages:
• Simple and easy to understand
• Doesn’t need separate index
• It is flexible.
Skills lab activity 1
Guidance on the skills lab activity:

In conducting this skills lab activity, you can ask an accountant of your school
the day when he/she will declare taxes based on his/her schedule.

Prepare your students by grouping them into groups and request access to
computer lab basing on the available date of school accountant.
i. Build
–– Put students in the groups
–– Give them clear guidelines about how they will behave in computer lab
–– Invite school accountant to do tax declaration and ask for an accountant
to do it slowly.

194 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– Use Projector
–– Accountant should start from preparation of annexures.
–– Allow students to ask questions.
–– NB: No student allowed to click on menu differently with what accountant
clicked on.
ii. Practice
–– Accountant make sure that the internet connectivity is full.
–– Accountant should visit RRA Website (www.rra.gov.rw).
–– Accountant should put School credentials( TIN and Password)
–– Start with downloading annexures and fill them
–– Go to new declaration menu and open a given document number
–– Continue with filling declaration form and save
–– Compare annexures with declaration form
–– Certify and submit
iii. Present
During the group presentation, the teacher must assess whether the student
participation in the skills lab activity was effective by:
–– Selecting randomly anyone in all groups to present the report on behalf
of team members using projector
–– Allow students to ask question to their fellows.
–– All team members being presenting are expected to contribute to the
plenary by answering some questions that the presenter is not covering
as well as expected.
iv. Conclusion
The teacher emphasizes on the objective of the research reminding students
that they were expected to understand the process of declaration for different
tax type. After this practice, students should be able to declare some of taxes,
and to apply these skills in their business after their studies or by helping tax
payers in tax declaration services and comply with all deadlines per tax as
indicated in the tax law.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 195

8.6. Summary of the unit
1. Meaning of tax declaration
Tax declaration is made by completing a form prepared by the Fiscal
Administration.

The determination of the payable tax is made in the 1st degree by the taxpayer
by way of declaration.

In the 2nd degree, the declaration filed by the taxpayer is verified by the Fiscal
Administration.

The taxpayer is obliged to file a declaration even when no profit was made
during the taxable period.

According to Article 9 of the Law Nº 027/2022 of 20/10/2022 establishing

taxes on income, an individual who carries out taxable income generating
activities prepares an annual tax declaration in accordance with procedures
specified by the tax administration.

2. Computation and payment of income tax

The amount of tax to be paid is calculated on the basis of the annual basic
declaration, reduced by:
i. the tax withheld on taxable income; with the exception of the tax
withheld on employment income, as well as on income to which lump
sum tax or flat tax are applied;
ii. the prepayments made every quarter.

Income tax is paid to the Tax Administration starting from the date of
declaration and not later than 31 March of the year following the tax period
through procedures specified by the Tax Administration unless otherwise
provided.

3. Methods of declaration
Mobile declaration
Here, the declaration is done via mobile phones by following prescribed
steps such *800*# press yes. This mode is likely used by small and medium tax
payers.

196 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

E-declaration
This is the way of making declaration by using internet and E-tax portal at
distance.

E-Tax is an online portal through which all domestic tax types can be declared.
This can be done online or with the help of staff at RRA offices. RRA has
developed the E-Tax system to make it easier for taxpayers to declare and pay
domestic taxes.

4. Declaring PAYE and RSSB Contributions

To facilitate taxpayers, RRA and Rwanda Social Security Board (RSSB) have
introduced a unified declaration, where PAYE and all RSSB contributions
(except for voluntary Pension Scheme) can be declared together.

The original method of declaring PAYE and each of the RSSB contributions
separately is still available. However, RRA is encouraging the use of the unified
declaration, and recommends that any newly declaring taxpayers should use
the unified declaration.

Therefore, this tax handbook focuses on the declaration process for the
Unified PAYE and RSSB declaration. The process for the original method is
very similar, but must be repeated for each of the separate tax types and RSSB
contributions.

5. Modes of tax payments

After submission of your tax declaration, you find acknowledgement invoice
where you find tax payable.

You have to choose one of the following payment methods to pay tax liability:
–– Online using Internet Banking and E-Payment.
–– On mobile phones or through agents using MTN Mobile Money.
–– Through Mobicash agents.
–– In person at a bank.
6. Filing
After paying tax you should file the supporting documents that why
there are different methods of filing.
• Alphabetical.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 197

 • Numerical,
• Geographical,
• Chronological

8.7. Additional information for teachers

Teacher should visit RRA websites, go to publications and read tax law in
Rwanda especially tax procedures and read articles related to payment and
declaration.

Teacher also should go to you tube and use DUHUGURANE as link for having
more skills related to declaration for all tax types and should share this link to
students.

Teacher should also be aware on filling annexures where each column should
be filled and pay attention on dates mode, he should know about valid
invoices and invoice period thus allowable invoices are invoices generated
by EBM.

In declaration, Teacher should be aware about rectification and revise,

Rectification happens in case after submission tax declaration, a tax payer

realize that he has committed error after payment.

But revise happens in case a tax payer committed error, but before deadline
of declaration and payment, a tax payer can revise declaration to find another
acknowledgment invoice and also revise declaration can be done by tax
administration in case they want to record audit results or other assessments
done by tax administration.

8.8. End unit assessment (answers)

Q1. Tax declarations for all registered tax types must be submitted for tax
periods from the date the taxpayer was registered.
Even if there is no business activity within the first, or subsequent, tax periods,
the declarations must still be submitted to avoid penalties

198 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q2. Filling: Is work of arranging documents in the correct files. The activity of
putting documents, into files.
Q3. Discuss the quality of goods filings
• Simplicity: a good filing system should be simple to operate.
• Economical: a good filing system should be economical.
• Accessibility: good filing system should be easily accessible
• Compactness: a good filing should not occupy too much office space.
• Flexibility: a good filing system should be flexible.
Q4. Identify any three (3) methods of good filing
Filing in Alphabetical order
Filing in Numerical order / by number
Filing in Geographical order /by places
Filing in chronological order / by dates.
Filing in Category / by subject
Q5.
a) Taxpayers are required to fill the total turnover/revenues/total sales of
the quarter under declaration (Here for our case is January to March
2020). As RRA is not requiring taxpayers to produce financials for each
three months, the system will compute internally the tax to turnover
ratio of previous year (2019) and apply it to the quarterly total turnover/
revenues/total sales of the quarter to determine the IQP payable.
Total sales of FRW 10,000,000 (Quarter January to March 2020)
Total sales/revenue declared 2019 = FRW 50,000,000
Annual tax computed in 2019 = FRW 80,000
80,000
Tax to turnover ratio (2019) =
50,000,000
80,000
IQP payable = 10,000,000 *( )= FRW 16,000
50,000,000
b) Jean-Baptiste must declare and pay IQP of FRW 16,000 by 30th June
2020.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 199

8.9. Additional activities
8.9.1 Remedial activities
Q1. What are the additional requirements for ‘Certified Financial Statements?

Answer: A taxpayer with annual turnover of equal to or above FRW 400,000,000

is also required to submit ‘Certified Financial Statements

Q2. What are the main objectives of filing system?

Answer: Objectives of filing system.

a) It helps to keep all records together so the history of office can be
understood.
b) It helps to provide safety place for storage of necessary documents in
order to use and locate then when required.
c) To make records readily and easily available.
d) It can be used as evidence in case of dispute
e) It helps in some legal formalities.
f ) It is shown as profit or legal evidence.
g) It can be presented as a legal document in court.
h) It helps to make future plans. Past records are the base of future records.
Q3. Outline the advantages of declaring online or on mobile phones.
a) Declare taxes anytime, from anywhere.
b) Avoid travel costs of visiting RRA offices.
c) Avoid queuing times at RRA offices.

8.9.2. Consolidation activities

Q1. When is the deadline to declare and pay.
a) Income Tax (PIT or CIT)
b) Rental Income Tax
c) Immovable property
Answer:
a) Income Tax (PIT or CIT): 31st March of following year
b) Rental Income Tax: 31st January of following year
c) Immovable property: 31st December of same year

200 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q2. The following are types of the taxes collected in Rwanda. Fill the table
below by putting each tax to its corresponding categories:

Corporate income tax, property taxes, rental taxes, withholding tax, trading
license tax
Taxes collected by the government of Taxes collected by the district
Rwanda

Answer:
Taxes collected by the district:
–– Property taxes
–– Rental taxes
–– Trading license tax
Taxes collected by the government of Rwanda
–– Corporate income Tax
-- Withholding tax

8.9.3. Extended activities

Q1. When is the deadline to declare and pay the RSSB contribution and PAYE?

Answer: Declaration of tax and remittance of RSSB contributions should be

done monthly.

On monthly basis
Declaration of tax and remittance of contributions are made on monthly basis;
not later than the 15th day of the month following the month to which the
contributions relate.

Q2. Discuss the deadline to declare and pay VAT

Answer
VAT is declared and paid on a monthly basis. Alternatively, taxpayers with
annual turnover below FRW 200,000,000 may request to declare on a quarterly
basis.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 201

Whether monthly or quarterly, the VAT declaration must be submitted and
paid by the 15th of the month following the end of the tax period.

This means that monthly declarations concerning the tax period between
March 1st and March 31st must be declared to RRA and paid by April 15th. Then
declarations concerning the tax period between April 1st and April 30th must
be declared to RRA and paid by May 15th and so on throughout the year.

The quarters for taxpayers declaring VAT on a quarterly basis concern the tax
period between:
–– March 1st to May 31st must be declared and paid by 15th June.
–– June 1st to August 31st must be declared and paid by 15th September.
–– September 1st to November 30th must be declared and paid by 15th
December.
–– December 1st to February 28th (or 29th if a leap year), must be declared
and paid by 15th March.
Note: The Commissionaire General has issue an instruction adjusting the
start of the quarter as follows: Quarter 1: January to March and pay by 15th
April and so on…

202 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Unit 9 TAX ADMINISTRATION

9.1. Key unit competence: Identify tax administration according to

rules and regulations

9.2. Prerequisite (knowledge, skills, attitudes and values)

Learners were introduced in taxation in senior 5 (unit 8) to the tax declaration
and payment So, with this prior knowledge, skills, attitudes and values it
should help them to appreciate the effectiveness of tax administration.

9.3. Cross-cutting issues to be addressed:

Note: The examples below are just to guide you on how to address cross-
cutting issues throughout the unit but this does not mean that these are the
only ones. You can address and give students opportunities to discuss all the
cross-cutting issues where possible taking consideration of their environment
or community around them.

Environment and sustainability: Environment is one of the greatest factors

that can affect both positively or negatively any business activity and one
cannot start up a business without the environment. Therefore, great care
for environment is crucial. Students are to be advised on the importance
of environmental protection and the importance of tax administration in
reducing tax fraud or evasion within the country

Gender education: Emphasis throughout this unit has to be put on how both
males and females have the equal opportunities to Identify tax administration
according to rules and regulations. So that this will encourage people to take
the first step in paying their taxes to the government.

Inclusive education: In addition to all having equal opportunities to carry

out business activities, emphasis has to be put on how we all regardless of
our background, economic or social setup have right to develop an ethical

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 203

understanding of tax administration that do not discriminate. Students
need to understand that the tax administration should not discriminate but
promote inclusiveness of all etc.

Peace and Values: You need to emphasize to learners the need to live in peace
and harmony with others. Students need to appreciate the effectiveness of tax
administration in promoting peace and patriotism in the community avoiding
activities that are illegal e.g. smuggling and make sure that every trade they
plan to have is legal and contributes to national development goals.

Standardization culture: You need to emphasize to students the need for

standard in a business legal aspect. This will help them to abide by standards
of tax administration as prospective business legal aspects

9.4. Guidance on introductory activity

Follow the guidance about the introductory activity:
Students in small groups, pairs or individual read and analyse the scenario and
enumerate the importance of Rwanda revenue authority and the purpose of
tax audit to the government.
During the activity, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing
and should applaud the actors after.
Students share their findings, responses or answers to the activity using an
appropriate method such as group presentation, pair-share or large group
discussion. Ensure all students are given an opportunity to give their views
and should be respected.
Appreciate the team’s presentations and remind them that this activity was
not meant come to the very right answers but to help them become aware
of what to expect in the unit. Answers to the activity will be got as the unit
progresses. Guide them to take notes in their books referring to learners’ book.
You can support student’s answers by referring to possible answers to the
introductory activity below:

204 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Possible answers for introductory activity (case study)
Note: These responses may be shared or not with the students. They are
specifically to guide you while harmonizing students’ responses during
presentation.
1. Explain to parents the essence of paying compulsory contribution
to government to allow it ensuring the minimum service to general
public like tax to finance different government activities such as road,
schools, hospitals, vaccination programme against Covid19, etc…
2. The purpose of taxation is to provide money to government collected
from its citizens to pay for public services

9.5. List of lessons/sub-heading

Headings # Lesson title/sub-
Learning Number of
headings objectives periods
Description Introductory activity
Arouse the 1
of the Tax curiosity of
administration students on the
(Rwanda Revenue content of unit 9.
Authority) 1 General Identify general 2
introduction of tax introduction
administration of tax
administration
2 Description of Tax Identify 1
payer recruitment, Description
registration and of tax payer
de-registration recruitment,
registration and
de-registration.
3 Registration and Describe 2
De-registration Registration and
procedures De-registration
procedures
9.2 Self- 1 Self-assessment Identify the Self- 1
assessment assessment

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 205

9.3 Tax audit 1 General Identity the 1
introduction on tax General
audit introduction on
tax audit
2 Types of audits Explain the Types 2
of audits
3 Features of an Identify the 1
effective audit plan features of an
effective audit
plan
4 Tax arrears, Debt Explain Tax 1
classification And arrears, Debt
Enforcement plan classification And
Enforcement plan
9.4 End unit assessment 2

Lesson 1: Description of the Tax administration (Rwanda Revenue

Authority)

a) Learning objective
• Identify general introduction of tax administration
• Identify Description of tax payer recruitment, registration and de-
registration.
• Describe Registration and De-registration procedures
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, official gazette, text books, resourceful person and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the Key unit competence in the syllabus to determine what students
will know and be able to do by the end of the unit. Look at the action verb,
concept and context of learning objective. This will help you see the skills,
knowledge attitudes embedded in the learning objective. Remember the
learning objective link to the key unit competence.

206 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 d) Learning activities
Activity 9.1
Exploit and use appropriate learning methods that can foster collaborative
learning for (example small groups or pairs, gallery walk). Provide students
with the activity in the student’s book, and give instructions to the activity to
be done.

During grouping or pairing, ensure a balance between boys and girls and
learners’ different abilities. During this activity ensure that students have
understood the instructions, prompt and probe them through question-and-
answer approach to make sure they are active and their curiosity in learning
and discovery is aroused. Encourage students to work together, value each
other’s contributions, share ideas, etc.

Students present their findings, results, answers through an appropriate

method such as pair-share, small group presentations on the introductory
activity. Encourage different students from the groups to share the group’s
work to avoid just a few students dominating. Also encourage other
students to listen and not disturb when other teams are sharing unless it is a
question. Encourage students to appreciate each other’s work especially the
presentation. Appreciate the team’s presentations and remind them that this
activity was not meant to come to the very right answers but to help them
become aware of what to expect in the lesson. Answers to the activity will be
got as the lesson progresses. You can support students’ answers by referring
to possible answers to the activity below:

Answers to Activity 9.1

Core values of Rwanda Revenue Authority are:
-- We are Customer-Focussed
-- We act with Integrity
-- We are Accountable
-- We work as a Team
-- We are Professional

e) Application activities 9.1

This activity can be given as a normal individual activity, where students
identify general introduction of tax administration.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 207

Monitor the activity to ensure students are on track and actively participating.

You make correction of papers Assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work.

Answers to application activity 9.1

Q1.
a) True
b) True
c) False
Q2. De-registration is where a taxpayer is removed from the obligations to
declare a certain tax.

Q3. It is free to register a business in Rwanda. It is free to register online and

at RDB and BDF offices
Q4.
1. b
2. d
3. a

Lesson 2: Self-assessment
a) Learning objective
Identify the self-assessment

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books,
internet and projector, case studies, text books, resourceful person and any
other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
In previous lesson, lesson 1 Students studied for description of the Tax
administration (Rwanda Revenue Authority)

That will help to identify the self-assessment leant in this lesson.

208 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 d) Learning activities
Activity 9.2
–– Put students in small groups and give clear instruction about the activity
–– Ask them to read the scenario in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating
–– Invites students to share their findings
–– Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary for why making a self-
review in the business is important. Answers or address any questions
or challenges about the activity. Guide them to make notes in referring
in their students’ book.
Answer to Activity 9.2
Self-review helps to know the:
–– Recovery of tax
–– Interest
–– Penalties and all costs incurred collection.
e) Application activities 9.2
This activity can be given as a normal individual activity, where students
Explain the excise duty and the person required to register for excise duty,
explain the obligations of excise registered taxpayers and valuation methods
of excise duty, identify the taxable products, rates of excise duty and Compute
Excise duty
Monitor the activity to ensure students are on track and actively participating.
You make correction of papers Assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work
Answers to application activity 9.2
Q1. This is the calculation of the amount of taxable income and gains after
deducting relief and allowances; a calculation of income tax payable after
taking into account tax deducted at source and tax credits on dividends.
Thus, it can be considered as examination and computation of the taxe
payable to the taxa administration. It must be fair, accurate and legal
bound.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 209

Q2. The notice of assessment mentions:
The taxpayer’s name, taxpayer identification number and address;
The modalities of calculation of the tax and the amount of tax to be paid;
The tax declaration or its rectification note, the assessment notice on which
the declaration is based;
The date of issuance of the notice of assessment;
The address of the Commissioner General to which an appeal has to be sent;
The conditions to be fulfilled in order to lodge an appeal

Lesson 3: Tax audit

a) Learning objective
• Identity the General introduction on tax audit
• Explain the types of audits
• Identify the features of an effective audit plan
• Explain tax arrears, debt classification and enforcement plan
b) Teaching resources
Basic materials for a class/ lesson to be conducted: Students books, internet
and projector, case studies, official gazette text books, resourceful person and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction (Guidance on how to start

the lesson)
Read the learning objective to determine what students will know and be
able to do by the end of the lesson. This will help you see the skills, knowledge
attitudes embedded in the learning objective. Remember the learning
objectives are linked to the key unit competence.

d) Learning activities
Activity 9.3
–– Put students in small groups and give clear instruction about the activity
–– Ask them to read the scenario in student book and answer the questions
provided in the activity
–– Guide students’ discussion and make sure that everyone is participating

210 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– Invites students to share their findings
–– Harmonize their findings or answers, and link the findings to the
learning objective, help them draw conclusions/summary for identify
the features of an effective audit plan, and explain tax arrears, debt
classification and enforcement plan. Answers or address any questions
or challenges about the activity. Guide them to make notes in referring
in their students’ book.
Answer to Activity 9.3
i) To exam whether taxpayer fulfils his/her required obligations related to
tax law
ii) To make sure that tax payer withhold taxes as required by withholding
tax law
iii) To reduce tax fraud(tax evasion)
iv) To detect error and fraud committed in the books of accounts
specifically on side of non -allowable tax expenses.
v) To find out challenges face tax payers in their self-assessment and tax
filling.

f) Application activities 9.3

This activity can be given as a normal individual activity, where students
explain the excise duty and the person required to register for excise duty,
explain the obligations of excise registered taxpayers and valuation methods
of excise duty, identify the taxable products, rates of excise duty and compute
Excise duty.

Monitor the activity to ensure students are on track and actively participating.

You make correction of papers Assess their answers depending on the purpose
of the application activity. Refer to the possible answers below as you assess
their work

Answers to Application Activity 9.3

Q1. During audit, the taxpayer must:
1. Provide tax auditors with appropriate working environment;
2. Provide tax auditors with books and records prescribed by this Law
and other related documents and provide them with their copies.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 211

Q2. For the state:
a) Audited companies ensure the accomplishment of fiscal duties
regarding companies (payment of taxes and social contributions)
b) The government is assured that public funds are being well used
c) The government ensures continuity of business for the purpose of
general interest of the people
d) The state ensures that books of accounts are maintained according to
legal requirements and companies act.

Q3. There are three main types of audit:

–– Desk audit
–– Issue audit
–– Comprehensive audit
Desk audits are conducted by RRA staff using information that has already
been submitted to RRA.

Issue audits are usually focused on a single tax type, single aspect or single
tax period. Refund audits are a type of issue audit, focused on tax declarations
claiming refunds from RRA. Issue audits may be desk-based or involve visits to
the taxpayer’s business premises.

Comprehensive audits are more in-depth and time intensive. These are
usually conducted by RRA staff whilst visiting the taxpayer’s business premises
and reviewing all relevant documents.

Skills lab activity 4

Guidance on the skills lab activity. In conducting this skills lab activity, you can
either invite a resource person (RRA) for students to interview him/her where
needed.
i) Build
Given that students listen resource person (RRA)
–– Remind students on the expected objective for the class attendance
–– Help them to be grouped and remember to mix both boys and girls
–– Let each team have the representative
–– Ensure they have where to keep necessary notes from the findings

212 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 –– Practice
–– Guide students on listening resource person
–– Ensure that all are listening
–– Respond to any questions for clarification and support accordingly
ii) Present
–– Choose randomly any two teams to present their findings
–– Allow students to ask question to resource person or their follows
iii) Conclusion
The teacher emphasizes on the objective of the visit reminding students that
they have to follow to know tax administration accordingly.
The following are key areas for reference:
Identify tax administration according to rules and regulations

9.6. Summary of the unit

• Rwanda Revenue Authority
 Official mandate
The Rwanda Revenue Authority was established under Law No 15/97 of
8 November 1997 as a quasi-autonomous body charged with the task of
assessing, collecting, and accounting for tax, customs and other specified
revenues. This is achieved through effective administration and enforcement
of the laws relating to those revenues. In addition, it is mandated to collect
non-tax revenues.

 Vision
“To become a world-class efficient and modern revenue agency, fully financing
national needs.”

 Mission
“Mobilise revenue for economic development through efficient and equitable
services that promote business growth.”

 Core values
We are Customer-Focussed

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 213

We act with Integrity
We are Accountable
We work as a Team
We are Professional
• Self-assessment
Tax administration is the system of assessment, declaration, payment and
collection of taxes.
• Tax audit
 Meaning of tax audit
Tax audit is an examination of whether the taxpayer has correctly assessed
and reported the tax liability and fulfils other obligations.

 Purpose of tax audit

• To exam in whether taxpayer fulfils his/her required obligation
• To maximize revenue collected from taxpayer inform of tax
• To reduce tax fraud (tax evasion)
• To detect error and fraud committed in the books of accounts
• To verify the accuracy of the books of accounts

 The required from the taxpayers

–– Declaration form
–– Acknowledgement receipts
–– Accounting source document
–– Audit reports of previous years
• Instruction, guideline for source a tax audit
–– Tax Law
–– Ministerial orders
–– International auditing standard (IAS) and IFRS (International reporting
standard)
–– What types of taxpayer is subjected?

214 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • The objectives and contents of the tax audit report
a. Objective of the tax audit report
–– To show for view of taxpayer
–– To prove if a taxpayer is evader
–– To detect and prevent error and fraud
b. Contents of audit reports
–– Title
–– Address
–– Scope
–– References
–– Opinion
–– Auditor’s address
–– Date of report

 Action to be taken after and closed tax audit

–– Advice taxpayer
–– Proposed punishment
–– Taxpayers business can be closed
–– Fine and penalties
–– Taxpayer can be appreciated
• Types of tax audits
Audit procedure
Tax audit is conducted in one of the following procedures:

1. contradictory procedures;
2. issue-oriented audit;
3. desk audit;
4. audit without notice.
• Definition of tax arrears
Tax arrears refer to any amount owned by taxpayers to administration. This
include any unpaid taxes after the deadline and unpaid penalties, fines and
interest.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 215

9.7. Additional information for teachers
• Appeal

 The period taxpayer’s appeal

Taxpayers may appeal to RRA against decisions within 30 days following the
conclusion of audits and/or receiving any assessment notices of taxes or
penalties.

 The cost of appeal

There is no cost of appealing to RRA. However, there may be fees incurred
when appealing to the Courts.

 The documents might be used to support an appeal

The types of supporting documents may vary depending upon the
circumstances of the appeal, but typically include: invoices, proof of payment,
books of account, financial statements and similar.

It is important to note any documents used to support appeals following the

conclusion of audits must have also been provided at the time of the audit.
• Rectification Note
When the Tax Administration discovers a miscalculation, an omission, a
misrepresentation, an understatement of income or any other error in the tax
declaration or an assessment, it has the right to issue an adjusted assessment.
In this case a rectification note is issued to the tax payer.

In case the tax declaration form is rectified, the Tax Administration sends a
rectification note to the taxpayer. The note contains a draft of the adjusted
assessment and all the elements leading to the adjusted assessment. The
rectification note contains fines determined by the Tax Administration in case
of non-compliance with the tax laws.

The taxpayer has the right to give his or her written opinion on the rectification
note within thirty (30) days. The taxpayer may also transmit additional
evidence or information to indicate that the adjusted assessment is incorrect.
The taxpayer has the right to a hearing on condition that he or she requested
for it in his or her reply.

216 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

The rectification note may be issued in a period of three (3) years, starting
from the day of the filing of the tax declaration. A rectification note has to
be issued at least on the last day of the three-year period. The prescription
mentioned in this paragraph is interrupted if the taxpayer has been informed
to be audited by the Tax Administration, when there has been an affidavit
thereof or by other deeds of acknowledgement by the taxpayer concerning
the tax liabilities and all other provisions provided in the other laws.
• A rectification note is definitive after:
A period of thirty (30) days, in case the taxpayer has not replied to the
rectification note;

The Tax Administration has sent a notification to the taxpayer declaring that
none or a part of the observations or remarks of the taxpayer are upheld;

The hearing of the taxpayer as mentioned under paragraph 2, followed by a

written notification by the Tax Administration to the taxpayer declaring that
none or just part of the observations or remarks of the taxpayer are upheld.
Any rectification note which does not respect provisions of this article is void.
• Conditions in Auditing and Investigation
In case of an audit, the Tax Administration is required to inform in writing, the
taxpayer the following:
That he or she will be audited at least seven (7) days before the audit is
conducted;
The place where the audit is to be conducted and the possible duration of the
audit;
Any specific document the tax administration wants to see or any specific
information it requires. In case of audit, the taxpayer is required to work
effectively with the tax audit team and to do the following:
To provide the team with suitable premises;
To give the team books and records
• Unique audit principle
The Tax administration audits a taxpayer only once on a type of tax and for
a tax period. However, the Tax administration may conduct a new audit only

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 217

once in case of one of the following circumstances:

1. Complicity of the taxpayer and the tax auditor to evade taxes or commit
any other act intending to non-payment of required tax;
2. If the first audit was based on forged documents;
3. If the first audit was issue-oriented and the Tax administration wants to
conduct a comprehensive audit,
4. When the Commissioner General cancels the first audit based on
appeal
• Investigation
Exceptionally, the authorized officer may, without notice, visit or enter business
premises of the taxpayer or any other person in search of tax information
about the taxpayer. If he or she considers it necessary, the authorized officer
may search and seize objects or documents related to the business activities
of the taxpayer.
The authorized officer, having a search warrant delivered by the Prosecutor,
may also enter the residential premises, search and seize objects or documents
related to the business activities of the taxpayer, between six 6:00 am and 6:00
pm.
Before the search, the concerned person is given a copy of the search warrant.
An authorized officer who has a search warrant may seek the assistance of the
Rwanda National Police or the representatives of decentralized administrative
entities of the place of search.
• Requirements for application
For search warrant

When applying for a search warrant, the Tax Administration provides to the
Prosecutor the following:
1. names, residence and profession of a person to be searched; location
of the residence the Tax Administration wants to search;
2. reasons on which the Tax Administration bases its request for the
search warrant

218 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 • Tax Recovery Procedures
Seizure or Attachment of the Taxpayer’s Property

When tax is not paid within fifteen (15) days as mentioned, the Tax
Administration may attach any movable or immovable property of the
taxpayer, whether held by the taxpayer or any other person.

The seized property is sold under a public auction eight (8) days after the
taxpayer is notified of the affidavit. If the Tax Administration has serious
indications that a supplier is selling taxable goods and such goods have
previously not been charged with value added tax, the Tax Administration
can seize those goods. If the supplier cannot provide evidence of compliance
with the provisions of the value added tax law within fifteen (15) days, the Tax
Administration can sell these goods at a public auction.

The seizure and selling of the attached goods takes place according to the law
on civil and commercial procedures. In the field of taxation, the bailiffs of the
Tax Administration have the same competence as private court bailiffs.
• Third Parties
If a tax is not paid within fifteen (15) days as mentioned after then, the Tax
Administration may require any person who is a debtor of the taxpayer to
pay to the Tax Administration the amount due to the taxpayer against the
taxpayer’s tax liability.

In case the Tax Administration assumes that a person is a debtor of a taxpayer,

it is required to:
–– Send a notification to that person;
–– Ask the debtor to give a clear explanation of the debt due to the taxpayer;
–– Inform the debtor that he or she is required to pay to the tax administration
in accordance with the terms and conditions of the contract with the
taxpayer or with respect to obligations of the taxpayer;
–– Send copies of all the letters to the taxpayer he or she sent to the debtor.
• The period taxpayers informed about audits
In the case of desk audits, taxpayers may not be informed about the audit
unless a specific problem is identified. Taxpayers will always be invited to offer
explanations before being issued with assessment notices.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 219

In the case of issue audits, taxpayers will be notified at least three days
beforehand. The postponement of such an issue-oriented audit cannot
exceed seven (7) working days.

In the case of comprehensive audits, taxpayers will be notified at least seven

days beforehand. If the taxpayer is not ready, they may write to RRA requesting
an extension, up to a maximum of thirty days.

9.8. End unit assessment (answers)

Q1. Action to be taken after and closed tax audit are:
–– Advice taxpayer
–– Proposed punishment
–– Taxpayers’ business can be closed
–– Fine and penalties
–– Taxpayer can be appreciated
Q2. Types of tax audits

1. contradictory procedures;
2. issue-oriented audit;
3. desk audit;
4. audit without notice.
Q3.

a. Objective
–– To show for view of taxpayer
–– To prove if a taxpayer is evader
–– To detect and prevent error and fraud

220 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 b. Contents of audit reports
Contents of an audit report

Main contents of the audit report are:

Description Contents
1. Title 1. Auditor’s report
2. Address 2. It is addressed to the shareholders or board
of directors of a company. It should be normally
addressed to shareholders.
3. Scope 3. The scope and extent of the audit is mentioned. It
includes the names of financial statements like balance
sheet, profit and loss account, name of company and
the period of audited statements.
4. References 4. The report indicates the references of companies
act, auditing standard and guidelines followed in the
conduct of the audit.
5. Opinion The auditor’s opinion is given in the report regarding
the financial statements and accounting records. The
words “the accounts show a true and fair view” are
normally used.
6. Auditor’s address The auditor gives his address
7. Date of report It means the date on which the auditor submitted this
report.

Q4.
Any person who sets up a business or other activities that may be taxable is
obliged to register with the Tax Administration within a period of seven (7)
days from the beginning of the business activity.

Q5.
Official mandate
The Rwanda Revenue Authority was established under Law No 15/97 of
8 November 1997 as a quasi-autonomous body charged with the task of
assessing, collecting, and accounting for tax, customs and other specified
revenues. This is achieved through effective administration and enforcement

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 221

of the laws relating to those revenues. In addition, it is mandated to collect
non-tax revenues.
Vision
“To become a world-class efficient and modern revenue agency, fully financing
national needs.”
Mission
“Mobilise revenue for economic development through efficient and equitable
services that promote business growth.”

Q6.
Tax Law
–– Ministerial orders
–– International auditing standard (IAS) and IFRS (International reporting
standard)
–– What types of taxpayer is subjected?
Q7.
In the case of desk audits, taxpayers may not be informed about the audit
unless a specific problem is identified. Taxpayers will always be invited to offer
explanations before being issued with assessment notices.

In the case of issue-oreinted audits, taxpayers will be notified at least three

days beforehand. The postponement of such an issue-oriented audit cannot
exceed seven (7) working days.

In the case of comprehensive audits, taxpayers will be notified at least seven

days beforehand. If the taxpayer is not ready, they may write to RRA requesting
an extension, up to a maximum of thirty days.

Q8.
RRA strategic principles are:

1. Efficiency
We collect more revenue with less resource. Our customers experience
our services to be efficient. Our services and products meet international
standards.

222 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

 2. Fairness
We are fair, even-handed and consistent in our treatment of staff and
customers. There is transparency in our decision-making, which leads to a
stable and predictable environment for our stakeholders. We respond to
feedback in a flexible and timely manner.

3. Customer-centred
We take time to understand how customers operate and we tailor our services
so that it is easy, simple and cost-effective for our customers to comply.

4. Data and Technology driven

We use data, evidence, and technology to drive our decision-making and
inform our operations. We are resilient to threats through the internal controls
we build.

9.9. Additional activities (Questions and answers)

9.9.1 Remedial activities
Q1. What is the RDB Business Registration system?

Q2. When person who sets up a business or other activities that are taxable is
obliged to be registered by tax administration.

Q3. What is an audit?

Possible answer
Q1.
RDB has developed the business registration system to make it easier for
taxpayers to register their business. The RDB system is an online portal through
which all businesses are registered.

Q2.
Any person who sets up a business or other activities that may be taxable is
obliged to register with the Tax Administration within a period of seven (7)
days from the beginning of the business activity

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 223

Q3.
An audit is one of the methods RRA uses to ensure that taxpayers are correctly
declaring and paying their taxes.

Audits involve RRA checking the relevant documents concerning a taxpayer’s

tax obligations for any tax period(s) within the past five years.

9.9.2. Consolidation activities

Q1. Describe the contents of audit reports

Q2. Describe the different types of audit

Proposed answer
Q1. Main contents of the audit report are:

Description Contents
1. Title 1. Auditor’s report
2. Address 2. It is addressed to the shareholders or board of
directors of a company. It should be normally
addressed to shareholders.
3. Scope 3. The scope and extent of the audit is mentioned.
It includes the names of financial statements like
balance sheet, profit and loss account, name of
company and the period of audited statements.
4. References 4. The report indicates the references of companies
act, auditing standard and guidelines followed in
the conduct of the audit.
5. Opinion The auditor’s opinion is given in the report regarding
the financial statements and accounting records.
The words “the accounts show a true and fair view”
are normally used.
6. Auditor’s address The auditor gives his address
7. Date of report It means the date on which the auditor submitted
this report.

224 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

Q2. There are three main types of audit:
–– Desk audit
–– Issue-oriented audit
–– Comprehensive audit
Desk audits are conducted by RRA staff using information that has already
been submitted to RRA.

Issue-oriented audits are usually focused on a single tax type, single aspect
or single tax period. Refund audits are a type of issue audit, focused on tax
declarations claiming refunds from RRA. Issue audits may be desk-based or
involve visits to the taxpayer’s business premises.

Comprehensive audits are more in-depth and time intensive. These are
usually conducted by RRA staff whilst visiting the taxpayer’s business premises
and reviewing all relevant documents.

9.9.3. Extended activities

Q1. Discuss about the content of the Notice of Assessment
Q2. Describe RRA strategic principles
Proposed solution
Q1. The notice of assessment mentions:
i. The taxpayer’s name, taxpayer identification number and address;
ii. The modalities of calculation of the tax and the amount of tax to be
paid;
iii. The tax declaration or its rectification note, the assessment notice on
which the declaration is based;
iv. The date of issuance of the notice of assessment;
v. The address of the Commissioner General to which an appeal has to
be sent;
vi. The conditions to be fulfilled in order to lodge an appeal

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 225

Q2. RRA strategic principles are:
1. Efficiency
We collect more revenue with less resource. Our customers experience
our services to be efficient. Our services and products meet international
standards.

2. Fairness
We are fair, even-handed and consistent in our treatment of staff and
customers. There is transparency in our decision-making, which leads to a
stable and predictable environment for our stakeholders. We respond to
feedback in a flexible and timely manner.

3. Customer-centred
We take time to understand how customers operate and we tailor our services
so that it is easy, simple and cost-effective for our customers to comply.

4. Data and Technology driven

We use data, evidence, and technology to drive our decision-making and
inform our operations. We are resilient to threats through the internal controls
we build.

226 TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE

REFERENCES
ICPAR. (2019). Taxation. London: BPP LEARNING MEDIA LTD.

ICPAR. (2020). Company Law. Kigali: Institute of Certified Public Accountants

of Rwanda.

Parliament of the Republic of Rwanda. (2015, March 28). Law No. 06/2015 of
28/03/2015 relating to investment promotion and facilitation. Official Gazette
No. Special of 27/05/2015, pp. 02-36.

Parliament of the Republic of Rwanda. (2018, August 30). Law No. 66/2018
of 30/08/2018 regulating labour in Rwanda. Official Gazette No. Special of
06/09/2018, pp. 02-104.

Parliament of the Republic of Rwanda. (2020, December 11). Ministerial Order

No.003/20/10/TC of 11/12/2020 establishing general rules on transfer pricing.
Official Gazette No. 40 of 14/12/2020, pp. 02-55.

Parliament of the Republic of Rwanda. (2021, February 05). No. 007/2021 of

05/02/2021 Law governing companies. Official Gazette No. 04 ter of 08/02/2021.

Parliament of the Republic of Rwanda. (2022, October 28). Law No. 027/2022of
28/10/2022 establishing taxes on income. Official Gazette No. 027 of 28/10/2022,
pp. 12-101.

RRA. (2019). RRA Tax Handbook, 2nd Edition. Kigali: Rwanda Revenue Authority.

RRA. (2022, March 30). rra.gov.rw/index.php?id=32. Retrieved from rra.gov.rw:

http://www.rra.gov.rw

RSSB. (2018). Understanding Social Security, Edition 2018. Kigali: Rwanda Social
Security Board.

Rwanda Prime Minister’s Office. (2020, September 30). Oder No. 105/03
of 30/09/2020 related to the community-based health insurance scheme
contributions. Official Gazette No. Special of 01/10/2020, pp. 03-20.

TAXATION BOOK | TEACHER GUIDE | SENIOR FIVE 227