TAXATION BOOK

for Rwandan Schools

ACCOUNTING PROFESSION OPTION

Senior
4 Teacher'sGuide

Experimental Version

Kigali, 2022
 © 2022Rwanda 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

ii Experimental Version
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 mathematical operations,
algebraic functions and equations, and basic statistics 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.
• 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.

Experimental Version iii

 • 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.

ACKNOWLEDGEMENT

iv Experimental Version
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

Experimental Version v
TABLE OF CONTENT
FOREWORD................................................................................................................................... iii
ACKNOWLEDGEMENT................................................................................................................ v
PART I. GENERAL INTRODUCTION...........................................................................................x
1.1 The structure of the guide..............................................................................................x
1.2 Methodological guidance...............................................................................................x
1.2.1 Developing competences.....................................................................................x

1.2.2 Addressing cross cutting issues........................................................................ xii

1.2.3 Guidance on how to help students with special education needs in classroom............ xiv

1.2.4. Guidance on assessment..................................................................................... 3

1.2.5. Teaching methods and techniques that promote active learning....... 5

PART II: SAMPLE LESSON PLANS...........................................................................................10
PART III: UNIT DEVELOPMENT ...............................................................................................17
UNIT1: INTRODUCTION TO RWANDAN TAX SYSTEM....................................................19
1.2. Prerequisite (knowledge, skills, attitudes and values).....................................19
1.3. Cross-cutting issues to be addressed:....................................................................19
1.4. Guidance on introductory activity ..........................................................................20
1.5 List of lessons/sub-heading .......................................................................................22
1.2 Summary of the unit......................................................................................................40
1.1. Additional information for teachers........................................................................44
1.8. End unit assessment (answers).................................................................................44
1.9. Additional activities (Questions and answers)....................................................47
1.9.. Remedial activities .................................................................................................47

1.9.2. Consolidation activities......................................................................................48

1.9.3. Extended activities ..............................................................................................50

UNIT 2: LAWS RELATED TO BUSINESS ACTIVITIES ..........................................................53
2.1. Key unit competence: ..................................................................................................53
2.2. Prerequisite (knowledge, skills, attitudes and values).....................................53
2.3. Cross-cutting issues to be addressed:....................................................................53

vi Experimental Version
 2.4. List of lessons/sub-heading ..................................................................................56
2.6. Summary of the unit.....................................................................................................67
2.9.1. Remedial activities ..............................................................................................71

2.9.2. Consolidation activities .....................................................................................72

2.9.3. Extended activities...............................................................................................72

UNIT 3: TAXATION OF EMPLOYMENT INCOME ................................................................75
3.1. Key unit competence: ..................................................................................................75
3.2. Prerequisite (knowledge, skills, attitudes and values)......................................75
3.3. Cross-cutting issues to be addressed:....................................................................75
3.4. Guidance on introductory activity ..........................................................................76
3.5. List of lessons/sub-heading ......................................................................................77
3.6. Summary of the unit.....................................................................................................89
3.7. Additional information for teachers........................................................................90
3.8. End unit assessment (answers).................................................................................90
3.9. Additional activities (Questions and answers)....................................................93
3.9.2. Consolidation activities......................................................................................94

3.9.3. Extended activities ..............................................................................................96

UNIT 4: TAX DEPRECIATION.................................................................................................. 101
4.1. Key unit competence: ............................................................................................... 101
4.2. Prerequisites (knowledge, skills, attitudes, and values)................................ 101
4.3. Cross-cutting issues to be addressed:................................................................. 101
4.4. Guidance on the introductory activity ............................................................... 101
4.5. List of lessons and lesson development............................................................. 102
4.6. Summary of the unit ................................................................................................. 109
4.7. Additional Information for Teachers.................................................................... 110
4.8. End unit assessment ................................................................................................. 110
4.9. Additional activities................................................................................................... 111
4.9.1. Remedial Activities: .......................................................................................... 111

Experimental Version vii

 4.9.2. Consolidation activities: ................................................................................. 112

4.9.3. Extended activities: ........................................................................................ 112

UNIT 5: THE TAXATION OF INVESTMENT INCOME........................................................ 115
5.1. Key unit competence: ............................................................................................... 115
5.2. Prerequisite (knowledge, skills, attitudes and values)................................... 115
5.3. Cross-cutting issues to be addressed:................................................................. 115
5.4. Guidance on introductory activity........................................................................ 116
5.5. List of lessons/sub-heading ................................................................................ 117
5.6. Summary of the unit.................................................................................................. 124
5.7. Additional information for teachers..................................................................... 125
5.8. End unit assessment.................................................................................................. 125
5.9. Additional activities................................................................................................... 126
5.9.1. Remedial activities ........................................................................................... 126

5.9.2. Consolidation activities .................................................................................. 127

UNIT 6: TAXATION OF INDIVIDUAL BUSINESS PROFITS.............................................. 131
6.1. Key unit competence: ............................................................................................... 131
6.2 Prerequisites (knowledge, skills, attitudes, and values)............... 131
6.3. Cross-cutting issues to be addressed:................................................................. 131
6.4. Guidance on the introductory activity ............................................................... 131
6.5. List of lessons and lesson development............................................................. 132
6.8. End unit assessment ................................................................................................. 148
6.9. Additional activities................................................................................................... 149
6.9.1. Remedial activities (Questions and answers).......................................... 149

6.9.2. Consolidation activities (Questions and answers)................................. 150

6.9.3. Extended activities (Questions and answers)............................................... 153

UNIT 7: ESTABLISH PAYROLL REQUIREMENTS AND PAYROLL PREPARATION...................................... 157
7.1. Key unit competence: ............................................................................................... 157
7.2. Prerequisite (knowledge, skills, attitudes and values)................................... 157

viii Experimental Version

 7.3. Cross-cutting issues to be addressed:................................................................. 157
7.4. Guidance on introductory activity....................................................................... 158
7.5. List of lessons/sub-heading ................................................................................... 159
7.8. End unit assessment (answers).............................................................................. 177
7.9. Additional activities (Questions and answers)................................................. 184
7.9.1. Remedial activities ........................................................................................... 184

7.9.2. Consolidation activities................................................................................... 185

7.9.3 Extended activities .................................................................................................. 186

UNIT 8: RETIREMENT, OCCUPATION HAZARD BENEFIT AND
DISMISSAL COMPENSATION.......................................................................... 189
8.1. Key unit competence:................................................................................................ 189
8.2. Prerequisite (knowledge, skills, attitudes and values)................................... 189
8.3. Cross-cutting issues to be addressed:................................................................. 189
8.4. Guidance on introductory activity........................................................................ 190
8.5. List of lessons/sub-heading ................................................................................... 191
8.6. Summary of the unit.................................................................................................. 202
8.7. Additional information for teachers..................................................................... 204
8.8. End unit assessment (answers).............................................................................. 205
8.9.2. Consolidation activities................................................................................... 206

8.9.3 Extended activities ............................................................................................ 209

REFERENCE................................................................................................................................ 210

Experimental Version ix
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 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:

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

Experimental Version xi
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
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:

Ways of addressing cross-

Cross-Cutting Issue
cutting issues
Comprehensive Sexuality Education: Using different charts and their
The primary goal of introducing interpretation, Taxation teacher
Comprehensive Sexuality Education should lead students to discuss
program in schools is to equip children, the following situations: “Alcohol
adolescents, and young people with abuse and unwanted pregnancies”
knowledge, skills and values in an and advise students on how they
age appropriate and culturally gender can fight against them.
sensitive manner so as to enable them
to make responsible choices about their
sexual and social relationships, explain Some examples can be given
and clarify feelings, values and attitudes, when learning statistics, powers,
and promote and sustain risk reducing logarithms and the related
behaviour. graphical interpretation.

xii Experimental Version

Environment and Sustainability:
Integration of Environment, Climate
Using Real life models or
Change and Sustainability in the
students’ experience, Taxation
curriculum focuses on and advocates for
Teachers should lead students
the need to balance economic growth,
to illustrate the situation of
society well-being and ecological
“population growth” and discuss
systems. Students need basic knowledge
its effects on the environment and
from the natural sciences, social sciences,
sustainability.
and humanities to understand to interpret
principles of sustainability.

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), interest
program as a precondition for achieving rate problems, total revenue
financial inclusion targets and improving functions and total cost functions,
the financial capability of Rwandans so supply and demand functions,
that they can make appropriate financial Taxation Teachers can lead
decisions that best fit the circumstances students to discuss how to make
of one’s life. appropriate financial decisions.
Taxation Teachers should address
gender as cross-cutting issue
Gender: At school, gender will be
through assigning leading roles
understood as family complementarities,
in the management of groups to
gender roles and responsibilities, the
both girls and boys and providing
need for gender equality and equity,
equal opportunity in the lesson
gender stereotypes, gender sensitivity,
participation and avoid any
etc.
gender stereotype in the whole
teaching and learning process.

Experimental Version xiii

 Firstly, Taxation Teachers need to
identify/recognize students with
special needs. Then by using
adapted teaching and learning
Inclusive Education: Inclusion is based
resources while conducting a
on the right of all students to a quality
lesson and setting appropriate
and equitable education that meets their
tasks to the level of students,
basic learning needs and understands
they can cater for students with
the diversity of backgrounds and abilities
special education needs. They
as a learning opportunity.
must create opportunity where
students can discuss how to
cater for students with special
educational needs.
Through a given lesson, a teacher
should:
Peace and Values Education: Peace • Set a learning objective
and Values Education (PVE) is defined as which is addressing positive
education that promotes social cohesion, attitudes and values,
positive values, including pluralism and
• Encourage students to
personal responsibility, empathy, critical develop the culture of
thinking and action in order to build a tolerance during discussion
more peaceful society. and to be able to instil it in
colleagues and cohabitants;
• Encourage students to
respect ideas from others.
Standardization Culture: With different word problems
Standardization Culture in Rwanda will related to the effective
be promoted through formal education implementationofStandardization,
and plays a vital role in terms of health Quality Assurance, Metrology
improvement, economic growth, and Testing, students can be
industrialization, trade and general motivated to be aware of health
welfare of the people through the effective improvement, economic growth,
implementation of Standardization, Quality industrialization, trade and general
Assurance, Metrology and Testing. welfare of the people.

1.2.3 Guidance on how to help students with special edu-

cation 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

xiv Experimental Version

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.

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

Experimental Version 1
 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;
• 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.
2 Experimental Version
Therefore, the teacher is expected to do assessment that fits individual students.

After evaluation, slow students are

provided with lower order thinking
activities related to the concepts learnt
to facilitate them in their learning.
Remedial activities
These activities can also be given to
assist deepening knowledge acquired
through the learning activities for slow
students.
After introduction of any concept,
a range number of activities can be
Consolidation activities
provided to all students to enhance/
reinforce learning.
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
Extended 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.

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.
Experimental Version 3
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.
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

4 Experimental Version
 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
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 ac-

tive 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

Experimental Version 5
 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
• 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

6 Experimental Version
 A student engaged in active
learning:
- Communicates and shares
relevant information with
- The teacher engages students
fellow students through
through active learning methods
presentations, discussions,
such as inquiry methods,
group work and other
group discussions, research,
student-centred activities
investigative activities, group and
(role play, case studies,
individual work activities.
project work, research and
- He/she encourages individual, investigation);
peer and group evaluation of the
- Actively participates and
work done in the classroom and
takes responsibility for his/
uses appropriate competence-
her own learning;
based assessment approaches
and methods. - Develops knowledge and
skills in active ways;
- He provides supervised
opportunities for students to - Carries out research/
develop different competences investigation by consulting
by giving tasks which enhance print/online documents and
critical thinking, problem solving, resourceful people, and
research, creativity and innovation, presents their findings;
communication and cooperation. - Ensures the effective
- Teacher supports and facilitates contribution of each group
the learning process by valuing member in assigned tasks
students’ contributions in the class through clear explanation and
activities. arguments, critical thinking,
responsibility and confidence
in public speaking
- Draws conclusions based on
the findings from the learning
activities.
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:

Experimental Version 7
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).

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

8 Experimental Version
 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.

1. 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.

Experimental Version 9
PART II: SAMPLE LESSON PLANS
Unit Lesson Class
Term Date Subject Class Duration
No No size
22 /09/
1 Taxation Year 4 1 5 of 8 140 Min 35
2022

Type of Special Educational Needs to be catered for in this

Three students with visual impairment
lesson and number of learners in each category

Unit title Introduction to Rwandan tax System

Key Unit
Describe various Rwandan tax system legislation
Competence:
Title of the lesson Categories of direct and indirect tax

Given a written scenario of businesses, student will be able to List categories of direct and indirect tax on income
Instructional
according to the businesses. The teacher will read for the students with visual impairment and allow them to answer
Objective
verbally or use Braille documents.

Plan for this Class

Inside the classroom in a U shape arrangement or outside the classroom
(location: in / outside)

Learning Materials
The learning material will depend on what is available (example: scenario, field visit, etc.)
(for all learners)

References Taxation year 4

Description of teaching and learning activity
Generic competences and
Timing for each Think-pair-share; small group discussion on categories of direct and indirect tax practiced in the country, cross cutting issues to
step be addressed + a short
gallery walk, and content harmonization from different group presentations
explanation
Teacher activities Learner activities

10 Experimental Version
 Revision on the previous lesson on the
meaning of tax

Explain the meaning of direct tax and

indirect tax

Handle any homework or Answer the questions on the meaning of tax, direct tax and
assignments, indirect tax

Ensure a conducive learning

environment. Communication: Through
1. Introduction Correct homework with the teacher answering questions and peer
Show learners the relationship
discussion.
minutes between the previous lesson and new
lesson Discover the title of today’s lesson:

Guide students to discover the lesson

of the day.
Categories of Direct tax and Indirect tax
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

Experimental Version 11
 Ask student to play Water Melon Listen carefully to instructions Cooperation, interpersonal
Game: Put students into groups & management and life
a) Discovery
have them sit together. Skills: Students share ideas in
activity
Forming groups: pairs and in groups.
Ask student to look in student book
Critical thinking:
year 4 taxation unit 1.
35 Minutes – Student analyse situation
This activity will be done first of business in their community
individually, shared in pairs then in and come up with taxes can
a big group according to students – Students arrange themselves in teams and sit together. be paid by the businesses.

sitting arrangement – Work individually or in pairs to list direct and indirect tax Communication:

Tell students that this activity will practiced in the country. - Students discuss in groups
and answer questions.
be done in 35 minutes and the
presentation will be done using Research and problem
gallery work. solving:

Through discussion and

Teacher moves around in groups – In their groups, they share and agree on the list of direct and
research, students list direct
to guide them as they attempt to indirect tax practiced in the country and indirect tax practiced in
answer the questions. the country

Peace and values education:

The teacher pays a special attention
to students with disabilities Trough games and group
discussions, students
socialize and develop some
values like sharing, honesty,
cooperation, respect, team
work, etc.

12 Experimental Version
 Inclusive Education:

– Invite the student to hang their

b) Presentation Groups present about the list of categories of direct and
work on the Present Boards.
and exploitation Taking into account students
indirect tax practiced in the country
of learner’s with visual impairment during
productions gallery walk and also read for
– Allow students to do gallery work them.
– Each team hangs its answers on Present Board.
Communication:
40 Minutes
– To ask other groups if they – Student discusses and
agree on what other groups have – Each team moves around to read presentations of other
communicates verbally while
presented and comment on each teams while taking notes and asking for clarification where they
presenting their work and
presentation. do not understand.
commenting on other groups
work.
– Invite the representative of each
group to come, list the categories of Harmonize their findings and come up with categories of direct Critical thinking:
direct and indirect tax practiced in and indirect tax practiced in the country.
the country. – Learners use critical
thinking in answering
questions.

Experimental Version 13
 Categories of direct and indirect tax:

Direct taxes:

In general, direct taxes are levied on profit and income.

1. Personal tax on income: Personal tax on income is

levied on income received by an individual. It may comprise
the following elements: Employment; Business activities;
- Help the students to come up with Investment; Capital gain. Inclusive Education:
a summary on categories of direct
c) Summary/ and indirect tax practiced in the According to Rwanda legislation, all income types raised are

conclusion country. subject to tax. They can be categorized as follow:

Taking into account of
- Personal Income Tax (PIT) students with visual

- Pay As You Earn (PAYE) impairment by reading for

10 Minutes – Read the summary loudly for the them note written onboard
- Investment income tax
two students with visual impairment and giving more time to take
- Capital gain
to allow them to take notes. note.
- Rental income (here ignore housing which is decentralized)

- Tax on minerals

- Taxes on gaming activities

- Different types of withholding taxes

- Quarterly payment

14 Experimental Version
2. Corporate Income Tax (CIT)

It is hereby-established a “corporate income tax” levied on

business profits received by entities.Indirect taxes: In
general, indirect taxes are applied on consumption of goods
and services.

1.Value Added Tax (VAT)

It is an indirect tax on “taxable supplies” made by a “taxable

person”

Subject to all taxable goods and services

Two tax rates in force:

Standard rate of 18%

Zero rate (0%)

2.Excise tax:

Excise tax is imposed on specified goods /service produced

locally or imported to be consumed in the country.

Excise tax was established in Rwanda in 1960s and is levied

on locally produced beers, lemonades, mineral water, juices,
liquors, wines, fuel, vehicles, powdered milk, as well as on
cigarettes, etc… and their imported counterparts if appearing
on the list published in the consumption tax law.

Excise tax is also levied on telephone communication since

year 2007.

Experimental Version 15
 Expected Answers:

Q1.a. Personal income tax: is an income tax imposed by

Government on income received by an individual.
b. Corporate income tax: is a tax levied on profits made by the
companies or entities.
c. Withholding tax: is a tax withheld on source of income before
payment to the beneficiary.
Critical thinking:
Q2. Source of income liable to personal income tax are:
Income generated from performing services (including employment)
Explain the following fiscal terms:
Activities of a craft person, singer, artist or player Students develop critical
a. Personal income tax Sports, cultural or leisure activities thinking and reasoning skills
while answering questions
b. Corporate income tax Income of Rwanda permanent establishment
3. Assessment from other groups.
Income from the use, lease and disposal of movable assets by
c. Withholding tax Rwandan business
20 Minutes Research and problem
Sale, lease and free transfer of immovable Rwandan business assets solving
Outline main Source of income liable
to personal income tax Farming, fishing and forestry
Usufruct (right of use of asset) and other rights attached to
Rwandan Business assets
Imagination and application
Income from investment in share (i.e., dividends) of this lesson to real business
Sales or transfer of shares and debentures (capital gains tax) world.
Change of partnership profit into shares, such that a partner’s
interest increases

Distributions of partnership profits to partners

Income from lending and deposits(interest)

Transfer, sales and lease of intellectual property
Other income generating activities that are not classified as exempt
Teacher self-
For example: 3 students need remedial activities (they are given)
evaluation

16 Experimental Version
PART III: UNIT DEVELOPMENT

Experimental Version 17
18 Experimental Version
 UNIT 1 INTRODUCTION TO
RWANDAN TAX SYSTEM

1. Key unit competence: Describe various Rwandan tax system

legislation

1.2. 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. So, with this prior
knowledge, skills, attitudes and values it should help them to appreciate the role
of tax system in the development of the country.

1.3. Cross-cutting issues to be addressed:

INTRODUCTION
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
TO ACCOUNTING
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 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
our background, economic or social setup have right to develop an ethical
understanding of Rwandan system that do not discriminate. Students need to

Experimental Version 19
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 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

1.4. 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 major changes expected by people especially business people
on June 15, every year, what makes the business people so anxious to know the
changes, why it is important for businesses to pay taxes to the government, how
an entrepreneur, government and society benefit from taxes, and the meaning of
at least two types of taxes in Rwanda.
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:
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

20 Experimental Version
presentation.
1. The major changes expected business people and others on 15th June
every year are the change in national budget, tax reforms and new taxes
introduced.
2. Business people are anxious because these above decisions may have
an impact on their business when they do not comply with especially tax
reforms and new taxes introduced.
3. It is important for business to pay taxes because government gets revenue
for infrastructure development, which is more needed, by business for
smooth running of business activities
4. How do the following benefit from taxes?
i) Entrepreneur: From taxes paid entrepreneurs, get infrastructures like
road we travel on are safe and well-maintained, funds public libraries,
parks etc.
ii) Government: from taxes paid government, gets revenue for paying
workers (salary), support common resources such as police, fire-fighters
etc. In brief Government must ensure minimum service is provided to the
general public especially where private sector can serve.
iii) Society: from the tax paid society gets infrastructure like schools,
hospitals, protected against harmful products etc.
5. Taxpayers in Rwanda pay taxes like CIT, PIT, Pay-As-You-Earn tax, VAT,
fixed/property tax, rental income tax, etc.
6. People who do not pay taxes face enforcement measures like penalty
of 40% in case of failure to file the return, interest of 1,5% per month
for delay besides a surcharge equivalent to 10% which cannot exceed
FRW100,000, if necessary even imprisonment.
7. Tax is a civic duty or tax is fees without a direct exchange requested
to the members of the community by the state according to the law to
financially support the execution of the government tasks and taking
into account the capacities of the payer whereas taxation is a system of
raising money or revenue by the government from individuals/businesses
and companies by law through taxes. Brief, taxation is a system while tax
is a payment due under this system.

Experimental Version 21
1.5 List of lessons/sub-heading
Number
No Lesson title/sub-heading Learning objectives of
periods
Meaning of taxation , tax and Explain the meaning of taxation , tax
1 2
duty and duty
Current legislation relating to Discuss current legislation and tax
2 4
taxation and tax period period relating to taxation in Rwanda
Use Rwandan tax system legislation
The residence and the
3 to describe conditions related to 4
permanent establishment (PE)
residence and permanent establishment
Justify the right and obligations of the
The right and obligation of
4 tax payer according to Rwandan tax 3
the taxpayer
system
Categories of direct and List categories of direct tax and
5 3
indirect taxation indirect tax on income
Definition of terminologies used Explain the terminologies used in
6 in taxation and Characteristics taxation and Characteristics of a good 4
of a good tax system tax system
The canons/principles of Identify the canons/principles of
7 3
taxation taxation
The importance of tax and the Identify the importance of tax and
8 4
Classification of taxes the Taxes classification
End Unit Assessment 3
Total number of periods 30

Lesson 1: Meaning of taxation , tax and duty

a) Learning objective

Explain the meaning of taxation , tax and duty

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

22 Experimental Version
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 1.1
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 1.1

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.

a) Application activities 1.1

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

Experimental Version 23
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 1.1

1) Taxation can be defined as a system where Government imposes
compulsory contribution for general interest.
2) RRA collect tax with the mission to mobilise revenue for economic
development trough efficient and equitable services that promote
business growth
Lesson 2: Current legislation relating to taxation and tax period

a) Learning objective

Discuss current legislation and tax period relating to taxation in Rwanda

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 taxation , tax and duty
That will help to discuss current legislation and tax period relating to taxation
in Rwanda
Leant in this lesson.

d) Learning activities

Activity 1.2
• 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

24 Experimental Version
 objective, help them draw conclusions/summary on when to discuss
current legislation and tax period relating to taxation in Rwanda.
Answers or address any questions or challenges about the activity.
Guide them to make notes in referring in their students’ book.

Answer to Activity 1.2

1. The final resting place of a tax or the person or company that actually pays the
tax are direct tax and indirect tax

The times to pay them are:

- For individual, whether they are in business or employed, will calculate their
tax in relation to their calendar year (the period 1 January to 31 December)
this is known as the tax period
- For company the default tax period for a company is also the calendar
year. however, companies may apply in writing to the minister of finance to
use a different 12 –month period

e) Application activities 1.2

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 1.2
Q1. Direct taxes are taxes whereby tax incidence cannot be shifted to another
person; or direct taxes are taxes imposed on person’s income and property.
Example incudes: PAYE, corporate income tax, rental tax, property tax, etc.
While
Indirect taxes are taxes where tax incidence can be shifted on another person
or is tax levied on expenditure/consumption. For example, VAT, consumption tax.
Q2.
– Tariffs
– Impose high tax on import product
– Give subsidies to the local industry

Experimental Version 25
 – Quotas specify the quantity of goods which can be imported
– Impose low tax on local produced materials.
Lesson 3: Define the residence and the permanent establishment (PE)

a) Learning objective

Use Rwandan tax system legislation to Describe conditions related to residence

and permanent establishment

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.

d) Learning activities

Activity 1.3
- 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 use Rwandan tax
system legislation to describe conditions related to residence and permanent
establishment. Answers or address any questions or challenges about the
activity. Guide them to make notes in referring in their students’ book.

Answer to Activity 1.3

Q1: A person or a company’s residence position determines their liability to pay
Rwandan tax, especially on overseas income source.
Q2: Permanent Establishment is a fixed place of business through which an
26 Experimental Version
income generating business wholly or partially conducted.

e) Application activities 1.3

This activity can be given as a normal individual or group activity, where students
use Rwandan tax system legislation to describe conditions related to residence
and permanent establishment. 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 1.3

Q1.
a) He/she has a permanent residence in Rwanda (defined as house,
department or dormitory in Rwanda which they usually occupy
b) He/she has a habitual abode in Rwanda (not defined in Rwanda law
but generally regarded as where an individual spends the majority of
their time)
c) He/she is Rwanda representing Rwandan abroad (for example an
ambassador
d) An individual will be treated as Rwandan resident if they are present
in Rwanda for 183 days (either continually or intermittently) in any 12
–month period. They will be treated as Rwandan resident for the tax
period that the 12-month period ends in. Note that if a tax payer is
presenting in Rwanda at the end of a day (i.e., at midnight), that day
counts as a day in Rwanda for the purposes of this test

Q2.
a) A place of management
b) A branch
c) A factory or workshop
d) A mine, an oil or any other place for an exploitation of natural resources
e) A site set of construction, construction site, or a place where supervision
or assembly work are carried out

Experimental Version 27
 f ) A place for the provision of services, including consulting services,
carried on by a person, with the support of employees or other
personnel, for more than 90 days in a 12 –month period

Lesson 4: The right and obligation of the taxpayer

a) Learning objective

Justify the right and obligations of the tax payer according to Rwandan tax
system

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.

d) Learning activities

Activity 1.4
- 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 1.4

The advice that would be given to Kabera is that abiding to taxpayer requirement are obligation
before they start the shop business, and therefore they should do the following first:

28 Experimental Version
 1) Relevant legislation
2) Registration of a business
3) Record-keeping
4) Self-assessment
5) Tax declaration and payment

e) Application activities 1.4

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.
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 1.4

1. Right is anything that is due to a person by law or tradition. Simply in
business term is what you can expect your employer to provide. In this
context of tax, taxpayers expect some services from RRA.
2. “Obligations/responsibilities” is duty for which one is accountable in
business term is what your employer can expect that you will do. In this
context of tax, RRA expect something from taxpayers
3. Some rights of taxpayer: - The right to pay not more than the correct
amount of tax; the right to certainty: The Right to Be Informed; The right
of appeal etc.
4. The right of the taxpayer according to Rwandan tax system are:

1. The right to be informed assisted and heard

Taxpayer is entitled to have up-to-date information on the operation of the tax
system and the way in which their tax is assessed.

2. The right of appeal

The right of appeal against any decision of the tax authorities applies to all
taxpayers and to almost all decisions made by the tax authorities, whether
as regards the application of the law or of administrative ruling, provided the
taxpayer is directly concerned

Experimental Version 29
3. The right to pay no more than the correct amount of tax
Taxpayers should pay no more tax than is required by the tax legislation, taking
into account their person circumstances and income.

4. The right to confidentiality and secrecy

Another basic taxpayers’right is that the information available to the tax authorities
on the affairs of a taxpayer is confidential and will only be used for the purposes
specified in tax legislation. Tax legislation usually imposes very heavy penalties
on tax officials who misuse confidential information and the confidentiality
rules that apply to tax authorities are far stricter than those applying to other
government departments.

Lesson 5: Categories of direct and indirect tax

a) Learning objective

List categories of direct tax on income

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 2 studied Discuss current legislation and tax period
relating to taxation in Rwanda for direct tax and indirect tax. That will help to List
categories of direct tax and indirect tax on income Leant in session 5.

d) Learning activities

Activity 1.5
- 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 to list

30 Experimental Version
 categories of direct and indirect tax. Answers or address any questions
or challenges about the activity. Guide them to make notes in referring in
their students’ book.

Answers to activity 1.5

- Personal Income Tax
- Corporate Income Tax
- PAYE
- Dividend tax

e) Application activities 1.5

This activity can be given as a normal individual or group activity, where students
List categories of direct tax and indirect tax on income
. 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 1.5

Q1.
a) Personal income tax: is an income tax imposed by Government on
income received by an individual.
b) Corporate income tax: is a tax levied on profits made by the companies
or entities.
c) Withholding tax: is a tax withheld on source of income before payment
to the beneficiary.
d) PAYE: Pay As You Earn
Q2. Source of income liable to personal income tax are:
- Income generated from performing services (including employment)
- Activities of a craft person, singer, artist or player
- Sports, cultural or leisure activities
- Income of Rwanda permanent establishment
- Income from the use, lease and disposal of movable assets by Rwandan
business
- Sale, lease and free transfer of immovable Rwandan business assets

Experimental Version 31
 - Farming, fishing and forestry
- Usufruct (right of use of asset) and other rights attached to Rwandan
Business assets
- Income from investment in share (i.e., dividends)
- Sales or transfer of shares and debentures (capital gains tax)
- Change of partnership profit into shares, such that a partner’s interest
increases
- Distributions of partnership profits to partners
- Income from lending and deposits(interest)
- Transfer, sales and lease of intellectual property
- Other income generating activities that are not classified as exempt
Lesson 6: Definition of terminologies used in taxation and Characteristics of
a good tax system

a) Learning objective

Explain the terminologies used in taxation and Characteristics of a good tax

system

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.

d) Learning activities

Activity 1.6
- 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

32 Experimental Version
 - 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 explaining the terminologies used
in taxation and Characteristics of a good tax system. Answers or address
any questions or challenges about the activity. Guide them to make notes in
referring in their students’ book.

Answers to activity 1.6

Q1. Tax is the compulsory amount of money paid to the government without
compensation to finance government expenditures.
a) Taxation is the process of collecting and managing taxes on behalf
of the Government
b) Tax avoidance is finding a way to avoid paying taxes by finding a
loophole in the tax system
c) Tax evasion is illegal practice inducing to tax fraud
d) Tax shifting is the transfer of either the part or whole tax burden to
another taxpayer/person.
Q2. From the decision Ruth made:
a) Tax avoidance: none
b) Tax evasion: is decision 1.
c) Tax shifting: is decision 2.
Q3. Among these actions, decision 1 will be penalized because the fact of
crossing the river without reporting to the Customs to pay import duties is a tax
fraud.

e) Application activities 1.6

This activity can be given as a normal individual or group activity, where students
Explain the terminologies used in taxation and Characteristics of a good
tax system, 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 1.6

1. Tax incidence is the final resting place or those economic units that finally

Experimental Version 33
bear the money burden of it and that are not able to pass it on to others while
tax impact is the first point of contact with the taxpayers.
2. The definitions point out four main characteristics:
• There is no quid-pro- quo in tax:
Tax is not levied for a return for a specific service rendered by government to
taxpayers. An individual cannot ask for any special benefit from the government
in return for the tax paid.
• It is a compulsory contribution:
It is imposed by the government on individuals, households, or companies.
Because of its compulsory nature, those who do not pay it are reliable to being
punished but it is to be paid by those who come under its jurisdiction.
• It involves a sacrifice:
It is a payment by taxpayers which is used to benefit all the citizens whereby the
government uses the collected revenues to establish infrastructures such as
hospitals, schools as well as other public utility services.
• It is paid out of total wealth:
Meaning tax is computed based on a certain specific percentage of the total
income.
3. Tax avoidance is a situation where a business person does not pay tax because
she/he has avoided the product or activity on which the tax is imposed. It is the
taxpayer’s exploitation of loopholes in the tax system there by paying less tax
than what they are supposed to pay.

Example of Tax Avoidance:

• Taking legitimate tax deductions to maximize business expenses and
thus lower your business tax bill.
Tax evasion is the illegal practice of not paying taxes by either not reporting
income, reporting expenses not legally allowed, or by not paying taxes owed. In
businesses, tax evasion can occur in connection with income taxes, employment
taxes, sales, etc.

Examples of practices considered as tax evasion:

• It is considered tax evasion if you knowingly fail to report income.
• Under-reporting income (claiming less income than you actually
received from a specific source).
• Providing false information to the RRA about business income or
expenses, etc.

34 Experimental Version
Lesson 7: The canons/principles of taxation

f ) Learning objective

Identify the canons/principles of taxation

g) 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.

h) 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.

i) Learning activities

Activity 1.7
- 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 Identify the canons/
principles of taxation. Answers or address any questions or challenges about
the activity. guide them to make notes in referring in their students’ book.

Answers to activity 1.7

The canons or principles of taxation are:
a) Canon of Equity
b) Canon of Certainty
c) Canon of Convenience
d) Canon of Economy
e) Canon of Productivity

Experimental Version 35
 f) Canon of Elasticity
g) Canon of Flexibility
h) Canon of Simplicity
i) Canon of Diversity

Application activities 1.7

This activity can be given as a normal individual or group activity, where students
Identify the canons/principles of taxation. 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 1.7

Q1. Principles of taxation are rules and regulations that should be observed in
the tax assessment, collection and administration. These rules are very important
since, they guide both taxpayers and tax-collectors in taxation system
Q2. Each principle is important because each one specifies what to do and
when to do it both for tax-payers (people/business people) and tax-collectors
(RRA). From the list of principles of taxation, none is more important compared
to others. All of them are important and complement because everyone states
what/how to do and when to do it.
Q3. In your community, you have probably heard people and business people
complaining about the taxes they pay or charged to different or similar items.
Identify any 5 things you have heard normally people complain about.
Answer: Five things that most people complain about the tax (people used to
think but seem is not true about taxes):
• Tariff/tax rate (complaining that is high).
• Time to pay tax (complaining that should be extended.
• Tax bases (saying that should be increased for ex. from 30,000Frw to
50,000Frw should be exempted).
• VAT (especially to those traders who do not issue EBM bill).
• Certain taxes like fixed and rental taxes (saying those things are theirs
and therefore should not assessed taxes) etc.

36 Experimental Version
Lesson 8: The importance of tax and the Classification of taxes

a) Learning objective

Identify the importance of tax and the Taxes classification

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 lessons, lesson1, 2, 3, 4,5,6,7 studied describe various Rwandan

tax system legislation. That will help to Identify the importance of tax and the
taxes classification leant in session 8.

d) Learning activities
• 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 Identify the importance of tax
and the Taxes classification.Answers or address any questions or challenges
about the activity. Guide them to make notes in referring in their students’ book.

Answers to activity 1.8

Q1:
People and business need to pay taxes to support government and allow it to
funds it public interests like police, military, build and maintain infrastructure etc.
Q2:
• By increasing import tax for protectionism
• By reducing tax on domestic industries
• Reducing tax on raw materials related to made in Rwanda
• Rewards for good taxpayers for domestic industries

Experimental Version 37
 e) Application activities 1.8

This activity can be given as a normal individual or group activity, where students
Identify the importance of tax and the Taxes classification,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 1.8

Q1.
• In our community, society benefits from taxes like enjoying infrastructure
development, security among others.
• There is a reduced rate of poverty among the community due to a
significantly equal distribution of income through various activities and
projects set by the government.
• Improved wellbeing among the vulnerable and elderly as they benefit
from the different government financed through taxes.
• Reduced infant mortality rates and increased life expectancy due to
improved access to health facilities and services.
• Increase in the percentage of the population that completes secondary
and TVET education, reducing the literacy levels, improving on the
peoples’ skills through programs such as 12YBE.
• Increased community/social solidarity, general happiness, life
satisfaction, and a significant more trust among the community members
and for public institutions.
• Taxes are charged on products discourage their usage hence controlling
over-exploitation of resources hence protecting the environment which
vital for the existence of the society.
Q2. If taxes were not paid, businesses would fail to perform their activities
because government would be unable to finance its expenditures like roads,
hospital, building etc. which, are essential for smooth running of business
activities.

Skills lab activity 1

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 different taxes in Rwanda

38 Experimental Version
then visit the return processing service to practice operations management of
different activities taking place there from the registration step to payment step.
Besides, encourage student to visit RRA website for further research.
i) Build

Given that students visit the RRA website,

– 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.
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
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
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.

Experimental Version 39
 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
administered by the tax administration. 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.

1.2 Summary of the unit

1.Meaning of taxation , tax and duty
Tax is a fee without direct exchange requested to the members of the community
by the State according to the law, to financially support the execution of the
government tasks.
Taxation is a system of raising money or revenue by the government from
individuals/businesses and companies by law through taxes.

2. Current legislation relating to taxation and tax period

A Direct tax is a tax on the income or wealth of a person .it is recovered
generally from that person under previously enacted legislation; an example
would be income tax.
An indirect tax is a tax on production, exchange or consumption of goods or
services. It is charged at the time a taxable operation is carried out. This is the
case for VAT and excise duty.

3. Define the residence and the permanent establishment (PE)

A person or a company’s residence position determines their liability to pay
Rwandan tax, especially on overseas income source
Permanent establishment is defined by the law n° 026/2019 of 18/09/2019
on tax procedures, chapter one called general provisions in article 3 as a fixed
place of business through which an income generating business wholly or
partially conducted.

4. The right and obligation of the taxpayer

• The rights of the tax payer according to Rwandan tax system
1. The right to be informed, assisted and heard
2. The right of appeal
3. The right to pay no more than the correct amount of tax

40 Experimental Version
 4. The rights to confidentiality and secrecy
• The obligations of the tax payer according to Rwandan tax
system
1. Relevant legislation
2. Registration of a business
3. Record-keeping

5. Categories of direct and indirect taxation

• Direct taxes
In general, direct taxes are levied on profit and income.

1. Personal tax on income

Personal tax on income is levied on income received by an individual. It may

comprise the following elements:
- Employment;
- Business activities;
- Investment;
- Capital gain;
- Use, sale, lease or free transfer of an immovable property allocated to the
business;
- Use, sale, lease or free transfer of movable property allocated to the
business.

2. Corporate Income Tax (CIT)

Rwandan resident companies, if not exempt bodies, pay corporate income tax
on all of their taxable income sources.
• Indirect taxes
In general, indirect taxes are applied on consumption of goods and services.

3. VAT

- VAT is an acronym for the term Value Added Tax

- It is an indirect tax on “taxable supplies” made by a “taxable person”
- Subject to all taxable goods and services
- Two tax rates in force:

Experimental Version 41
 • Standard rate of 18%
• Zero rate (0%)
A taxpayer must register for VAT if his turnover is above FRW 20,000,000
for any twelve-month period or above FRW 5,000,000 for three consecutive
quarters. In addition, any taxpayer may choose to register voluntarily for VAT if
he doesn’t meet the threshold.

4. Excise tax

Excise tax is imposed on specified goods /service produced locally or imported

to be consumed in the country.

5. Definition of terminologies used in taxation and Characteristics

of a good tax system
• Terminologies used in taxation
a) Tax burden
b) Tax incidence
c) Tax impact
d) Tax base
e) Taxable capacity
f ) Tax evasion
g) Tax avoidance
h) Tax exemption
i) Tax shifting
j) Taxpayer
k) Budget year
l) Tax Administration
m) Fiscal Year
n) Authorized officer

• Characteristics of a Tax
a) There is no quid-pro- quo in tax
b) It is a compulsory contribution
c) It involves a sacrifice
d) It is paid out of total wealth

42 Experimental Version
7. The canons/principles of taxation
A good tax system should consist of taxes which conform to the canons of
taxation such as:
a) Canon of convenience
b) Canon of simplicity
c) Canon of certainty
d) Canon of economy
e) Canon of elasticity
f ) Canon of productivity
g) Canon of equity
h) Canon of diversity

8. The importance of tax and the Classification of taxes

• Roles of taxation in Rwanda
Taxation plays a great role in Rwanda’s economy like in any other country’s
economy. These roles include the following:
• Raising government revenue
• Protecting home industries especially infant industries
• Control of inflation
• Reducing dumping
• Discourage importation and consumption of certain goods
• Controls monopoly
• Reduce income inequality
• Improve balance of payment position
• Encourages hard work
• Discourage over exploitation of resources
• Promotes economic growth
• Classification of taxes
Tax can be classified in the following ways:
• According to its nature
a) Personal
b) Property
• According to who bears the burden of the tax?
a) Direct
b) Indirect

Experimental Version 43
3. According to the method of determination of amount of tax
a) Specific
b) Ad Valorem

4. According to purpose
a) General, fiscal, or revenue
b) Special or regulatory

5. According to scope or authority imposing the tax

a) Centralized
b) Decentralized

6. According to graduated scale of rates.

a) Progressive taxes
b) Regressive taxes
c) Proportional taxes

1.1. Additional information for teachers

Additional Information
Taxes are called a non-quid pro-quo payment which means that there is not
direct payment or contributions to government services. A taxpayer may receive
more or less services than the taxes actually paid.
Functions of tax
There are three main functions that a tax fulfils:
Financial function: main function of a tax is to finance the government’s
expenditure
The social function: taxes enable the government to redistribute the national
income. Taxes are therefore an instrument for social solidarity.
Economic function: taxes permit the government to regulate the economic
activities in a country. Taxes can be used for example to regulate the inflation,
as incentive for investment or for discouraging certain behaviour (like drinking
and smoking)

1.8. End unit assessment (answers)

Q1. No, taxes are not free money from taxpayers to government is fees without
a direct exchange requested to the members of the community by the State
according to the law, to support financially the execution of the government

44 Experimental Version
tasks. Example: roads construction and maintenance, hospitals, security (army
and police) etc.

Q2. Characteristics of a tax.

The definitions point out four main characteristics of good tax:

1. There is no quid-pro- quo in tax:

Tax is not levied for a return for a specific service rendered by government to
taxpayers. An individual cannot ask for any special benefit from the government
in return for the tax paid.

2. It is a compulsory contribution:

It is imposed by the government on individuals, households, or companies.

Because of its compulsory nature, those who do not pay it are reliable to being
punished but it is to be paid by those who come under its jurisdiction.

3. It involves a sacrifice:

It is a payment by taxpayers which is used to benefit all the citizens whereby the
government uses the collected revenues to establish infrastructures such as
hospitals, schools as well as other public utility services.

4. It is paid out of total wealth:

Meaning tax is computed based on a certain specific percentage of the total

income.

Q3. Discuss the classification of taxes

Tax can be classified in the following ways:
• According to its nature:
Personal, poll or capitation tax: It is a tax of a fixed amount on individuals
residing within a specified territory, without regard to their property, occupation
or business. Ex. Community tax (basic)
Property- imposed on property, real or personal, in proportion to its value, or in
accordance with some reasonable method or apportionment. Ex. Real estate
Tax
Property- imposed on property, real or personal, in proportion to its value, or in
accordance with some reasonable method or apportionment. Ex. Real estate
Tax

Experimental Version 45
 • According to who bears the burden of the tax:
- Direct- the tax is imposed on the person who also bears the burden
thereof Ex. Income tax, corporate tax etc.
- Indirect –imposed on the taxpayer who shifts the burden of the tax to
another, Ex. VAT
- According to the method of determination of amount of tax:
- Specific –imposed and based on a physical unit of measurement as by
head number, weight, length or volume. Ex, fermented liquors, cigars.
- Ad Valorem of a fixed proportion of the value of the property with respect
to which the tax is assessed. Ex, Real estate tax, excises tax on cars.
• According to purpose:
- General, fiscal, or revenue- imposed for the general purpose of supporting
the government. Ex. Income tax, percentage tax.
- Special or regulatory- imposed for a special purpose, to achieve some
social or economic objective. Ex. Protective tariffs or custom duties on
imported goods intended to protect local industries.
• According to scope or authority imposing the tax:
- Centralized - imposed by the national government ex; CIT, PIT
- Decentralized - imposed by municipal corporations or local Governments
ex. property tax, rental tax and other fees
• According to graduated scale of rates:
- Progressive taxes: a tax is progressive if the tax rate increases as the
income increases. For example, a person earning 50,000F= paying 10%
and the person earning 100,000F = paying 15%.
- Regressive taxes: a tax is regressive if the tax rate reduces with the
increase in levels of income. As income increase the tax rate decreases.
Example, a person earning 100,000F = pays 10% of his income and a
person earning 200,000F = pays 5%.
- Proportional taxes: proportional taxes are also called flat taxes. The tax
rate is constant for all levels of income. People of low income and people
of high income pay taxes at the same rate. If for example, the tax is set at
20%
Q4. c. AB Ltd, a large company preparing its accounts under GAAP, which
wishes to prepare accounts to 30 June for commercial reasons
Q5. b 1and3

46 Experimental Version
1.9. Additional activities (Questions and answers)
1.9.1 Remedial activities
Q1. Which two of these Rwandan taxes would be considered direct taxes?
a) excise tax on alcohol
b) corporate income tax
c) Import duties paid when acquiring goods from outside Rwanda
d) capital gains tax on the sales of shares
a) 1 and 2
b) 2 and 4
c) 2 and 3
d) 3 and 4
Q2. Explain the following fiscal terms:
a) Tax exemption
b) Decentralized taxes in Rwanda
c) Tax impact
d) Tax incidence

Q3. Which of the following is the definition of direct tax?

a) A tax on an individual not a company
b) A tax on the purchases of goods or services
c) A tax on the income or wealth of a person
d) A tax charged at the time a transaction occurs

Q4. Which two of the following conditions need to be meet for a

taxpayer to use a tax period that is not 31 December?
1. The taxpayer must be an individual.
2. The taxpayer must apply to the minister of finance for permission.
3. The taxpayer must have an overseas parent company.
4. The taxpayer must notify the Rwandan revenue authority of the change.
a) 1 and 3
b) 2 and 3
c) 1 and 4
d) 2 and 4

Experimental Version 47
Q5. Which one of the following would be considered a permanent
establishment of an overseas company operating in Rwanda?
a) a storage of facility
b) An office solely used for market research purposes
c) an independent agent
d) a factory where workers assemble goods for resale

Answer:

Q1. b) 2 and 4
Q2.:Tax exemption is the right to exclude all or some income from taxation by federal
or states governments. Most taxpayers are entitled to various exemptions to
reduce their taxable income, and certain individuals and organizations are
completely exempt from paying taxes.
a) The decentralized taxes are taxes collected by the districts
b) Tax impact: this refers to the first resting place of a tax or the burden
suffered by the person /company that initially pays the tax imposed
when it has just been.
c) Tax incidence: this is the final resting place of a tax or the person or
company that actually pays the tax.
Q3. c) A tax on the income or wealth of a person.
Q4. d) 2and4
Q5. d) a factory where workers assemble goods for resale

1.9.2. Consolidation activities

Q1. Why does the government of Rwanda impose a tax?
Q2. What are the requirements for a good fiscal system?
Q3. Ronald Kalisa ha a business in Rwanda with annual turnover of FRW
15,000,000. which two of the following records is he not required to keep for
tax purposes?
1. Personal income tax calculation
2. Daily records of income and expenses
3. Record of trading closing stock
4. Withholding tax documentation
a) 1 and 4
b) 1 and 2

48 Experimental Version
 c) 2 and 3
d) 3 and 4
Q4. Which of the following taxpayers, each of whom runs a business in Rwanda,
would be required to keep records of closing trading stock?
a) An n individual with turnover of FRW 30,000,000 per year
b) An individual with turnover of FRW 19,000,000 per year
c) An individual with turnover of FRW 10,000,000 per year
d) Both a and b

Answer:
Q1. Roles of taxation in Rwanda
Taxation plays a great role in Rwanda’s economy like in any other country’s
economy. These roles include the following:
Raising government revenue: taxation raises revenue for the government,
which revenue the government uses to cater for its legitimate expenditures such
as administrative costs, paying civil or government workers, etc.
Protecting home industries especially infant industries: taxes imposed
on imported goods protect home industries, especially the infant industries from
foreign competition
Which increases market and consumption of locally made goods as imported
goods are made expensive by these taxes.
Control of inflation: taxation helps to fight inflation in a country when direct
taxes are charged on people’s income, which reduces disposable income
thereby reducing aggregate demand and causing a fall in the general price level.
Reducing dumping: dumping is the selling of goods in foreign countries at
cheaper prices than in the home country. Imposing high taxes on such goods
discourage dumping and protects the economy because such goods discourage
development of local industries, which usually start with high production cost
and relatively high prices.
Discourage importation and consumption of certain goods: taxation
helps to discourage importation and consumption of harmful goods through
charging high taxes on such goods like cigarettes, alcohol, etc., thereby making
them expensive to consume.
Reduce income inequality: the government, through taxation, reduces
income inequalities in the country by using a progressive tax system in which

Experimental Version 49
taxes are charged according to people’s income thereby making the rich pay
more than poor.
Improve balance of payment position: the government is able to improve its
balance of payment position by charging high taxes on imported goods and
encouraging consumption of locally produced goods and exportation. This
reduces expenditures abroad and increases foreign exchange from export
earnings.
Encourages hard work: taxes encourage or force people to work hard in
order to pay their tax obligations and especially true with direct taxes charged
on individual such as income tax.
Discourage over exploitation of resources: taxation can be used by the
government to discourage over exploitation of resources by raising the cost of
production for the exploitation firms through imposing high taxes on them.
Promotes economic growth: taxation policies are used by the government
to influence the level of economic activity in the country and hence helps in
promoting economic growth by encouraging increased production and
investment and also providing enough government revenue

Q2. the requirements for a good fiscal system are:

• A good fiscal system should be flexible
• A good fiscal system should be economical
• A good fiscal system should be convenient
• A good fiscal system should be elastic
• A good fiscal system should be productive
• A good fiscal system should be equity
• A good fiscal system should be simple
• A good fiscal system should be able to be paid.
Q3. 2 and 3
Q4. An individual with turnover of FRW 30,000,000 per year

1.9.3. Extended activities

Q1. Chloé petit, a French, national has been second to the Rwandan permanent
establishment of her French employer for a period of two years starting on 1
September 2019.During her secondment she will work fulltime for the Rwandan
business and will be paid in Rwandan Francs. She also earns further income by
providing internet design services to French businesses in her spare time and
will continue to do this while she is Rwanda. She will invoice her design clients

50 Experimental Version
in Euros and the fees will be paid into her French bank account.
She will live in rented flat while she is in Rwanda. Her employment income and
the internet design income will be her only sources of income
Explain to Chloé
a) The period she will become a Rwandan resident for tax purposes
b) How her Rwandan employment income will be taxed?
Q2. Do you think taxpayers have obligations or responsibilities? Give reasons
to support your response.

Answer:

Q1.
a) You will be Rwandan resident for a tax year if you are present in
Rwanda at midnight for 183 days or more in any 12-month period
that ends in that tax year.as you will only be present in Rwanda for
four months in 2019,you will not be considered Rwandan resident for
2019, however, you will be Rwandan resident for the tax year to 31
December 2020 as you will be present in Rwanda for 183 days by the
beginning of march 2020.you will also be Rwandan resident under this
test for the tax period ending 31 December 2021
b) You’re earning for your work in Rwanda will be liable to Rwanda person
income tax for your entire secondment; Rwandan tax sourced income
is chargeable even if the recipient is not Rwandan resident
Q2. Yes. Some of the obligations/responsibilities of taxpayers are:
– To register with RRA
– To be honest
– To provide accurate information and documents on time
– To keep records, providing accurate information to RRA
– To sign tax returns
– To pay tax on time.

Experimental Version 51
52 Experimental Version
 UNIT 2 LAWS RELATED TO
BUSINESS ACTIVITIES

2.1. Key unit competence: To be able to identify laws

related to business activities

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

In senior 3 Unit 9 you analysed Business Ethics, while in senior 3 unit 4
you analysed different forms of enterprises. This prior knowledge, skills or
competences should help the students to be able to apply laws related to
business activities in their locality and be able to realize their contribution as
students towards business activities.

INTRODUCTION
2.3. Cross-cutting issues to be addressed:

TO ACCOUNTING
Note: The examples below are just to guide you on how to address crosscutting
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 crosscutting
issues where possible taking consideration of their environment or community
around them.
Genocide Studies: Genocide Studies provides young people with an
understanding of the circumstances leading to the genocide and the remarkable
story of recovery and re-establishing national unity. Genocide Studies helps
student to comprehend the role of every individual in ensuring nothing of the
sort ever happens again.

Gender education: Emphasis throughout this unit has to be put on how both
males and females have same rights and obligations to do business activities
which can generate an income in their local community. So as to promote better
standard of living of business activities and their community in the creation of
business-based employment opportunities and the country by paying taxes
leading to socioeconomic development.

Experimental Version 53
Environment and sustainability: The greatest source of Law is the
environment and the society. Business law or any other law related to business
activities cannot be applied without the environment. Therefore, great care
has to be taken for environment and society. Therefore, business law the only
way through which the environment can be safe from harm but only done
appropriately.
Inclusive education: In addition to all having equal opportunities to become
businesses, attention will be made on how we all regardless of our background
have right to generate ideas that do not discriminate as our needs are the same.
Students need to understand that business law should not discriminate but
promote inclusiveness of all. Throughout the business activities students should
be able to evaluate the contribution of law in socio-economic development of
the community.
Peace and Values: You need to emphasize on students need to live in peace
and harmony with others. Students need to identify potential contributions of law
towards society and promoting peace. Students also need to develop positive
attitude towards the society, customers, shareholders, environment, business
and government, among others as the socio-economic development. They need
also to know that the security is important for people to live in high standard of
living.
Standardization culture: You need to emphasize to students, the need for
standards even in business activities to ensure that these activities bring in
enough income to the economy and to maintain order in business environment.
Financial education: Teacher and students should know that resources and
materials used in teaching and learning activities must not be mismanaged. This
issue will also be addressed when studying law related to business activities.
Students will learn what is permitted and what is prohibited to manage learning
resources and materials well. They will put in mind that misusing materials is
wasting money.
1.3. Guidance on introductory activity
NOTE: The students won’t be able to answer all the questions at this stage;
they can answer one question. The most important thing is that you want to
challenge students to be expectant and to use their previous knowledge and
background to self-discover during teaching and learning of this unit.
Explain the purpose of the introductory activity of the lesson. This activity is
intended to provide interest and motivation for students to be able to identify
laws related to business activities as opportunity of fighting against illegal
business activities in the community.

54 Experimental Version
The introductory activity will also evoke students’ interests about what to expect
in this unit as they answer the questions that follow in the activity. Students can
build on previous knowledge, skills, values and attitudes to help you assess the
student’s prior knowledge and help link with the new content.
Use an appropriate method such as small groups or pairs and provide students
with Unit 2 introductory activity, give clear instructions to the activity.
They observe photo and discuss what activities may have carried out. They
read a scenario about business in Rwanda and discuss about What could be
done by law to govern, standardizing and resolving some problems happen in
business activities.
During grouping or pairing, mix boys and girls and students with different abilities.
During the discussion, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing and
should applaud/congratulate 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.
Harmonize their findings or answers, and help them draw conclusions/summary
to questions. Answer or address any questions or challenges about the activity.
Guide them to make notes in their books referring to students’ book.
Possible Answers of introductory activity:
• The photo shows business law and activities related to business
activities
• Law set of binding rules established and enforced by competent
authorities in order to govern relationships between persons in a given
community. This is involved in protecting liberties and rights, maintaining
orders, resolving disputes, and establishing standards for the business
concerns and their dealings with government agencies and individuals.
• Government authorities can govern them are Commercial Courts,
Rwanda Revenue Authority (RRA), Rwanda Development Boards
(RDB), Rwanda Utilities Regulatory Authority (RURA), Food and Drug
Authority (FDA), Rwanda Standards Boards (RSB)

Experimental Version 55
2.4. List of lessons/sub-heading
Lesson title/ Number
Learning objectives
Sub-heading of periods
Law and business Explain the meaning of law and
1 2
law business law
Important terms Explain important terms used in
2 4
used in law business law
Importance of
Discuss the Importance of law for
3 business law in 4
business operations
business operations
Laws related to Discuss the Importance of laws
4 4
business related to business operations
Legal institutions
related to Identify different legal institutions
5 4
businesses in related to business in Rwanda.
Rwanda
Business
registration Explain the registering process
6 4
according to forms and procedures of a business.
of business
Benefits of
Explain the Benefits of registering
7 registering a 3
a business
business
Consequences of
List the consequences of not
8 not registering a 2
registering a business
business
End Unit Assessment 3
Total number of periods 30

Lesson 1: Law and Business Law

a) Learning objective

Explain the meaning of law and business law

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

56 Experimental Version
 c) Prerequisites/Revision/Introduction

Students are familiar with term law and business from entrepreneurship S3 Unit
9. Again, they live in society where law and businesses applied. So, they refer
to their community to explain business law.

d) Learning activities
• Invite student to read individually the question in the student book and
work in pairs to share with the classmates.
• Have some pairs make the presentation.
• Provide constructive feedback in terms of supplements.

Answers to activity 2.1:

The law binding rules established and enforced by competent authorities in
order to govern relationships between persons in a given community.

e) Application activities 2.1:

Invite students to read, the application activities in student book and answer
them.

Answers to Application Activity 2.1

a) Law is a set of principles; rules and standards of conduct
b) Because have always demonstrate the importance of legal norms
meant to regulate relationships within communities. There is no society
without rules.
c) Yes, because have general application to the society and have been
developed by an authority for that society and for which the violation
imposes a sanction.
d) Yes, because it is set of binding rules established and enforced by
competent authorities in order to govern relationships between
persons in a given community. It shows what is permitted and what is
prohibited in society.

Lesson 2: Important terms used in Law

a) Learning objective

Explain important terms used in law

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

Experimental Version 57
chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with term law from S3 entrepreneurship Unit 9. Again, they
can refer to their community where law is applied.

d) Learning activities
• Invite students to observe individually the photo in the student book
and work in pairs to share with the classmates the activities do.
• Some pairs make the presentations
• Provide constructive feedback from the findings

Answers to activity 2.2:

• Plaintiff: this is the person who sues another in a court of law. Or a
plaintiff is the person or entity initiating a lawsuit by filing a complaint in
a court of law.
• Defendant: this is the one against whom a law suit is brought.
• Appellant: a person appealing to a higher court against a decision made
by a lower court, seeking reversal of that decision.
• Law suit: Accusation in the court of law
• Counsel: legal advice given in a case; also means a lawyer or attorney
in a case.
• Damages: money that a defendant pays to the plaintiff in a civil case if
the plaintiff has won the case.
• Fine: Money paid by the defendant to the public or government

e) Application activities 2.2:

• Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to application activity 2.2

Plaintiff: this is the person who sues another in a court of law. Or a plaintiff is
the person or entity initiating a lawsuit by filing a complaint in a court of law.
Defendant: this is the one against whom a law suit is brought.

58 Experimental Version
Appellant: a person appealing to a higher court against a decision made by a
lower court, seeking reversal of that decision.
Damages: money that a defendant pays to the plaintiff in a civil case if the
plaintiff has won the case.
Fine: Money paid by the defendant to the public or government

Lesson 3: Importance of business law in business operations

a) Learning objective

Discuss on the Importance of business laws in business operations

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with business ethics from S3 entrepreneurship Unit 9.

Again, they can refer to their community where business law is applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards the importance of business law
in business activities.
• Invite students to share their findings

Answers to activity 2.3:

• Business law maintains order in community by creating a stable
environment where plans and rights can be protected, complaints can
be made, expectations can exist.
• Law protects business, protects consumers from harmful business
practices and limits government from engaging in abusive practices
against businesses.

e) Application activities 2.3:

Invite students to read the application activities in student book and answer
individually accordingly.

Experimental Version 59
Answers to Application Activity 2.3
1) This governs the dealings regarding commercial matters, namely business
organizations. It encompasses all laws that guide on how to set up a
business and then how to run it. This includes all the laws that govern on
how to set up, start, manage, run, close or sell a business.
2) With the help of business law, business owners may make better
decisions, and also know when to seek legal help. Every business has
to maintain an ethical conduct but most businesses, in the greed to
earn more profits; do not follow such conducts. Business law makes it
mandatory for all the businesses to maintain an ethical conduct which in
turn pleases the buyers and they form a good image of the business.

Lesson 4: Laws related to business

a) Learning objective

Explain the laws related to business

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with business ethics from S3 entrepreneurship Unit 9.

Again, they can refer to their community where business law is applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards the importance of law in business
activities.
• Invite students to share their findings

Answers to activity 2.4:

Because it includes all the laws that govern on how to set up, start, manage,
run, close or sell a business. It includes contracts, laws of corporations, other
business organizations, commercial papers, income tax, secured transactions,
intellectual properties, and other transactions and dealings related to the
business.

60 Experimental Version
 e) Application activities 2.4:

Invite students to read the application activities in student book and answer
individually accordingly.

Answers to Application Activity 2.4

The role of Laws related to business are:
• Land act for the ownership and management of land
• Food and drugs law for regulating a wide range of consumer products,
• Consumer protection law for offering pure and perfect competition at
the market
• National environmental law for determining modalities for protecting,
conserving and promoting the environment against climate change

Lesson 5: Legal Institutions Related to Businesses in Rwanda

a) Learning objective

Identify different legal institutions related to business in Rwanda.

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with business from S3 entrepreneurship Unit 9. Again,

they can refer to their community where business is applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards legal institution related to
business activities.
• Invite students to share their findings

Answers to activity 2.5:

The government institutions needed in business are: Commercial Courts,
Rwanda Revenue Authority (RRA), Rwanda Development Boards (RDB),
Rwanda Utilities Regulatory Authority (RURA), Food and Drug Authority (FDA),
Rwanda Standards Boards (RSB), etc…

Experimental Version 61
 e) Application activities 2.5:
• Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 2.5

The role of institutions governing business in Rwanda:
• Commercial Courts for handling commercial matters in order to deal
with a big backlog of commercial cases, speed up the resolution of
business disputes and thus play a part in the promotion of investment
in the country.
• Rwanda Revenue Authority (RRA) for enforcing, assessing, collecting,
and accounting for the various taxes imposed in Rwanda.
• Rwanda Development Boards (RDB) for Investment Promotion, Export
& Special Economic Zone (SEZ) Development, Investment Deals
Negotiation, Tourism and Conservation, Skills Development and One
Stop Centre services (business and investment registration, visa
facilitation, EIA, tax incentives management, etc.)
• Rwanda Utilities Regulatory Authority (RURA) for regulating
certain public utilities, namely: telecommunications network and/
or Telecommunications services, electricity, water, removal of waste
products from residential or business premises, extraction and
distribution of gas and transport of goods and persons.
• Food and Drug Authority (FDA) for protecting and promotes human
and veterinary public health through conducting assessment and
evaluations of application dossiers for processed foods/ drinks, food
additives, food supplements, both human and veterinary medicines,
vaccines and other biologics, medicated cosmetics, medical devices,
chemicals and pesticides and tobacco products. The FDAR Department
also recommends for registration and/or marketing authorization (MA)
to products that comply with Rwanda FDA regulatory requirements for
registration.
• Rwanda Standards Boards (RSB) for defining and possess national
standards. Public services and public or private firms must present their
standards to RSB for adoption at national level.

62 Experimental Version
Lesson 6: Business registration according to forms of business

a) Learning objective

Explain registration procedures of business

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with business from S3 entrepreneurship. Again, they can
refer to their community where business is applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards registration of business in
Rwanda.
• Invite students to share their findings

Answers to activity 2.6:

• Registering a sole trade business or Individual Enterprises,
• registering a company,
• registering a partnership,
• Registering a cooperative.

e) Application activities 2.6:

• Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 2.6

1) You can register your business online at http://org.rdb.rw/ or at the
Office of the Registrar General which is a department within the Rwanda
Development Board located in Kigali the capital city.
2) Registering a company is be one of the best ways you can expand your
business and help ensure its success. Not only will you be free of liability,

Experimental Version 63
 but lower tax rates will mean that you can focus on turning your business
into the lucrative venture you want it to be. If you’re unsure which business
structure is right for you, a business lawyer can help you determine which
option is right for you.

Lesson 7: Benefits of registering a business

a) Learning objective

Explain the benefits of registering a business

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with business from S3 entrepreneurship. Again, they can
refer to their community where business is applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards registration of business in
Rwanda.
• Invite students to share their findings

Answers to activity 2.7:

Registering business can create reputation from customer, you get legal liability
protection, Branding and Legitimacy, ensure Loan facility, Create employment.

e) Application activities 2.7:

• Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 2.7

The benefits of registering business in Rwanda:
• Building reputation especially from customers and clients.

64 Experimental Version
 • When you register your business as Limited Liability Company, you
will not be held personally responsible for certain accidents and other
liabilities.
• Registered business helps in building reputation with your suppliers,
customers, and employees.
• When your company is registered, accessing loan becomes very easy
compare to personal loan application.
• Registered business can employ full-time employees and pay them
salaries and other benefits.

Lesson 8: Consequences of not registering a business

a) Learning objective

Explain the benefits of registering a business

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with business from S3 entrepreneurship. Again, they can
refer to their community where business is applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards not registering of business in
Rwanda.
• Invite students to share their findings

Answers to activity 2.8:

The consequences of not registering business in Rwanda: Pay Fines and
Penalties, Lawsuits, Closing Business, Arrests business responsible, Inability to
Bid, Loss of Reputation, Difficulty to Obtain Financing

e) Application activities 2.8:

• Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings

Experimental Version 65
 • Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 2.8:

1. Because the activities of business not having licence can be considered
to be fraudulent activities.
2. When a customer is informed that your business is not operating legally,
it could call into question the quality of your work and the trustworthiness
of your business, which can be devastating and difficult to rebuild.

Skills lab activity 2

Guidance on the skills lab activity.
In conducting this skills lab activity, you can either invite a resource person from
RDB for students to interview him/her or request students to conduct research
on the internet where need be.
i) Build
Given that students visit the RDB website,
- 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
ii) Practice
- Guide students on accessing the real website
- Ensure that internet is connected for all
- 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 their fellows
iv) Conclusion
- The teacher emphasizes on the objective of the research reminding
students that they have to follow those identified steps in registering their
own businesses.
- The following are key areas for reference:

66 Experimental Version
 - Requirements for starting a business:
• How to register a business
• Institutions that are involved with starting and developing a business

2.6. Summary of the unit

Law and Business Law: Law is a set of principles, rules and standards of
conduct that have general application to the society, have been developed by
an authority for that society and for which the violation imposes a sanction.
Business law is a section of code that is involved in protecting liberties and
rights, maintaining orders, resolving disputes, and establishing standards for the
business concerns and their dealings with government agencies and individuals.
Importance of business law in business operations: It set standards,
maintain equilibrium, decrease chances of frauds, presence of Ethical conduct.
Laws related to business: Land act for the ownership and management of
land, Food and drugs law for regulating a wide range of consumer products,
Consumer protection law for offering pure and perfect competition at the market,
National environmental law for determining modalities for protecting, conserving
and promoting the environment against climate change.
Legal Institutions Related to Businesses in Rwanda: The government
institutions needed in business are: Commercial Courts, Rwanda Revenue
Authority (RRA), Rwanda Development Boards (RDB), Rwanda Utilities
Regulatory Authority (RURA), Food and Drug Authority (FDA), Rwanda
Standards Boards (RSB).
Business registration according to forms of business:
Registering a sole trade business or individual enterprise: Business
registration operates as a single point integrated service. Once you complete
your business registration, you have also completed tax registration with the
Rwanda Revenue Authority, employer registration with the Social Security Fund
of Rwanda and notification of business activities to the National Institute of
Statistics of Rwanda.
Registering a company: You can register your business online at http://org.
rdb.rw/ or at the Office of the Registrar General which is a department within
the Rwanda Development Board located in Kigali the capital city for Domestic
Company Registration and Opening a branch/ Foreign Company.
Registering a partnership: You can register your partnership business online
at http://org.rdb.rw/ or at the Office of the Registrar General which is located

Experimental Version 67
in Kigali.
Registering a cooperative: Registration of a Cooperative is the action or
process of registering a cooperative by attributing a registration number or
of being registered in registration book for Cooperatives. A cooperative is
registered when it fulfils all legal requirements. The exercise is done online by
the applicant him/herself through the Cooperative Management Information
System (CMIS).
Benefits of registering a business: Building reputation especially from
customers and clients. When you register your business as Limited Liability
Company, you will not be held personally responsible for certain accidents
and other liabilities. Registered business helps in building confidence and
reputation with your suppliers, customers, and employees. When your company
is registered, accessing loan becomes very easy compare to personal loan
application. Registered business can employ full-time employees and pay them
salaries and other benefits.
Consequences of not registering a business: pay fines and penalties,
lawsuits, closing business, arrests business responsible, inability to bid, loss of
reputation, difficulty to obtain financing

2.7. Additional information for teachers

Sources of law
Law as a set of binding rules derives from different sources depending on the
nature of the norm in question, the enacting authority, etc.
But considering the Rwandan context which is predominantly civil law-inspired
legal system, law has the following source: Constitution, international law,
organic laws and ordinary laws, presidential and ministerial orders, custom,
case-law, general principles of law and doctrine.

A. Constitution
This is the supreme law of any given country. It enshrines the most important
principles governing the State such as whether a country is a Republic or a
monarchy, the functioning of different administrative entities, the separation
of powers (executive, legislative and judiciary), fundamental human rights
principles, etc. The Constitution cannot, however, provide for every matter in a
country. Therefore, particular laws must be put in place so as to regulate each
situation in a more detailed way. The current Constitution of the Republic of
Rwanda entered into force on June 4th, 2003.

68 Experimental Version
 B. International law
International law is a set of rules which emanate from agreements concluded
between States, or between the latter and international organizations. Rwanda
is part to several international conventions such as for instance, the General
Agreement on Tariffs and Trade, the UN Convention on Contracts for International
Sale of Goods, the Agreement instituting the Common Market for Eastern and
Southern African, the EAC, etc.
According to Article 190 of the Constitution, international agreements and
treaties come in the second position in the hierarchy of legal norms in Rwanda
i.e. after the Constitution and before organic laws, ordinary laws and ordinances.

C. Organic law and ordinary laws

Organic laws mostly deal with the organization and functioning of public entities
e.g. organic law on the organization, functioning and competence of courts,
whereas ordinary laws regulate all other issues e.g. the law n° 07/ 2009 of 27/
04/ 2009 relating to commercial companies (Official Gazette, n° 17 bis of 27/
04/ 2009).
The minimum voting majority differs between organic and ordinary laws.
For the former ones, a minimum majority of 2/3 is required whereas a simple
majority is sufficient for the vote of the latter ones.

D. Orders
In some cases, the law vests the President, Prime Minister or a given Minster
with the power to enact orders regulating any particular issue. Such orders will
have the same binding force as a law enacted by M.Ps.
It is worth noting that the Constitution of the Republic of Rwanda empowers the
Government to legislate through Decrees in special cases when it is impossible
for the parliament to convene.

E. Custom
Custom is a set of unwritten rules originating from common practices within
a given society which are deemed to be binding and are orally transmitted
from generation to generation. Pursuant to Rwanda Constitution, Article 201,
paragraph 3, custom remains applicable as long as it has not been replaced by
a law and does not infringe the Constitution, laws and regulations nor does it
violate public order and good morals.
Also, Article 3, paragraph 2 of the preliminary title of the Constitution provides

Experimental Version 69
that in the absence of an applicable legal provision, the judge will decide
according to customary law; and in the absence of the latter, according to rules
that he would make if he were to enact laws. Thus, customary law takes a
secondary place; meaning that it can only be referred to if there is no written law
applicable to a given situation.
In order for the custom to be recognized on customary rule:
- It must be reasonable;
- It must have existed for a long time;
- It must be generally recognized and observed by the community;
- The content must be certain and clear.

F. Case-law
Also known as jurisprudence, case-law is constituted of judicial decisions
rendered by courts and tribunals. In Rwandan legal system which is predominantly
civil law-based, a judge is not bound by the decision of another judge on a similar
issue. Judges appraise independently and with sovereignty matters submitted to
them. Regard to a prior decided case may only be had on a consultative basis.

G. General principles of law

These are fundamental principles recognized by the vast majority of jurisdictions.
They may be relied upon as sources of law in the absence of a written law or a
custom. The examples of such principles are the following: ignorance of the law
is not an excuse, the special rule derogates to the general one, non-retroactivity
of the law, etc.

H. Doctrine
This has to do with the opinions of academic lawyers to be found in text books,
learned journals and the notes to cases reported cases in law journals.
Although the doctrine is not considered as a formal source of law, it can be
consulted in order to create new concepts or to suggest some solutions which
can be followed by the legislation.

2.8. End unit assessment

1) Business law is there to maintain order, resolve disputes, establish

generally accepted standards, protect rights and liberties when it comes
to business and its relation to other companies, government authorities,
and the customers.

70 Experimental Version
 2) With the help of business law, business owners may make better
decisions, and also know when to seek legal help. Every business has
to maintain an ethical conduct but most businesses, in the greed to
earn more profits; do not follow such conducts. Business law makes it
mandatory for all the businesses to maintain an ethical conduct which in
turn pleases the buyers and they form a good image of the business.
3) The permits required from government entities are:
- Rwanda Development Boards (RDB) for registering business
- Rwanda Utilities Regulatory Authority (RURA) for regulating certain public
utilities.
- Rwanda Standards Boards (RSB): For standardising certain products
- Rwanda Revenue Authority (RRA) for collecting taxes
4) Yes, because through registration, businesses adhere to the compliance
of rules and regulations and thus, remain under government control.
5) Law governs the dealings regarding commercial matters, namely business
organizations. It encompasses all laws that guide on how to set up a
business and then how to run it. This includes all the laws that govern on
how to set up, start, manage, run, close or sell a business.

2.9. Additional activities

2.9.1. Remedial activities

1) What do you understand by the following terms: Law, Business law,
Lawsuit, fine?

Possible answer:
• Law is a set of principles; rules and standards of conduct that have
general application to the society, have been developed by an authority
for that society and for which the violation imposes a sanction.
• Business law is a section of code that is involved in protecting liberties
and rights, maintaining orders, resolving disputes, and establishing
standards for the business concerns and their dealings with government
agencies and individuals.
• Law suit is accusation in the court of law
• Fine is money paid by the defendant to the public or government
2) How can you register a company in Rwanda?

Possible answer:
You can register your partnership business online at http://org.rdb.rw/

Experimental Version 71
Or at the Office of the Registrar General which is located in Kigali.

2.9.2. Consolidation activities

1) Explain the function of Rwanda Development Board (RDB) and Rwanda
Revenue Authority in Rwandan business.

Possible answer:
• The RRA is charged of enforcing, assessing, collecting, and accounting
for the various taxes imposed in Rwanda.
• Currently, RDB’s key services are; Investment Promotion, Export
& Special Economic Zone (SEZ) Development, Investment Deals
Negotiation, Tourism and Conservation, Skills Development and One
Stop Centre services (business and investment registration, visa
facilitation, Environmental Impact Assessments (EIA), tax incentives
management, etc.)
RDB is here to provide support throughout the entire investment journey and
to ensure that Rwanda remains one of the best places to do business in Africa
and the World.
1) Differentiate land act from National environmental law as the law related
to business.

Possible answer:
• Land act: An Act to provide for the tenure, ownership and management
of land; to amend and consolidate the law relating to tenure, ownership
and management of land; and to provide for other related or incidental
matters.
• National environmental law: This Law determines modalities for
protecting, conserving and promoting the environment against climate
change. Environmental law refers to a variety of protections which share
the goal of protecting the environment.

2.9.3. Extended activities

Referring to the example of Rwanda. Discuss on the importance of business
law for:
• Customer
• Owner
• Society

Possible answer:
• For customer:

72 Experimental Version
Earlier, the customer had to suffer a lot due to the absence of a proper law that
could safeguard their interests and money invested in a particular business. As
there was no such law regarding maintenance of order, rights, and liabilities,
etc., the business owners made their own standards and made the customers
suffer just because of the greed to make more money.
With the establishment of business law, many standards have been established
which have to be followed by businesses.
Maintaining Equilibrium in order to create a sense of satisfaction among
customers. In the absence of the law, different countries had different laws
regarding the business dealings which made it difficult for the customers as well
as the seller to establish a deal. But now every country has the same standards,
and the deal between buyer and seller is easily established. This brings ease in
business dealings and transactions all across the globe.
• For owner:
Business law helps the owners itself to get aware of the laws against other
businesses and individuals. It also helps the individuals to be aware of the rights
against the businesses so that they can use them in case they fall prey to the
frauds and misery of the business.
• For the society:
With the help of business law, business owners may make better decisions,
and also know when to seek legal help. Every business has to maintain an
ethical conduct but most businesses, in the greed to earn more profits; do not
follow such conducts. Business law makes it mandatory for all the businesses
to maintain an ethical conduct which in turn pleases the buyers and they form a
good image of the business.

Experimental Version 73
74 Experimental Version
 UNIT 3 TAXATION OF EMPLOYMENT
INCOME

3.1. Key unit competence: To be able to compute

employment income tax

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

Besides the unit 1 on Rwanda Taxation System covered in S4, Students were
introduced in senior 2 (unit 5) to the taxes in Rwanda, in senior 3 (unit 5) to the
role of Rwandan Customs procedures. This prior knowledge, skills, attitudes
and values should help students to compute employment income tax and file its
related return to tax administration.

INTRODUCTION
3.3. Cross-cutting issues to be addressed:

TO ACCOUNTING
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 business activity industry.
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. Although businesses are focused on increasing
productivity so as to make more revenues, students are to be advised on the
importance of environmental protection. Thus, students will acquire necessary
skills and knowledge to sensitize economic operators and the general public on
needs for corporate social responsibility towards the 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 importance of increasing government means through employment income
taxation in Rwanda. Being citizens of Rwanda, males and females are served
the same way by civil servants. Therefore, they should all together contribute to
revenue collection to secure funds for general development.

Experimental Version 75
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 domestic taxes administration system should not
discriminate but promote inclusiveness of all residents.

Peace and Values: You need to emphasize to students the benefit of living in
peace and harmony with others. Students need to appreciate the role of taxation
as source of revenue in promoting peace and patriotism in the community
avoiding activities that are illegal e.g., terrorism, 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 why adhering to
ethics and integrity requirements at workplace and their respective community
is very crucial for a self-reliance national development. This will help them to
abide by standards of tax system as prospective business legal aspects.

3.4. Guidance on introductory activity

NOTE: The students won’t be able to answer all the questions at this stage.
The most important thing is that you want to challenge students to be expectant
and to use their previous knowledge and background to self-discover during
teaching and learning of this unit. Explain the purpose of the introductory
activity of the lesson. This activity is intended to provide capability for students
to analyze employment income as a tool for government to mobilize means for
spending. The introductory activity will also arouse students’ interests about
what to expect in this unit as they answer the questions that follow in the activity.
Students can build on previous knowledge, skills, values and attitudes to help
you assess the student’s prior knowledge and help link with the new content.
Exploit and use engaging methods that can foster team work like small groups,
pairs or gallery walk. Provide students with the introductory activity in the
student’s book, and explain in details what is expected from the activity to be
done. During grouping or pairing, ensure an acceptable balance between boys
and girls and students’ different abilities.
Through question-and-answer approach, check the students’ understanding of
the instructions to make sure they are going to deliver a good report. Encourage
students to work together, value each other’s contributions, share ideas, etc.
Ensure all students are given an opportunity to give their views and should be

76 Experimental Version
respected. Request them to take notes in their books referring to student’s
book.
Students present their findings, results, answers through presentations on the
introductory activity. 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 unit.
You can support student’s answers by referring to possible answers to the
introductory activity below:

Possible answers to the introductory activity:

Activity being carried out at RRA office:

• Accountant officer making financial statements
• HR officer preparing payroll
• Officer reviewing the accuracy of PAYE declaration
• HR manager crosschecking the summary report on monthly RSSB
Pension Contribution

4.5. List of lessons/sub-heading

Learning objectives (from the

Lesson title/Sub- Number of
No syllabus or set according to
heading periods
the lesson title)
Explain the meaning and
Components of
1 components of employment 3
employment income.
income.
Payments and Persons Explain the payments and
2 exempted from persons exempted from 2
employment income tax. employments income tax.
Explain the benefits in kind for
3 The benefits in kind. 3
employment income.
Explain different categories of
4 Categories of employee. 3
employees.

Demonstrate RSSB contributions

5 RSSB contributions. of emplyee / employers and 3
reliefs for employment income .

Experimental Version 77
 Demonstrate the calculation,
declarations and payment
6 Declaration and Payment. 4
deadline of employment income
tax.
End Unit Assessment. 3
Total number of periods 21

Lesson 1: Components of employment income

a) Learning objective

Explain the meaning and components of employment income.

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 and
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 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
students’ 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

78 Experimental Version
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

Yes, at the end of the month, you will be paid for your work. Cash emoluments
and benefits in kind are included in taxable employment income. Non-cash
rewards are known as benefits in kind.

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 extension activities.

Answers to application activity 3.1

There are two main categories of income subject to PAYE:

1. Income from employment activities:

- Wages, salaries, bonus, leave pay; sick pay, medical allowances, etc…
- All kinds of allowances, including any cost of living, subsistence, rent, and
entertainment or travel allowance,
- Reimbursement of expenses the employee or his/her associate incurs,
- Payment to the employee for to his or her acceptance to work in any
conditions of employment,
- Redundancy or termination pay,
- Pension payment,
- Other payments make in respect of current, previous or future employment.

Experimental Version 79
2. Income from benefit in kind:
- Use of employer’s vehicle at 10% of total employment income excluding
benefits in kind,
- Interest saved by an employee from loan (including advance of more than
3 months’ salary) provided by the employer,
- Use of employment income excluding benefits in kind,
- Benefits provided to a person related to an employee.

Lesson 2: Payments and persons exempted from employment income

tax

a) Learning objective

Explain the payments and persons exempted from employments income tax.

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 discussed the components of employment

income. This will help them to understand why some payments or persons are
exempted from employment income tax as per tax legislation in Rwanda.

d) Learning activities

Activity 3.2
- Put students in small groups and give clear instruction about the activity
- Ask them to read carefully the questions and answer them
- Guide students’ discussions 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. Answer or address any
questions or challenges about the activity. Guide them to make notes in
referring in their students’ book.

80 Experimental Version
Answer to Activity 3.2
1) A provision on exemptions is necessary for PAYE in Rwanda although
source of income is worldwide. For fairness, it is not understandable to
include in the tax base the employer contribution to RSSB for employee
retirement. It would be a kind of penalty against the employer and thus
discouraging business. Besides, it is prudent to regulate the exemptions
using the law so as to avoid any abuse so doing to avoid any tax evasion/
avoidance.
2) The income of a foreigner who represents his or her country in Rwanda
should be exempted on condition of reciprocity.
3) If the employer is not obliged to withhold any tax, then the employee is
hold responsible to file himself the PAYE return to the tax administration.

d) 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 for both gender and
capability. 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 answer below as
you assess their work.

Answers to application activity 3.2

There is no way Rwanda can apply PAYE on the income of a non-citizen individual
employed by an international organization formed under international law. Doing
so, would be a double taxation since the non-citizen in Rwanda will be imposed
the same in his country of origin on basis of residence. This is in contradiction
with the canon of equity as proposed by Adam Smith.

Lesson 3: Benefits in kind

a) Learning objective

Explain the benefits in kind for employment income.

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.

Experimental Version 81
 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
- 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’ discussions 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.
- Answer or address any questions or challenges about the activity.
- Guide them to make notes in referring in their students’ book.

Answer to Activity 3.3

It is true that benefits in kind can be difficult to value then regular employment
income. This is the case when the employer provides some benefits to person
related to an employee in terms for example of presents, special support, etc…
To overcome this barrier, Rwanda taxation law has specified the cases to be
considered as benefits in kind for tax purposes and ignore the rest. It is stipulated
in the tax law the following types of benefits in kind:
• Use of employer’s vehicle at 10% of total employment income excluding
benefits in kind.
• Interest saved by an employee from loan (including advance of more
than 3 months’ salary) provided by the employer.
• Use of employer’s housing, furniture and equipment valued at 20% of
the total employment income excluding benefits in kind.

e) Application activities 3.3

This activity can be given as a normal individual or group activity, where students
use Rwandan tax legislation to describe different elements intervening in the
computation of empolyment taxable income. If preference is to put them in

82 Experimental Version
working group to facilitate students sharing experience, 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 3.3

1. Robert’s benefit in kind for the provision of the car and driver is calculated
as 10% of his cash emoluments.
2. 10% x FRW 4,200,000 = FRW 420,000
3. Nancy’s benefit in kind for the low interest loan is calculated as follows:
FRW
Loan x deemed interest rate
(FRW 5,000,000 x 6.5%) 325,000
Less: actual interest paid
(FRW 5,000,000 x 1%) (50,000)
Benefit in kind 275,000
1. Octave’s benefit in kind for the provision of the accommodation is
calculated as 20% of his cash emoluments.

FRW (54,000,000 + 700,000) x 20% = FRW 10,940,000

Lesson 4: Categories of employee

a) Learning objective

Explain different categories of employees

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.

Experimental Version 83
 d) Learning activities

Activity 3.4
- 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’ discussions 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.
- Answer or address any questions or challenges about the activity.
- Guide them to make notes in referring in their students’ book.

Answer to Activity 3.4

There are three types of employees:

• Permanent employees
• Casual labourers
• Employees with more than one employer

Discussion on definitions:
All employees are regarded as permanent employees unless they fulfil the
criteria for casual labourers or employees with more than one employer. A casual
labourer is an employee who performs labour activities that don’t require special
skills like use of machinery and who is engaged by an employer for a period
lesser than 30 days during a tax period. While if an employee is employed by
more than one employer, the employer paying the highest taxable income is
called the first employer.

e) Application activities 3.4

This activity can be given as a normal individual or group activity, where students
discuss different types of employees. Monitor the activity to ensure students are
effectively engaged in working group activity to ensure maximum participation.
Students share their findings to the large group. Assess their answers depending
on the purpose of the application activity. Refer to the answer below as you
assess their work.

Answers to Application Activity 3.4

84 Experimental Version
As Muneza works for Dukore Company for less than 30 days in an unskilled
capacity, he is classed as a casual labourer.
Monthly FRW
30,000 x 0% 0
20,000 x 15% 3,000
50,000
Total income tax payable 3,000
Lesson 5: RSSB contributions.

a) Learning objective

Demonstrate RSSB contributions of emplyee / employers and reliefs for

employment income.

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 lessons, students covered the following: components of employment

income, payments and persons exempted, categories of employees, different
elements of benefit in kind. With these acquired skills, they are able to compute
RSSB contributions. This will help them to understand better the management
of social security in Rwanda and the accepted reliefs.

d) Learning activities

Activity 3.5
- Put students in small groups and give clear instruction about the activity
- Ask them to observe very well the photo 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. Answers or address any
questions or challenges about the activity. Guide them to make notes in
referring in their students’ book.

Experimental Version 85
Answers to activity 3.5
Employee contributions to the Rwanda Social Security Board (RSSB) are
deducted from an employee’s pay check in a similar manner to PAYE. Employer
contributions are also required and are deductible for tax purposes for the
employer.
These are withheld by the employer and paid to the Rwanda Revenue Authority
(RRA) along with PAYE. Then the RRA passes them to the RSSB.

e) Application activities 3.5

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers to Application Activity 3.5

RSSB contributions
Bahoneza Ltd’s
Marcel’s contribution Total
contribution

FRW FRW FRW

(950,000 + 470,000) x (950,000 + 470,000) x
Pension 42,600 113,600
3% = 5% = 71,000
Maternity

(950,000 + 470,000) x (950,000 + 470,000) x

Leave 4,260 4,260 8,520
0.3% = 0.3% =

Total 46,860 75,260 122,120

Lesson 6: Declaration and Payment

a) Learning objective

Demonstrate the calculation, declarations and payment deadline of employment

income tax.

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.

86 Experimental Version
 c) Prerequisites/Revision/Introduction (Guidance on how to start
the lesson)

Read the learning objective to determine what students will be able to do by

the end of the lesson. This will help you see the skills, knowledge attitudes
embedded in the learning objective. Having discussed all elements constituting
the PAYE and the RSSB contribution, make sure the students are calculating the
two correctly while following the sequence according to the process provided
by both domestic tax law and social security law in Rwanda. Remember the
learning objectives are linked to the key unit competence which is accurate
computation.

d) Learning activities

Activity 3.6
- Put students in small groups and give clear instruction about the activity
- Ask them to observe the photo in student book and answer the questions
provided in the activity
- Guide students’ discussions 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 explaining the terminologies
used in PAYE and RSSB contributions management.
- Answers or address any questions or challenges about the activity
especially on sequencing while computing tax and contribution.
- Make sure they are clear about the procedure and understand very well the
reference base of computation and why this base is different depending
on what you are calculating: either PAYE or RSSB contributions.
- Guide them to make notes in referring in their students’ book.

Answers to activity 3.6

The pay as you earn (PAYE) system requires employers to collect income tax on
their employees’ employment income. Contributions to the RSSB are collected
in the same way.
This means the employees do not need to declare or pay any further taxes on
their employment income.

e) Application activities 3.6

Experimental Version 87
This activity can be given as a normal individual or group activity, where learners
analyze the options given to determine the appropriate answer to the question.
Monitor the activity to ensure learners are on track and actively participating.
Learners 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 3.6

Tracy
You will not be personally required to pay your personal income tax on your
employment income. Your employer Nziza will be responsible for deducting
the correct tax from your employment income and for paying this to the tax
administration. This is called pay as you earn, or PAYE.

Skills lab activity 3

Guidance on the skills lab activity:

In conducting this skills lab activity, you invite an officer from RRA to make
a presentation at school on employment income tax and RSSB contributions.
Besides, encourage students to conduct more research on different websites
especially the one for RRA and RSSB.
i) Build
Given that students visit the RRA / RSSB website,
- 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
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

88 Experimental Version
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:
– 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
required deadlines.

3.6. Summary of the unit

Taxation of employment income refers to Pay As You Earn (PAYE). Nowadays,
there is no way you can separate PAYE from Rwanda Social Security Board
(RSSB) pension contribution since both must be withheld by the same person
using the same source.
PAYE is tax on employment income. PAYE is an efficient way of collecting taxes
on income earned by employees. PAYE is required to be withheld by employers
on behalf of their employees and then pay it to tax administration.
Similarly, RSSB contributions must be paid on employment income through
withholding process. RSSB contributions are paid by all employees and
employers and go towards providing social security schemes such as pensions,
cover for work related accidents, diseases, medical services or disease
compensation, or to provide maternity leave benefits.
By the completion of this unit, students will be able to answer the following
questions related to PAYE:
• What is PAYE?
• Who must register for PAYE?
• What are the obligations of PAYE registered taxpayers?

Experimental Version 89
 • Which types of employment income are taxable?
• Which types of employment income are exempt?
• What is the valuation method for benefits in kind?
• What are the tax rates for permanent employees?
• What are the tax rates for casual labourers?
• When is the deadline to declare and pay PAYE?
• How do you appreciate PAYE and RSSB contributions declared
simultaneously?
Besides being capable to answer the above questions, the students should be
able to apply and explain how to register, declare and pay RSSB contributions.
RRA is mandated to collect social security contributions on behalf of RSSB.
This is because social security contributions are also paid on the basis of
employment income. Therefore, it makes it easier for taxpayers to declare PAYE
and social security contributions on one portal at the same time. RRA then
transfers all social security contributions directly to RSSB. All in all, students
must know that any malpractice while computing PAYE and RSSB contributions
will attract penalties and fines.

3.7. Additional information for teachers

To facilitate taxpayers, RRA and 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.
Any failure to comply with the requirements related to PAYE and RSSB
contributions will attract penalties and fines. In general offences may be grouped
into four categories;
- Late declaration
- Late payment
- Declaring less than the amount tax due
- Paying less than the amount due
Besides the above sanctions, the rules concerning interest, administrative fines
and repeat offenders may be applied to enforce better the law.

End unit assessment (answers)

90 Experimental Version
 Answers to end unit assessment activities

Q1.

Income tax payable - Permanent

3.8. Answers to end unit assessment activities
employee
Monthly
FRW
Salary (FRW 75,000,000 ÷ 12) 6,250,000
Education allowance (FRW 3,000,000 x
750,000
3÷ 12)
Total cash emoluments 7,000,000
Add benefits in kind:
Accommodation (20% x FRW
1,400,000
7,000,000)
Car (10% x FRW 7,000,000) 700,000

Less private pension relief (50,000)

Monthly taxable employment income 9,050,000

30,000 x 0% 0
70,000 x 20% 14,000
8,950,000 x 30% 2,685,000
9,050,000
Pay As You Earn 2,699,000

Answers to end unit assessment activities

Q2

Responsibility allowance 796,000

Performance pay increase 190,500
Transport allowance 250,000
Post incentives 305,000
Total Gross Salary 2,426,500
Monthly taxable employment income
Housing in kind (20% total benefit) 485,300
Total Taxable income 2,911,800

Experimental Version 91
107
 Less transport for RSSB
250,000
Answers to end unit assessment activities
calculations
Basic calculations for RSSB funds 2,661,800

Employee's pension fund

2,661,800 79,854
a) contribution x 3% =
Employer's pension fund
2,661,800 133,090
contribution x 5% =

Employee contribution to
2,661,800 7,985
b) maternity leave x 0.3% =
Employer contribution to
2,661,800 7,985
maternity leave x 0.3% =

Employee contribution to Medical

885,000 66,375
c) Scheme x 7.5% =
Employee contribution to Medical
885,000 66,375
Scheme x 7.5% =

d) P.A.Y. E 2,911,800
30,000 x 0% = 0
2,881,800
70,000 x 20% = 14,000
2,811,800 x 30% = 843,540
Total P.A.Y.E to be paid 857,540

e) NET SALARY = 2,911,800

(All benefits - Employee's
contributions) (79,854)
(7,985)
(66,375)
(857,540)
NET SALARY 1,900,046

f) CBHI 1,900,046 x 0.5% = 9,500

TAKE HOME PAY = Net Salary –

1,900,046
g) CBHI
(9,500)
TAKE-HOME PAY 1,890,545

108
92 Experimental Version
3.9. Additional activities (Questions and answers)
3.9.1 Remedial activities
Question 1: UWIMANA Anet is a technician at ABC Industries Limited,
receiving a monthly salary of FRW500,000. He is also allowed a car and an
accommodation by the company. How much will be deducted as PAYE from
UWIMANA’s salary?
Answer:
• Basic salary: FRW500,000
• Housing benefit: 500,000*20/100= FRW100,000
• Transport benefit: 500,000*10/100= FRW50,000
• Gross salary/ taxable income: basic salary +allowances
• Gross salary=500,000+150,000
• Gross salary= FRW650,000
• PAYE:
Ø 0-30,000:0%= 30,000*0/100=0
Ø 30,001-100,000:20%= 70,000*20/100=14,000
Ø 100,001 and above: 550,000*30/100=165,000
Ø Total PAYE=0+14,000+165,000 Total PAYE= FRW179,000
Question 2: Dr DRUSHIM is a lecturer in University of Rwanda where he is paid
a monthly basic salary of FRW600,000, housing allowances of FRW75,000,
transport allowances FRW75,000, responsibility allowances FRW200,000 as
a coordinator of evening program in his faculty.
This one is also a teacher at University of Kigali (UoK) on part time basis and
gets the monthly gross salary of 260,000F
Required: Calculate the PAYE to be withheld by University of Rwanda and that
of Kigali (UoK)
Answer:
• PAYE withheld by UR:
Gross salary: 600,000+75,000+75,000+200,000= FRW950,000
From: 0 to 30,000: 0% = 30,000*0%= 0
From: 30,001 to 100,000: 20%= (100,000-30,000) *20%=14,000
From: 100,001 to 950,000: 30%= (950,000-100,000) *30%= 255,000

Experimental Version 93
Sub-total: 0+14,000+255,000= FRW269,000
• PAYE withheld by UoK: FRW260,000*30%= FRW78,000
Question 3: Calculate an annual professional tax of an employee who earns
the monthly basic salary of FRW141,000; housing allowances FRW19,000;
communication allowances of FRW6,000; transport allowances FRW12,000.
Required: annual professional tax.

Answer:

Data:
• Monthly income: FRW141,000
• Housing allowances: FRW19,000
• Communication allowances: FRW6,000
• Transport allowance: FRW12,000
• Total: FRW178, 000

Tax rate
From To
0 30,000 0% FRW30,000*0%= 0

30,001 100,000 20% (100,000-30,000) *20%=14,000

(FRW178,000-FRW100,000)
100,001 178,000 30%
*30%=23,700
PAYE Tax to be paid: 0+14,000+23,700= FRW37,700

Annual professional tax: 37,700*12= FRW452, 400

3.9.2. Consolidation activities

Question 1: Uwimbabazi is employed by KCB Musanze branch as the branch
manager on the following terms:
A monthly salary of FRW 1,200,000, Residential house where she pays FRW
300,000 per month but the market value of rent FRW 500,000, a company
vehicle which she uses both private and office, the company pays two house
girls for her each FRW 50,000, transport allowance of FRW 300,000 per month.
During the month she went to Kigali to attend the board meeting and she uses
FRW 120,000 on transport. Determine the monthly and annual taxable income
and tax liability of Uwimbabazi.
Monthly Annually

94 Experimental Version
Salary 1,200,000 14,400,000
Transport allowance 300,000 3,600,000
House Benefit (500,000-300,000) 200,000 2,400,000
Motor vehicle benefit (10%x1, 500,000) 150,000 1,800,000
House girls 100,000 1,200,000
Transport reimbursement (120,000) (120,000)
Taxable Income 1,830,000 21,960,000
Monthly Tax Liability
0-30,000 tax rate 0% 0
30,000 – 100,000 tax rate 20% 14,000
100,000-1,830,000 tax rate 30% 519,000
Tax liability 533,000
Annual Tax Liability
0-360,000 tax rate 0% 0
360,000-1,200,000 tax rate 20% 168,000
1,200,000 – 21, 960,000 tax 30% 6,228,000
Tax liability 6,396,000
Question 2: Kayitesi is employed by Eco bank as the financial manager on
the following terms: Monthly salary of FRW 2,000,000 per month, a company
house and vehicle. Kayitesi uses the vehicle both private and business purpose.
In addition, she also receives a medical allowance of FRW 50,000 and transport
allowance of FRW 100,000 per month. The general policy of medical allowance
is FRW 20,000 to all employees paid to Ruhengeri hospital. The bank also
gave her an interest free loan of FRW 3,000,000. Kayitesi employs one house
girl paid by the company at FRW 60,000 per month. During the month she
contributed FRW 95,000 as pay as you earn (PAYE). Determine the monthly
and annual taxable income and her tax liability. The inter-bank interest rate is
15%
Monthly Annually
Salary 2,000,000 24,000,000

Experimental Version 95
Transport allowance 100,000 1,200,000
Housing benefit (2,100,000 x20%) 420,000 5,040,000
Motor vehicle benefit (2,100,000x10%) 210,000 2,520,000
Medical allowance (50,000-20,000) 30,000 360,000
Interest (3,000,000x15%)/12 37,500 450,000
House girl benefit 60,000
720,000
Taxable Income 2,857,500 34,290,000
Monthly tax liability
0-30,000 tax 0% 0
30,000 – 100,000 tax 20% 14,000
100,000 – 2,857,500 tax 30% 827,250
Tax liability 841,250
Less PAYE (95,000)
Tax payable 746,250
Annual Tax Liability
0 – 360,000 Tax 0% 0
360,000 – 1,200,000 tax 20% 168,000
1,200,000 – 34,290,000 tax 30% 9,927,000
Tax liability 10,095,000
Less PAYE (1,140,000)
Tax Payable 8,955,000

3.9.3. Extended activities

Samson is an American national working with American Research Holding Inc.
(ARH). ARH primary objective is to conduct research on causes of conflicts
in African countries. ARH is not a tax resident in Rwanda and does not want
to create or trigger any Permanent Establishment (PE) in Rwanda in the near
future. ARH has signed a contract for two years with the Government of
Rwanda to conduct research on what caused genocide in Rwanda in 1994.

96 Experimental Version
ARH is planning to send Samson to Rwanda to conduct this research. Samson
plans to recruit a local researcher from the University of Rwanda (UR) who will
be assisting him in interpreting data from Kinyarwanda to English. The local
researcher is on UR payroll and earns FRW 1,800,000 as gross pay per month.
Samson will remain on AHR’s payroll and his salary will be paid in California, his
home town. He will get remunerated as follows:
• Basic annual salary $ 18,000
• Monthly transport allowance $ 200
The company will pay his return air ticket of $1,000 so that he can come and commence
work. In addition, he will be paid a return ticket of $1,000 per annum to enable him
visit his family in California. ARH will be paid a hardship allowance of $150 per month
because America considers Rwanda a risky country to work in.
He will be given domestic travel allowance of $100 per month to enable him travel to all
districts of Rwanda to collect data. This money will cover travel and accommodation and
food out of Kigali. He will account for this money by producing receipts of expenditure.
In addition, ARH will rent a house in Kigali worth $1,000 per month. This will be paid
to the land lord’s bank account held in the bank of Kigali. Samson will get a bonus of
$3,000 each year and will be paid in December each year. Samson will be paid education
allowance of $4,000 per annum for his children who are studying at Harvard University.
He will be paid medical allowance of $1,000 per annum and this will be paid to the
Rwanda Insurance Company-Radiant Insurance Company.
He will be paid other monthly allowances in Rwanda totalling to FRW 700,000. In
addition, he will be provided with a security guard from KK Security and a cook and these
will be paid $200 per month each. His research assistant from UR will be paid by ARH
in Rwanda Francs. He will be paid FRW 1.200.000 per month. Apply exchange rate of
1$= FRW 750.
Required:
a) What is a Permanent Establishment (PE) in accordance with the tax laws of
Rwanda?
b) Discuss two ways in which income tax for Samson can be accounted for in
Rwanda without creating a PE for ARH.
c) Compute monthly PAYE and RSSB contribution for Samson.
d) Compute PAYE for the local researcher.

Solution:
a) PE
The term “permanent establishment” means a fixed place of business through

Experimental Version 97
which the business of a person is wholly or partially carried on. In particular one
of the following is considered as a permanent establishment: An administrative
branch, factory, workshop, mine, quarry or any other place for the exploitation of
natural resources, and a building site or a place where construction or assembly
works are carried out.
A person is considered as not to have a permanent establishment if that person:
1° uses facilities solely for the purpose of storage or display of goods or
merchandise;
2° maintains a stock of goods or merchandise belonging to that person solely
for the purpose storage or display;
3° maintains a stock of goods or merchandise belonging to that person solely
for the purpose of processing by another person;
4° has a place of operation aimed purposely at purchasing goods or merchandise
or of collecting information related to his or her business;
5° has a place of operation solely for the purpose of carrying on preparations
of his or her activities, and performing any other activities that make them more
effective.
Notwithstanding provisions of points 1° and 2° above, where an agent, except
an independent person, concerned with point 5°, of paragraph 2 acts on behalf
of a person and who has capacity to make contracts in the name of that person,
that person is considered as if he or she owns a permanent establishment in
respect of activities his or her agent undertakes for the person except if such
activities of the agent are limited to those mentioned in paragraph 2°.
A person is not considered as a permanent establishment if he or she only
carries out activities through a broker, general commission agent or any other
private agent in accordance with procedures of the ordinary course of the
activities of such an agent.
b) Two ways in which income tax for Samson can be accounted for in
Rwanda without PE:
i) Source: ARH is invoicing gvt of Rwanda. Thus the source is Rwandan
ii) Residence: Samson will spend more than 183 days in Rwanda. Thus he
is Rwanda resident.
c) PAYE and RSSB contribution for Samson
Basic salary ($18,000 / 12) $1,500

98 Experimental Version
 Add allowance

- Transport $200
- Hardship $150
- Bonus ($3,000/12) $250
- Education allowance ($4000/12) $353
- General allowance (FRW 700,000/750) $933 $1,866
$3,366
Add benefit in kind
- Air ticket to visit family ($1000/12) $83
- House rent $1,000
- Security & cook (200x2) $400 $1,483
$4,849

In FRW = $4,849 x 750 = FRW 3,636,750

PAYE:
0 to 36,000 0% 0
30,000 to 100,000 20% 14,000
100,000 to 3,636,750 30% x 3,536,750 1,061,025

1,075,025

Experimental Version 99
RSSB
Employment income is basic salary + cash allowances (Except transport
allowance)
Employment income = 3,366-200 = $3,166

In FRW = 3,166 x 750 = Frw2,524,500

Contribution of the employer: 2,524,500 x 5% = 126,225
Contribution of the employee: 2,524,500 x 3% = 75,735
Total RSSB contribution = FRW 201,960

d) PAYE for local researcher

The one who is paying the biggest amount is the first employer: UR since
1,800,000 is bigger than 1,200,000

0 to 36,000 0% 0
30,000 to 100,000 20% 14,000
100,000 to 1,800,000 30% x 1,700,000 510,000
524,000
Tax on income from ARH: 30% x 1,200,000 360,000
Total tax FRW 884,000

100 Experimental Version

 UNIT 4 TAX DEPRECIATION

4.1. Key unit competence: Apply tax depreciation to produce a

tax liability

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

The students will perform well in this unit if they have a good background
on:
• The computation of asset cost
• The useful life of an asset
• The salvage value and obsolescence

INTRODUCTION
4.3. Cross-cutting issues to be addressed:
• Inclusive education: Promote the participation of all students while
TO ACCOUNTING
the teaching and learning process.
• Peace and value education: During group activities, the teacher will
encourage students to respect the opinions of their colleagues
• Gender: Give equal opportunities to all students for both girls and
boys to participate actively in the lesson from the beginning to the end
of the lesson.

4.4. Guidance on the introductory activity

- Lead small groups of students to work on introductory activity 1.
- Through class discussion, have the students think about different possible
solutions and justify their validity to the whole class
- The teacher should go to all groups and provide pieces of advice where
needed.
- After a certain time, ask the students to present their results and harmonize
them.
- Point out to students that for the given activity, they may get different
answers depending on the sentences they are looking at. Try to stimulate
students’ curiosity about the content of this fourth unit.

Experimental Version 101

Answers for introductory activity 1
1. Depreciation is a way of accounting for the reduction in the useful life of
property, plant and equipment due to obsolescence, wear and tear, and
other factors.
2. a) Computers and accessories, information and communication systems
whose life is under ten (10) years: fifty percent (50%);
b) b) Any other business asset: twenty five percent (25%).
3) Percentage rate =25%
Depreciation =FRW40,000,000*25%=FRW 10,000,000

4.5. List of lessons and lesson development

Number
# Lesson title Learning objectives of
periods

Definition, Nature of Identify the meaning of tax

tax depreciation and its depreciation
1 availability 2
Define the nature of tax
depreciation and its availability

The difference between Make the difference between

2 tax depreciation and tax depreciation and 2
accounting depreciation accounting depreciation
The tax depreciation
applied to individual Interpret the computation of tax
3 2
assets and to pools of depreciation
assets
Be able to compute tax
4 Computing tax depreciation amounts
3
depreciation accurately on any given asset
or pool of assets.

5 Investment allowances Identify investment allowances 2

Private use of assets by Identify private use of assets by

6 1
business owners business owners
End Unit Assessment 2
Total number of periods 14

102 Experimental Version

Lesson 1: Definition, Nature of tax depreciation and its availability

a) Learning objective

Define the meaning of tax depreciation, as well as the nature and availability of
tax depreciation.

b) Teaching resources

Printed or soft income tax law No. 16/2018, RRA tax handbook (2019),
calculators, students’ book, and other reference textbooks to facilitate research.

c) Prerequisites/Revision/Introduction

Students will learn this lesson better if they have good knowledge of basic
mathematical calculations.

d) Learning activities
• Organize the students into small groups;
• Ask them to do activity 4.1. from the students’ book
• After a period of time ask randomly some groups to present their
findings to the whole class
• During harmonization, help students to discover the new lesson
• Use different probing questions and guide students to explore the
content and examples given in the students’ book.
• After this step guide students to do the application activity 4.1. conduct,
assess their competencies and assess whether the teaching objectives
have been achieved

Answers for Activity 4.1

The school administration needs to keep depreciating the truck and this
depreciation amount will definitely reduce the tax liability so that the school can
have funds for the replacement after its usage.

e) Application activities 4.1

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Experimental Version 103

Answers for the application activity 4.1.
D. An investment allowance of FRW 75,000,000 could be available to KBM Ltd
(if KBM Ltd had successfully applied for an investment certificate).

Lesson 2: The difference between tax depreciation and accounting

depreciation

a) Learning objective

Make the difference between tax depreciation and accounting depreciation

b) Teaching resources

Printed or soft income tax law No. 16/2018, RRA tax handbook (2019),
calculators, students’ book, and other reference textbooks to facilitate research.
Prerequisites/Revision/Introduction:
Students will learn this lesson better if they have good knowledge of basic
mathematical calculations.

c) Learning activities
– Organize the students into small groups;
– Ask them to make a difference between tax depreciation and accounting
depreciation
– After a period of time ask randomly some groups to present their
findings to the whole class
– During harmonization, help students to discover the new lesson
– Use different probing questions and guide students to explore the
content and examples given in the students’ book.
– After this step guide students to do the application activity 4.2 conduct,
assess their competencies, and assess whether the teaching objectives
have been achieved

Answers for Activity 4.2

Essentially, depreciation is a method of allocating the cost of a tangible asset
over several periods of time due to decreases in the fair value of the asset. Note
that amortization is a concept similar to depreciation, but it is applied primarily
to intangible assets.

104 Experimental Version

 d) Application activities 4.2

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 4.2

1. Accounting depreciation (also known as book depreciation) is the cost of
a tangible asset allocated by a company over the useful life of the asset.
2. The most common criteria for depreciable assets are:
- The asset is the property owned by a taxpayer
- A taxpayer uses the asset in the income-generating activities
- The asset possesses a determinable useful life
- The asset’s useful life is more than one year

Lesson 3: Tax depreciation applied to individual assets and to pools

of assets

a) Learning objective

Interpret the computation of tax depreciation

b) Teaching resources

Printed or soft income tax law No. 16/2018, RRA tax handbook (2019),
calculators, students’ book, and other reference textbooks to facilitate research.

c) Prerequisites/Revision/Introduction

Students will learn this lesson better if they have good skills of basic mathematical
calculations.

d) Learning activities
• Organize the students into small groups;
• Ask them to clarify the assets that will be treated independently for the
calculation of tax depreciation and those that will be grouped

Experimental Version 105

 • After some time, randomly ask a few groups to present their findings to
the whole class
• During harmonization, help students discover the new lesson
• Use different probing questions and guide students to explore the
content and examples from the student book.
• After this step guide students to do the application activity 4.3 conduct,
assess their competencies, and assess whether the teaching objectives
have been achieved

Answers for Activity 4.3

Raisons for providing depreciation are:

i) It ensures that the revenue recognized bears the full cost of the permanent
resources used during the same period
ii) It spreads the depreciable amount of a fixed asset over its useful life
iii) It provides a meaningful basis for the valuation and disclosure of fixed
assets in the financial statements
iv) It ensures that provision is made for the loss sustainable by fixed assets

e) Application activities 4.3

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 4.3

Individual asset capital allowances

a) Production line machinery built into a factory – 5% straight line
(fixed/heavy machinery)
b) A piece of telephone equipment with an expected life of 15 years,
acquired under an operating lease – none (leased asset – needs to
be a finance lease to qualify)
c) The extension of a residential home – none (not used in a business)
d) The purchase of patent rights – 10% straight line (purchased
intangible asset)

106 Experimental Version

Lesson 4: Computing tax depreciation

a) Learning objective

Be able to compute tax depreciation amounts accurately on any given asset or

pools of assets

b) Teaching resources

Printed or soft income tax law No. 16/2018, RRA tax handbook (2019),
calculators, students’ book, and other reference textbooks to facilitate research.

c) Prerequisites/Revision/Introduction

Students will learn this lesson better if they have a good working knowledge of
basic math calculations.

d) Learning activities
• Invite students to form small groups;
• Give clear instructions and introduce activity 4.4 by guiding the students
• In small groups, ask students to do activity 4.4 from the student book
• Move around to ensure all students are actively participating in the
group discussion
• After a certain period of time, randomly ask a few groups to present
their findings to the whole class
• Use a variety of probing questions and guide students to explore the
examples and content of the student book to develop calculation skills
to improve tax depreciation
• After this step, guide students to do the application activity 4.4 then
assess their competencies, and evaluate whether lesson objectives
were achieved.

Answers for Activity 4.4

Depreciation: 25% x 45,000,000 = FRW 11,250,000

e) Application activities 4.4

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.

Experimental Version 107

Refer to the possible answer below as you assess their work.
Calculation of single asset capital allowances
Answers for the application activity 4.4
Telecommunications Tax depreciation
equipment available
Year ended 31 December 2018
Cost 20,000,000
Tax depreciation at 10% (2,000,000) 2,000,000
TWDV c/f 18,000,000
Year ended 31 December 2019
Tax depreciation (2,000,000) 2,000,000
TWDV c/f 16,000,000
Year ended 31 December 2020
Asset sold - balance of TWDV (16,000,000) 16,000,000
Note that the FRW 9,000,000 disposal proceeds would be included in the
TWDV c/f 0
taxable income of Nkuvugishe Plc in the year ended 31 , December 2020.
st

The overall impact on taxable income in the year ended 31st December 2020 is
a deduction of FRW (9,000,000 – 16,000,000) = FRW 7,000,000; this gives
total tax relief of FRW 11,000,000 over the three years, and this is equal to the
economic loss on this asset suffered by Nkuvugishe Plc.

Lesson 5: Investment allowance and Private use of assets by business

owners

a) Learning objective

Identify investment allowances and private use of assets by business owners

b) Teaching resources

Printed or soft income tax law No. 16/2018, RRA tax handbook (2019),
calculators, students’ book, and other reference textbooks to facilitate research.

c) Prerequisites/Revision/Introduction:

Students will learn this lesson better if they have a good knowledge of investment
promotion and facilitation in Rwanda

d) Learning activities
• Invite students to work in groups on Activity 4.5 found in their student
book;

108 Experimental Version

 • move around the class to moderate when necessary and provide further
explanation of any challenges they may encounter during their work
• Invite group representatives from each group to present their findings;
• As a teacher, harmonize the findings from the presentation and guide
them to explain why they expect such types of taxpayers to facilitate
fixed asset investments during the tax period.
• Use different probing questions and guide them to explore the content
and examples from the student book;
• Guide students to classify the conditions for applying the investment
allowance and guide them to identify the impact on tax depreciation;
• After this step, guide the students to complete the application activity
4.5 and assess whether the learning objectives have been met.

Answers for Activity 4.5

1. The investment allowance is 50% of the acquisition cost of the asset
2. The investment allowance, permits investors to deduct from taxable
income a certain percentage of the cost of eligible assets in addition to
depreciation allowances

c) Application activities 4.5

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 4.5

Answer is A. The investment allowance will be FRW 100,000,000 and the
balance of FRW 100,000,000 will qualify for straight-line depreciation at 5%
per year.

4.6. Summary of the unit

• Most assets used in the trade are eligible for tax depreciation.
• Assets that are not subject to wear and tear or obsolescence are not
eligible for tax depreciation;
• Buildings, heavy and fixed machinery, intangible assets and computer
equipment with a useful life of more than 10 years are all tax depreciated
as a percentage of cost (straight line), on an individual asset basis;
• Other qualifying assets are allocated to one of two pools and are tax

Experimental Version 109

 depreciated on a declining balance basis;
• The investment allowance increases the tax relief in the acquisition year
if the investor spends at least 50,000 US dollars (equivalent to approx.
50,000,000 FRW) in a tax period. This tax benefit is refundable if the
asset is sold within three years
• The private use of a business asset limits the tax depreciation to the
operational use share (currently 20% is considered private use);
• If the depreciated value of an asset or pool is less than FRW500,000;
this is expensed.

4.7. Additional Information for Teachers

For more information, please refer to all official gazettes in the references page.

4.8. End unit assessment

Question 1.
Other
Business Computer Computer business Car (used Tax
premises server equipment assets privately) depreciation
FRW FRW FRW FRW FRW FRW
TWDV b/f 40,000,000 4,200,000 3,500,000 8,600,000 3,000,000
Additions 600,000
Disposals (3,100,000)
Balance 40,000,000 4,200,000 400,000 9,200,000 3,000,000
Tax
depreciation 5% on 10% on 100% 25% 25%
rate
(balance
50,000,000 6,000,000
under
(cost, net of 500,000)

investment

allowance)
Tax
2,500,000) (600,000) (400,000) (2,300,000) 5,800,000
depreciation
Tax
depreciation (750,000) 80% 600,000
– car
TWDV C/f 37,500,000 3,600,000 NIL 6,900,000 2,250,000
Total tax 6,400,000
depreciation

Question 2
FRW 50,000,000 x 5% = FRW 2,500,000 per year. Assumed private use is
20% so depreciation claim will be 80% x 2,500,000 = FRW 2,000,000. There
is no investment certificate so no investment allowance.

110 Experimental Version

4.9. Additional activities
4.9.1. Remedial Activities:
1. Y ltd purchased a building during the tax period for a price of FRW
50,000,000. No investment certificate was applied for by Y ltd. The
building is mainly used as retail premises by Y ltd, but there is living
accommodation above the shop which is used by one director.

What is the maximum annual tax depreciation that can be claimed by Y Ltd in
relation to this building?
a) FRW 2,500,000
b) FRW 500,000
c) FRW 2,000,000
d) FRW 21,000,000

Answer:
c. FRW2,000,000
FRW 50,000,000 x 5% = FRW 2,500,000 per year. Assumed private use is
20% so depreciation claim = 80% x 2,500,000 = FRW 2,000,000. There is no
investment certificate so no investment allowance.
2. ax depreciation in Rwanda is either given on assets separately or on
asset ‘pool’. On which of the following assets will tax depreciation be
calculated separately?
1. Lorries
2. Goodwill
3. Computer systems with an expected life of eight years
4. Production line machinery
a) 1 and 3
b) 2 and 4
c) 2 and 3
d) 1 and 2

Answer:
b. 2 and 4

Experimental Version 111

 4.9.2. Consolidation activities:
Maurice Ntwali, who has been in business for several years, bought a Volkswagen
car for FRW 25,000,000. Maurice uses the car for both business and private
journeys.
Required: Compute the tax depreciation
The tax depreciation computation for the year of purchase is as follows:

Value Tax depreciation

FRW'000 FRW'000
Volkswagen car
Purchase cost 25,000
Tax depreciation (25% x FRW 25,000,000) (6,250) x 80% 5,000
TWDV c/f 18,750
Total tax depreciation for the year 5,000

4.9.3. Extended activities:

M ltd, a Rwandan resident company, has the following brought forward balances
on its assets that qualify for tax depreciation
information TWDV b/f (FRW)
Cost FRW 100,000,000,
Business premises investment allowance 50% 40,000,000
claimed on acquisition
Computer server Useful life 12 years, original
4,200,000
equipment cost FRW 6,000,000
Computer equipment pool 3,500,000
Other assets pool 8,600,000
Car(used privately by a
3,000,000
company employee)
During the year, the following transactions took place:

Purchases
Office furniture costing FRW 600,000

Disposals
Computer equipment – proceeds FRW 3,100,000

112 Experimental Version

Required: Compute the total tax depreciation available to M ltd in the tax period.
Show clearly the balances to carry forward for each pool or individual asset.

Answer
Computer Computer Other
Business Car (Used
business Tax
premises Server Equipment privately)
assets depreciation
FRW FRW FRW FRW
FRW

TWDV b/f 40,000,000 4,200,000 3,500,000 8,600,000 3,000,000

Additional
disposal 3,100,000 600,000
balance
100%
Tax 5% on 10%on (balance
25% 25%
deprecation 50,000,000 6,000,000 under
500,000)
Tax
(2,500,000) (600,000) (400,000) (2,300,000) (5,800,000)
depreciation
Depreciation
(750,000) 600,000
car
TWDV C/f
Total 37,500,000 3,600,000 NIL 6,900,000 6,400,000
depreciation

Experimental Version 113

114 Experimental Version
 UNIT 5 THE TAXATION OF
INVESTMENT INCOME

5.1. Key unit competence: To be able to use and interpret

the taxation of investment income

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

In senior 4 Unit 1 you analysed direct tax and indirect tax, while in senior 4 unit
4 you analysed depreciation tax. This prior knowledge, skills or competences
should help the students to be able to use and interpret the taxation of investment
income in their locality and be able to realize their contribution as students
towards business.

INTRODUCTION
5.3. Cross-cutting issues to be addressed:

TO ACCOUNTING
Note: The examples below are just to guide you on how to address crosscutting
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 crosscutting
issues where possible taking consideration of their environment or community
around them.
Gender education: Emphasis throughout this unit has to be put on how both
males and females have same rights and obligations to do business activities
which can generate an income in their local community. So as to promote better
standard of living of business activities and their community in the creation of
business-based employment opportunities and the country by paying taxes
leading to socioeconomic development.
Environment and sustainability: The greatest source of tax is the environment
and the society. Taxation of investment income cannot be applied without
the environment. Therefore, great care has to be taken for environment and
society. Paying tax is source of public income used by government in protecting
environment from harm.
Inclusive education: In addition to all having equal opportunities to become
businesses, attention will be made on how we all regardless of our background
have right to generate ideas that do not discriminate as our needs are the same.

Experimental Version 115

Students need to understand that tax should not discriminate but promote
inclusiveness of all. Throughout the study of investment income tax, students
should be able to evaluate the contribution of this tax in socio-economic
development of the community.
Financial education: Teacher and students should know that resources and
materials used in teaching and learning activities must not be mismanaged.
This issue will also be addressed when studying tax. Students will learn what is
permitted and what is prohibited to manage learning resources and materials
well. They will put in mind that misusing materials is wasting money.

5.4. Guidance on introductory activity

NOTE: The students won’t be able to answer all the questions at this stage;
they can answer one question. The most important thing is that you want to
challenge students to be expectant and to use their previous knowledge and
background to self-discover during teaching and learning of this unit.
Explain the purpose of the introductory activity of the lesson. This activity is
intended to provide interest and motivation for students to be able to use and
interpret the taxation of investment income as opportunity of fighting against tax
evasion and tax avoidance in the community.
The introductory activity will also evoke students’ interests about what to expect
in this unit as they answer the questions that follow in the activity. Students can
build on previous knowledge, skills, values and attitudes to help you assess the
student’s prior knowledge and help link with the new content.
Use an appropriate method such as small groups or pairs and provide students
with Unit 5 introductory activity, give clear instructions to the activity.
They observe photo and discuss what activities may have been carried out.
They read a scenario about tax in Rwanda and discuss about what could be
done by taxation to resolve some problems happening in business activities.
During grouping or pairing, mix boys and girls and students with different abilities.
During the discussion, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing and
should applaud/congratulate 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

116 Experimental Version

should be respected.
Harmonize their findings or answers, and help them draw conclusions/summary
to questions. Answer or address any questions or challenges about the activity.
Guide them to make notes in their books referring to students’ book.

Possible Answers of introductory activity:

• From the photo there are: Stock exchange trading board, profit and
loss, machinery, taxes and taxpayer.
• Investment income, includes all payments in cash or in kind in the
form of interest, dividends or royalties. In the majority of cases, this will
already have been paid as a withholding tax, but must still be declared,
and then claimed back.

5.5. List of lessons/sub-heading

Number
Lesson title/Sub-heading Learning objectives of
periods
Legislative features or Identify the legislative
1 components of investment features or components of 4
income the investment income

List the exemptions

Exemption from
2 on investment income 3
investment income
according to the taxation laws
Computation of investment
3 Compute investment income 4
income
Rental income from Compute tax rental income
4 4
machinery and equipment machinery and equipment

Explain the capital gain tax on

5 Capital gains tax on shares 4
shares

Capital gains tax on Explain the capital gain tax on

6 4
immovable property immovable property

End Unit Assessment 3

Total number of periods 26
Lesson 1: Legislative features or components of investment income

a) Learning objective

Experimental Version 117

Identify the legislative features or components of the investment income

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

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. Students are familiar with term tax and business
from entrepreneurship S3 Unit 9 and about direct tax and indirect tax from S 4
Unit 1. Again, they live in society where tax and businesses applied.

d) Learning activities
• Invite students to read individually the question in the student book and
work in pairs to share with the classmates.
• Have some pairs and make the presentations
• Provide constructive feedback in terms of supplements

Answers to activity 5.1:

The components of investment income tax are: financial interest, Dividend
income, Royalties and Rental income.

e) Application activities 5.1:

Invite students to read, the application activities in student book and answer
them.

Answers to Application Activity 5.1

1. Dividend income is the payment of profits to shareholders, and is derived
from the owing of shares in any societies. Dividend income is also subject
to a withholding tax of 15%. However, for shares that are listed at the
Rwanda stock exchange and owned by a taxpayer from East Africa, it is
subject to a withholding tax of 5%.

Then, royalty income includes: All payments of any kind received as a prize for
the use of, or the right to use, any copyright of literary, craftsmanship or scientific
work including cinematograph films, films, or tapes used for radio or television

118 Experimental Version

broadcasting; Any payment received from using a trademark, design or model,
computer application and invention patent; The price of using, or of the right
to use industrial, commercial or scientific equipment or for using information
concerning industrial, commercial or scientific knowledge; Payments from
natural resource use.
2. Rental income includes income from the rental of machinery and other
equipment, including agriculture and livestock equipment.

Lesson 2: Exemption from investment income

a) Learning objective

List the exemptions on investment income according to the taxation laws

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with term tax and business from entrepreneurship S3 Unit
9 and about direct tax and indirect tax from S 4 Unit 1. Again, they live in society
where tax and businesses applied.

d) Learning activities
• Invite students to read individually the scenario in the student book and
work in pairs to share with the classmates the activities do.
• Some pairs make the presentations
• Provide constructive feedback from the findings

Answers to activity 5.2:

Yes. Some goods are exempted like goods and services related to health
purposes:
a) health and medical services;
b) equipment designed for persons with disabilities;
c) goods and drugs appearing on the list provided for by an Order of the
Minister.

d) Application activities 5.2

• Invite students to read, discuss in pairs the application activities in

Experimental Version 119

 student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 5.2

Income accruing from savings in collective investment schemes and employees’
shares scheme, Income earned by an agriculturalist or a pastoralist on agricultural
or livestock activities is exempt if the turnover from agricultural or livestock
activities do not exceed twelve million, Capital gain from the sale or transfer of
shares on the capital market and capital gain from the sale or transfer of units of
the collective investment schemes.

Lesson 3: Computation of tax on investment income

a) Learning objective

Compute investment income

b) Teaching resources
Basic materials for a class/ lesson to be conducted: Desks, chalkboard,
chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.
c) Prerequisites/Revision/Introduction
Students are familiar with term tax and business from entrepreneurship S3 Unit
9 and about direct tax and indirect tax from S 4 Unit 1. Again, they live in society
where tax and businesses applied.
d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards the importance of business law
in business activities.
• Invite students to share their findings

Answers to activity 5.3:

Yes, because it helps in deciding which investments to sell and when. It can also
be used as a tax planning tool and can help in examining various ways to lower
taxes. It affects investment strategies and financial planning.
e) Application activities 5.3
Invite students to read the application activities in student book and answer
individually accordingly.

120 Experimental Version

Answers to Application Activity 5.3
1. This means that, the FRW 10,000 was received after deducting 15%
tax at the source. Therefore, the gross amount will be 100/85x10, 000
= 11,765
2. Tax to be paid by Modern Ltd Company = FRW 10,000,000 ×15%=
FRW 1,500,000

Lesson 4: Rental income from machinery and equipment

a) Learning objective

Compute rental income tax of machinery and equipment

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with term tax and business from entrepreneurship S3 Unit
9 and about direct tax and indirect tax from S 4 Unit 1. Again, they live in society
where tax and businesses applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards the importance of law in business
activities.
• Invite students to share their findings

Answers to activity 5.4:

1. Machinery is defined as a mechanical device or the parts that keep
something working.

2. Equipment is the implements used in an operation or activity like

agriculture

3. Yes, because they earn income from machinery or equipment rented

4. Calculate tax for rental income tax from machinery and equipment,

Experimental Version 121

 filing declaration for rental income tax from machinery and
equipment, , clearing tax on time and paying tax.

e) Application activities 5.4:

Invite students to read the application activities in student book and answer
individually accordingly.

Answers to Application Activity 5.4

Gross rental income 2,400,000
Less 10% deemed expense (240,000)
Interest (100,000)
Depreciation (5% ×20,000,000) (1,000,000)
Taxable rental income 1,060,000

Lesson 5: Capital gains tax on shares

a) Learning objective

Explain the capital gain tax on shares

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with term tax and business from entrepreneurship S3 Unit
9 and about direct tax and indirect tax from S 4 Unit 1. Again, they live in society
where tax and businesses applied.

d) Learning activities
• Put students in groups; ask them to read the scenario in student book.
• Guide student’s discussions towards legal institution related to
business activities.
• Invite students to share their findings

Answers to activity 5.5:

Capital gains tax on shares

122 Experimental Version

 e) Application activities 5.5
• Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 5.5

Proceeds from the shares transferred 350,000 x 200 70,000,000
Cost of the shares transferred 350,000 x 180 (63,000,000)
Capital gain 7,000,000
Capital gain tax 7,000,000 x 5% 350,000

Lesson 6: Capital gains tax on immovable property

a) Learning objective

Explain the capital gain tax on immovable property

b) Teaching resources

Basic materials for a class/ lesson to be conducted: Desks, chalkboard,

chalk, papers, internet, computer, students’ books, internet, case studies and
any other trustworthy and reliable resources to enhance learning.

c) Prerequisites/Revision/Introduction

Students are familiar with term tax and business from entrepreneurship S3 Unit
9 and about direct tax and indirect tax from S 4 Unit 1. Again, they live in society
where tax and businesses applied.

d) Learning activities
• Put students in groups ask them to read the scenario in student book.
• Guide student’s discussions towards registration of business in
Rwanda.
• Invite students to share their findings

Answers to activity 5.6:

Capital gains tax on immovable property

e) Application activities 5.6:

Experimental Version 123

 • Invite students to read, discuss in pairs the application activities in
student book
• Have some pairs to present their findings
• Ask other pairs to supplement
• Give constructive feedback

Answers to Application Activity 5.6

Q1.
A registered investor shall not pay capital gains tax. However, income derived
from the sale of a commercial immovable property shall be included in the
taxable income of the investor.
Q2.
Penalties and fines are enforced for:
• Late declaration
• Late payment
• Declaring less than the correct tax due
• Paying less than the tax due declared. There are no additional penalties
or fines specifically applicable to Capital Gains Tax. The only difference
compared to other domestic taxes is that as Capital Gains Tax is
declared and paid on a case-by-case basis, there is no need to submit
regular Capital Gains Tax declarations if no taxable capital gain has
been received.

5.6. Summary of the unit

Investment income tax: Includes payments of interest, dividends, service fees,
royalties, and rent which has not been taxed as business income in accordance
with law No 016/2018. Investment income, includes all payments in cash or in
kind in the form of interest, dividends or royalties. In the majority of cases, this
will already have been paid as a withholding tax, but must still be declared, and
then claimed back.
Rental income from machinery and equipment: Includes all revenues
derived from rent of machinery and other equipment including agriculture and
livestock equipment in Rwanda.
Capital Gains Tax on shares: According to Article 36 of Law 16/2018,
capital gain tax is charged on the sale or transfer of shares. The capital gain

124 Experimental Version

on sale or transfer of shares is the difference between the acquisition value of
shares and their selling price or transfer price.
Capital gains tax on immovable property: Capital gains tax on immovable
business property is paid at a rate of 30% of the selling value of the property
(net of selling expenses and any unrelieved tax base) and can be declared as
income as part of an individual’s income tax assessment, or by a company as
part of their corporate income tax. Alternatively, it can be declared separately.

5.7. Additional information for teachers

A resident individual or resident entity must withhold tax whenever they make
the following payments:
Income Rate (%)
Interest – unlisted securities 15
Interest – listed securities and listed bonds with maturity of three
5
years and above
Dividend 15
Dividend – listed securities 5
Royalty income 15
Service fees, including management and technical services fees,
15
with the exclusion of international transport
Performance payments made to an artist, a musician or a
15
sportsperson
Lottery and other gambling proceeds 15

Good supplied by companies or physical persons not registered

15
as taxpayers in Rwanda
Goods imported for commercial use 5
Payments by public institutions to winners of public tenders 3

5.8. End unit assessment

1. (B)Interest, Dividends, Royalties and Rent
2. (C) capital gain tax
3. (C) FRW 15,000

Taxable income = 100,000 × 15% = 15,000

1. FRW 1,000,000

Experimental Version 125

Taxable rental income= Gross rental less 10%, loan interest and depreciation
Taxable income = FRW 2,500,000- 250,00- 100,000- 1,150,000= 1,000,000
2. (C) The sale of residential house and (D) The sale of a factory used in the
trade of a sole trader

5.9. Additional activities

5.9.1. Remedial activities
1. What do you understand by the following terms?

A. Financial interest
B. Dividend income
C. Rental income

Possible Answer:

A. Financial interest
According to Article 40 of Law 16/2018, financial interest includes: Income from
loans; Income from deposits; Income from guarantees; Income from government
securities, income from bonds, negotiable securities issued by the Government,
securities issued by public and private companies, as well as income from cash
negotiable securities.

B. Dividend income
Dividend income is the payment of profits to shareholders, and is derived from
the owing of shares in any company. Because the profits of Rwandan resident
companies suffer corporate income tax, the only further tax that may be payable
by a Rwandan taxpayer on dividends received from a Rwandan company is
withholding tax. This also includes the outstanding balance after taxation of
profit.

C. Rental income:
Rental income includes income from the rental of land and buildings as well
as rent of machinery and other equipment, including agriculture and livestock
equipment.
1. Describe the exemption from paying investment income tax

Possible Answer:
• Income accruing from savings in collective investment schemes and

126 Experimental Version

 employees’ shares scheme within a company are exempted from
income tax.
• Income earned by an agriculturalist or a pastoralist on agricultural
or livestock activities is exempt if the turnover from agricultural or
livestock activities do not exceed twelve million Rwanda francs (FRW
12,000,000) in a tax period.
In case the turnover exceeds twelve million Rwandan francs (FRW 12,000,000),
the latter amount is excluded from the taxable income.
• Capital gain from the sale or transfer of shares on the capital market and
capital gain from the sale or transfer of units of the collective investment
schemes, is exempted from capital gain tax.

5.9.2. Consolidation activities

1. SHYIRAMBERE purchased 200,000 shares from Bank of Africa
at FRW200 per share, a private limited company in 2010. In 2020,
SHYIRAMBERE sold 100,000 shares to Alex at FRW 250 per share.

Compute the capital gain and the capital gain tax

Possible Answer:
Particulars FRW FRW
Sales proceeds 100,000 x 250 25,000,000
Cost of the shares sold 100,000 x 200 (20,000,000)
Capital gain 5,000,000
Capital gain tax 5% x 5,000,000 250,000
1. NYIRISHEMA owns machineries that he rents to various individuals,
during the year ended 31/12/2021, he received a gross rental income
of FRW 25,000,000. The machines were purchased in 2018 at FRW
20,000,000. During the purchase, he borrowed FRW 5,000,000 from
the bank at an annual interest rate of 20%.

Required:
Compute his taxable rental income and the tax payable.
Computation of taxable rental income and tax liability

Possible Answer:
Gross income 25,000,000

Experimental Version 127

 10%
Less allowable expenses 2,500,000
×25,000,000
20% ×
Interest expenses 1,000,000
5,000,000
Depreciation Working 1 3,750,000 (7,250,000)
Taxable income 17,750,000

Tax band Tax rate Tax

0 → 360,000 0% 0
360,000 → 1,200,000 20% 168,000
1,200,000 → 17,750,000 30% 4,965,000
Tax liability 5,133,000

Working 1 Depreciation
Accumulated Net Book
Period Depreciation (25%)
Depreciation Value

1 20,000,000×25%= 5,000,000 5,000,000 15,000,000

2 15,000,000×25%= 3,750,000 8,750,000 11,250,000

5.9.4. Extended activities

During the year ended 31/12/2021, KAMANZI received income from the
following assets.
100,000 shares of FRW200 each in KAMUHANDA limited a private company
whose shares are not listed at Rwanda stock exchange. During the year ended,
KAMANZI sold 6000 shares at FRW359 each.
Invested FRW 20,000,000 in a fixed deposit account in the bank for a period of
eight months at an annual interest rate of 9%.
Received FRW 8,000,000 from the investment in Government bonds with
a maturity period of two years KAMANZI has 80,000 shares in BK a listed
company at RSE market.
At the end of the year, the company declared a dividend of FRW 200 per share.
KAMANZI also owns a fixed deposit account in NILE bank with a maturity of two
years, at the end of the year he received an interest income of FRW 3,000,000.
During the year he sold a copy right of his new book at FRW 12,000,000.
He also invested in government securities with a maturity period of 5 years,
during the year he received an interest income of FRW 6,000,000

128 Experimental Version

He owns 20,000 shares of FRW 300 each in BYIZA limited a listed company in
Rwanda stock exchange market. During the year he disposed of 12, 000 shares
at FRW 400 each.
He owns shares in UBUKI limited a private company that is listed at RSE. During
the year ended, he received a dividend income of FRW 2,500,000

Required: Compute the relevant withholding taxes.

Income Workings WHT
Proceeds from the sale of shares (359 x 6000) 2,154,000

Capital Cost of the shares (200 x 6000) 1,200,000

47,700
gain Capital gain 954,000

Capital gain tax (954,000 x 5%)

Interest
(20,000,000 x9%) x 8/12 1,200,000 x 15% 180,000
income
Interest 8,000,000 x 100/85 (since maturity is below 3 years the
1,411,765
income withholding is 15% and it is at the source) 9, 411,765 x 15%
Dividend 200 x 80,000 = 16,000,000 (since it is a listed company, the
800,000
income WHT is 5%) 5% x 16,000,000
Interest Since the maturity of the deposit is above one year the income
Exempted
income is exempted
Royalty
12,000,000 x 15% 1,800,000
income
Interest 6000,000 x 100/95 (since it is a long-term government bond
315,790
income the WHT is 5%) 6,315,790 x 5%
Capital
Capital gain on shares that are listed at RSE is exempted Exempted
gain
Dividend 2,500,000 x100/95 (since shares are listed at RSE the WHT
131,579
income tax is 5%) 2,631,579 x5%

Note: when the income is received net, in order to calculate the withholding tax
(WHT), there is a need to first gross them before computing the tax.

Experimental Version 129

130 Experimental Version
UNIT 6 TAXATION OF INDIVIDUAL
BUSINESS PROFITS

6.1. Key unit competence: To be able to apply and compute

the taxation of individual business profits (PIT)

6.2 Prerequisites (knowledge, skills, attitudes, and values)

Besides the unit 1 on Rwanda Taxation System covered in S4 where they
were introduced to different types of taxes and duties administered in Rwanda,
students were introduced in senior 2 (unit 5) to the taxes in Rwanda, in senior
3 (unit 5) to the role of Rwandan Customs procedures. This prior knowledge,
skills or competences should help students to compute the personal income tax

INTRODUCTION
(PIT) related to individual businesses and file its related return.

6.3. Cross-cutting issues to be addressed:

TO ACCOUNTING
• 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.

6.4. Guidance on the introductory activity

• Lead small groups of students to work on introductory activity 1.
• During the class discussion, have the students think about different
possible solutions for business growth 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

Experimental Version 131

 their results.
• 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 sixth unit’s material.

Answers for introductory activity 1

For business owners, it is important that they understand the different stages
of business growth, so that they can perform with maximum efficiency at each
stage. Identifying these stages and understanding the details eventually helps
owners to identify the problems that they may face at each particular stage,
deploying effective solutions and eventually becoming successful.

6.5. List of lessons and lesson development

Number of
# Lesson title Learning objectives
periods
Definition of the Explain the meaning of business
1 1
concept and exempted business income
The taxation of Discuss the taxation of small
2 3
small businesses business
Adjustment of Demonstrate the adjustments of
3 2
profit for tax profits for tax
4 Capital and Identify the difference between
revenue capital expenditure and revenue 3
expenditure expenditure
Transactions
Identify the transactions made for
5 made for foreign 3
foreign currencies
currencies
Long-term
Identify long term contacts and
6 contracts and 2
stock
Stock
7 Bad debts Explain the bad debts 1
Transfer pricing
8 Identify the transfer pricing 3
principles
End Unit Assessment 2
Total number of periods 20

Lesson 1: Definition of the concept

a) Learning objective

132 Experimental Version

Explain the meaning of business and exempted business income

b) Teaching resources

Printed or soft income tax law No. 16/2018, 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 learn well the content of of previous
unit in this subject especially unit two and unit five.

d) Learning activities
• Invite students to work in group and do the activity 6.1 found in their
students’ book;
• Move around the class to moderate where needed and provide more
clarity about any challenges they may encounter during their work;
identify groups with different work steps.
• Invite each group with different working steps to present their answers
in a whole class discussion;
• As a teacher, harmonize the insights from the students’ presentation
and ask them to provide other real life examples of problems that involve
the use of business profit
• Guide them to explore examples given in the students’ book

Answers for Activity 6.1

When I started Simple Straw Solutions four years ago, I started with very little
money that I put up out of my own pocket. However, as I started taking more
orders and needed more capital to execute orders, I knew I needed to secure
outside funding and attended a variety of small business conferences that
connect small businesses with potential investors. After about three months
of events, I received offers from various sources to finance production and
marketing costs and closed deals with investors that have helped our company
to grow exponentially.
Taxpayers that are exempt from Income Tax are not required to register, declare
or pay Income Tax.

e) Application activities 6.1.

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to

Experimental Version 133

give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 6.1.

Mutunzi is a farmer with an annual turnover of FRW 15,870,350, then to
calculate his taxable income we should deduct the allowance and the rest is the
taxable income.
Taxable income (agriculture) = FRW 15,870,350 – FRW 12,000,000 = FRW
3,870,350
Lesson 2: The taxation of small businesses

a) Learning objective

Discuss the taxation of small business

b) Teaching resources:

Printed or soft Income Tax Law No. 16/2018, 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 learnt well the content of of previous
unit in this subject especially unit one and unit two.

d) Learning activities
• Invite students to sit in small groups;
• Invite students to work in small groups on the questions for activity 6.2
• Move around to support and guide struggling students in their work
• Ask the group representative to share their findings with the whole
class during a class discussion;
• As a teacher, harmonize different answers given by students on the
activity 6.2
• Use different questions and examples from the student book and guide
them on how to solve different small business questions
• After this step of application activity 6.2, assess their competencies
and assess whether the lesson objectives have been met

Answers for Activity 6.2

134 Experimental Version

The following are the important contributions of small business towards
economic development.
1. Greater flexibility in their operations: They are much better placed in
catering to individual tastes and changing fashions.
2. Labour-intensive: They thus ideally suit the country where capital is
scarce while labour is super abundant. Small scale industries provide
opportunities for profitable employment of these skills, thus playing a vital
role in relieving the widespread and object poverty.
3. Making use of local resources which otherwise may go waste: They
provide opportunities for entrepreneurship to many more persons. They
thus promote entrepreneurship which is an essential factor in economic
development.
4. Artistic handicrafts earn valuable foreign exchange for the country: It
is able to contribute some percentages of the much-needed foreign
exchange earnings through exports.
5. Easy and quick to be set into operation: While large businesses take
years to put up and attain reasonable levels of capacity utilization, small
scale units can be set up in a much shorter period contributed.
6. Possibility of decentralization of production: decentralization of
production made possible by small businesses can provide a check on
excessive and premature urbanization which is a serious problem.
7. The contribution to the manufacturing sector and GDP as a whole is
significant in terms of its share in total value added.
8. Role in mitigating the problem of imbalance in the balance of payment
accounts through its export promotion.
9. Providing opportunities to a large number of capable and potential
entrepreneurs who are deprived of appropriate opportunities.
10. Releasing scarce capital towards productive use.
11. Minimum element of risk in SMEs leading to employing of more resources
by large number of labour force.

e) Application activities 6.2

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.

Experimental Version 135

Refer to the possible answer below as you assess their work.

Answers for the application activity 6.2

Flat and turnover taxes

A. Clement Gatete, is a clothing manufacturer with an annual turnover of
FRW 18,000,000 and expenses of FRW 4,000,000 per tax year.
B. Small enterprise (turnover FRW 12-20M). Turnover tax at 3% = FRW
18M x 3% = FRW 540,000
C. Henriette Uwiragiye, a lawyer with an annual turnover of FRW
15,000,000 per tax year.
D. Turnover and flat taxes not applicable – liberal profession. Must be
taxed on profits.
E. Dutembere Plc, a company specializing in the tourist industry, with a
turnover of FRW 25,000,000 and expenses of FRW 6,000,000 per
tax year.
F. Turnover above FRW 20,000,0000. Not within small businesses
regime, so must be taxed on profits.
G. Claude Mukamire, a crop farmer with an annual turnover of FRW
17,000,000.
Taxable income (agriculture) = FRW 17,000,000 – FRW 12,000,000 = FRW
5,000,000
Micro-enterprise: flat tax (FRW 4,000,001 – FRW 7,000,000) = FRW 120,000

Lesson 3: Adjustment of profit for tax

a) Learning objective

Demonstrate the adjustments of profits for tax

b) Teaching resources

Printed or soft Income Tax Law No. 16/2018, RRA Tax Guide (2019), calculator,
student book and other reference books to facilitate research.

c) Prerequisites/Revision/Introduction

Students learn this lesson better when they have a good understanding of
business profits, deductible expenses, and non-deductible expenses.

d) Learning activities
• Organize the students into small groups;

136 Experimental Version

 • Give clear instructions and introduce activity 6.3 by guiding the students
• In small groups, ask students to do activity 6.3 from the student book
• Request students brainstorm what they know about profit adjustment,
and then have a detailed conversation about what is adjusted profit for
tax purposes.
• After some time has passed, select a few groups at random to present
their findings to the entire class.
• During harmonization, assist students in learning about the new lesson.
• Use a variety of probing questions to lead students through the lesson
and examples in the student book.
• After this phase, instruct students on how to do the application activity
6.3, assess their competencies, and determine whether the instructional
objectives were met.

Answers for Activity 6.3

Adjusted Profit includes profits from operating activities and excludes personal
allowances, certain tax relief and real estate and financial instrument revaluations,
capital gains or losses, exceptional items and other defined conditions.
Keep in mind that adjusted profit is calculated after adding non-deductible
expenses and subtracting deductible expenses and excluded income. The value
derived from this calculation is the adjusted profit

e) Application activities 6.3.

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 6.3

Experimental Version 137

 Workings:
• (W1): Personal Rent = FRW3,000,000 x 25% = FRW750,000
• (W2): Overheads expenses = FRW(500,000 + 400,000) x 20% =
FRW180,000

a) Profit and Loss account

Description FRW
Sales 55,000,000
Cost of goods sold (12,000,000)
Gross profit 43,000,000
Administration expenses 2,000,000
Operating expenses 1,500,000
Fines and penalties paid 500,000
Rent 3,000,000
Provision for bad debts 5,000,000
Transport & Insurance 1,500,000
Depreciation expenses 400,000
Communication expenses 500,000
Interest paid to Bank of Kigali 400,000
Electricity & Water expenses 400,000
Fuel expenses 600,000
Total expenses 15,800,000
Profit before tax 27,200,000

b) Adjusted taxable income

FRW’000 FRW’000
Net profit as per accounts (A/Cs) 27,200
Add:
Fines and penalties 500
Personal rent 750
Overhead’s expense 180 1,430
Less: Investment allowance 1,500 (1,500)
Adjusted business profits 27,130

Lesson 4: Capital and revenue expenditure

138 Experimental Version

 a) Learning objective

Identify the difference between capital expenditure and revenue exenditure

b) Teaching resources

Printed or soft Income Tax Law No. 16/2018, 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 6.4 in small groups.
• Move around to help and guide students who are having difficulty with
their assignment.
• Request each group exchange their responses with another group, and
that they encourage one another when they face larger difficulties in
completing this activity. 6.4
• During a class discussion, ask the group leader to present their findings
with the entire class.
• As a teacher, harmonize the students’ different responses to Activity
6.4
• Have students go through application activity 6.4 and assess whether
the objectives of the lesson have been met.

Answers for Activity 6.4

Capital expenditure is the money a company spends to acquire assets or
improve the quality of existing ones. Revenue expenditures are the monies spent
by businesses to keep up their day-to-day operations.

e) Application activities 6.4.

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Experimental Version 139

Answers for the application activity 6.4
C. 3 and 4
Repairs, irrespective of their cost, are revenue in nature and therefore allowable
business expenditure. The computer upgrade, although it is an improvement
and hence capital; costs less than FRW 500,000 and is therefore allowable.

Lesson 5: Transactions in foreign currencies

a) Learning objective

Identify the transactions made for foreign currencies

b) Teaching resources

Printed or soft Income Tax Law No. 16/2018, 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
• Invite students to work in groups on Activity 6.5 found in their student
book;
• Move around the class to moderate when needed and provide further
explanation of any challenges they might encounter during their work
• Invite members from each group to give a presentation about their
findings;
• As a teacher, bring the findings from the presentation together and lead
them through an explanation of what foreign currency is.
• Use a variety of probing questions to lead them through the subject and
examples in the student book;
• After this, assist the students in completing application activity 6.5 and
determining whether the learning objectives were satisfied.

Answers for Activity 6.5

The currency of any foreign country which is authorized medium of circulation
and the basis for record keeping in that country. Foreign currency is traded by
banks either by the actual handling of currency or checks, or by establishing
balances in foreign currency with banks in those countries.

140 Experimental Version

What is a foreign currency transaction? This occurs when a company enters into
a transaction denominated in a currency other than the company’s functional
currency. A company’s functional currency is the currency of the primary
economic environment in which the company operates.
What is a foreign currency transaction? This occurs when a company enters into
a transaction denominated in a currency other than the company’s functional
currency. A company’s functional currency is the currency of the primary
economic environment in which the company operates. Certain percentage of
the cost of eligible assets in addition to depreciation allowances

e) Application activities 6.5.

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 6.5

Exchange gains and losses
Jackson will record an exchange loss of FRW 152,000 in the tax year, and this
will be treated as a deductible expense.
Original liability: € 5,000 x 1,020.85 = FRW 5,104,250
Retranslated at year-end exchange rate: € 5,000 x 1,051.25 = FRW 5,256,250
Difference = Increased liability of FRW (5,104,250 - 5,256,250) = FRW
152,000 (an exchange loss)

Lesson 6: Long-term contracts and stock

a) Learning objective

Identify long term contract and stock

b) Teaching resources

Printed or soft Income Tax Law No. 16/2018, RRA Tax Guide (2019), calculator,
student book and other reference books to facilitate research.

c) Prerequisites/Revision/Introduction

Experimental Version 141

Students will do well in this lesson if they have a solid understanding of the
content of business-related laws.

d) Learning activities
• Organize students into small groups;
• Invite students to work on the questions for activity 6.6 in small groups.
• Move around to help and guide students who are having difficulty with
their assignment.
• Ask the group representative to share their insights with the whole
class during a class discussion;
• As a teacher, harmonize different answers given by students on the
activity 6.6
• Use the student book’s questions and examples to lead them through
the treatment of long-term contracts.
• Assess their competencies and whether the course objectives were
satisfied after this phase of application activity 6.6.

Answers for activity 6.6

1. A long-term contract is a contract for manufacture, installation,
construction or related services that is not completed in the tax period in
which it begins.
2. According to the accrual principle, revenue is recognized when it is
realized and not when it is actually received. Similarly, costs are recorded
when they are incurred and not when payment is made. This assumption
makes it necessary to make certain adjustments when preparing the
income statement with regard to revenues and costs. However, as part of
the cash accounting system, income and expenses are not recorded until
they are actually received or paid. As a result, combining the cash and
accrual systems is preferable to overcome each system’s shortcomings

e) Application activities 6.6

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 6.6

142 Experimental Version

The TRUE statements in relation to the taxation of long-term contracts and
stock are:
C. 1 and 3
The tax treatment of long-term contracts generally follows GAAP and
The percentage of a contract that was completed during the year will determine
the level of profit to be taxed

Lesson 7: Bad debts

a) Learning objective

Explain the bad debts

b) Teaching resources

Printed or soft Income Tax Law No. 16/2018, 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 learnt well the content of of previous
unit in this subject especially unit two.

d) Learning activities
- Organize students into small groups;
- Invite students to work in small groups on the questions in Activity 6.7
- Move to support and guide struggling students in their work
- Ask the group representative to share their insights with the whole class
during a class discussion;
- As a teacher, harmonize the students’ different responses to Activity 6.7
- Using various questions and examples from the student book, guide them
to identify specifically what bad debts are, what causes bad debts, and
the effects of bad debts.
• After this step of application activity 6.7, assess their competencies
and assess whether the teaching objectives have been met

Answers for Activity 6.7

• What is a bad debt?
Bad debt refers to loans or outstanding balances owed that are no longer

Experimental Version 143

deemed recoverable and must be written off. This expense is a cost of doing
business with customers on credit, as there is always some default risk inherent
with extending credit
• Simple example of bad debt
A retailer receives 30 days to pay Company SNT after receiving the laptops.
Company SNT records the amount due as “accounts receivable” on the balance
sheet and records the revenue. However, as the 30-day due date passes,
Company SNT realizes the retailer is not going to make the payment.
• What causes bad debts?
Bad debts are incurred when an individual has poor financial management and
he is not able to pay his debt on time. In case the debtor is unwilling to pay or is
no longer capable of paying the debt. This is one of the key reasons most debts
become bad debts
A bad debt is a receivable that a customer will not pay. Bad debts are possible
whenever credit is extended to customers. They arise when a company extends
too much credit to a customer that is incapable of paying back the debt, resulting
in either a delayed, reduced, or missing payment
• What are the effects of bad debts?
In most cases a bad debt occurs when you have extended credit terms to an
unsuitable customer or when the customer’s circumstances change. One of the
most obvious consequences of experiencing a bad debt is that a business’ cash
flow is disrupted, resulting in lowered profitability
• Why bad debts recovered are added back to taxable profit?
Bad debts recovered are added back to taxable profit because the provisions
created when the client was declared insolvent are no longer justified although
the taxpayer the taxpayer has taken all possible steps in pursuing payment and
has shown concrete proofs that the debtor is insolvent.
It is quite normal to add back to taxable profit this kind of income since
haphazardly, the client has become capable to do business by starting paying
back the debts. Failure to do so is not different from committing tax evasion by
underestimating the profit.

e) Application activities 6.1.

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.

144 Experimental Version

Refer to the possible answer below as you assess their work.

Answers for the application activity 6.7

Bad debts
B Deduct bad debt relief of FRW 2,700,000
The debt was written off in 2020. The expense would not have been allowed
in 2020 as the debt was less than three years old at 31st December 2020. As
Nancy would have been chasing the debt since 30th September 2018, three
years have now passed and Nancy will be permitted to claim tax relief in the
2021 tax period.
Note: As the debt was for a value of less than FRW 3,000,000 no court
insolvency decision is required for bad debt relief to be claimed.

Lesson 8: Transfer pricing

a) Learning objective

Identify the transfer pricing

b) Teaching resources

Printed or soft Income Tax Law No. 16/2018, 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 the students into small groups;
- Give clear instructions and introduce activity 6.8 by guiding the students
- In small groups, ask students to do activity 6.8 from the student book
- Ask the group representative to share their insights with the whole class
during a class discussion;
- After some time has passed, select a few groups at random to present
their findings to the entire class.
- During harmonization, assist students in learning about the new lesson.
- Use a variety of probing questions to lead students through the lesson and

Experimental Version 145

 examples in the student book.
- After this phase, instruct students on how to do the application activity
6.8, assess their competencies, and determine whether the instructional
objectives were met.

Answers for Activity 6.8

Choosing a transfer pricing method is a top-down strategic decision that
benefits from the use of tools and resources designed to help organizations
identify the most beneficial and appropriate methods for their transfer pricing
strategy. They are also used in advance of negotiating new advance pricing
agreements (APAs).

e) Application activities 6.8

This activity must be done in small groups. Depending on the purpose of the
application activity, chose an appropriate method to assess learners’ findings,
answers or responses. Based on the performance or results, you may decide to
give remedial or extension activities.
Refer to the possible answer below as you assess their work.

Answers for the application activity 6.8

Therefore;
Sales: (To country A) 1,000,000
Cost of sales 500,000
Profit 500,000
Taxed @ 35% 175,000
The business in Country A sells the widgets locally, for 4Frw each. They incur
distribution costs of 1Frw each.
Therefore;
Sales (In Country A) 2,000,000
Cost of goods sold (1,000,000)
Distribution costs (500,000)
Profit 500,000
Taxed @ 15% 75,000

146 Experimental Version

 Therefore, total tax
In country B 175,000
In country A 75,000
Total 250,000
However, to reduce the tax liability, the company could decide to make no
profit in Country B, and all the profit in Country A.
Thus, if the sales are all to their own business in Country A, the company
could decide to charge their own company FRW 1 per unit. The following
therefore would be the case:
Country B
Sales: (To country A) 500,000
Cost of sales 500,000
Profit 0
Taxed @ 35% 0

Country A
Sales 2,000,000
Cost of goods (500,000)
Distribution costs (500,000)
Profit 1,000,000
Tax @ 15% 150,000
Therefore, we can see that the overall tax liabilities are reduced from 250,000
to 150,000. This has been achieved by the simple mechanism of transferring
the original profits from Country B to Country A, where there is a lower tax rate.
This in turn has been achieved by reducing the price of the goods sold into
Country A. Thus, no profits are made in Country B, and all the profits are made
in Country A. The pricing mechanism used between different parts of the same
business is known as “transfer pricing”, and as can be seen from the above
examples can be used to manipulate the profits in various countries.

Experimental Version 147

6.6. Summary of the unit
- Business profits are subject to income tax for both natural persons (as sole
traders or partners in a partnership) and companies. A business includes
a trade or a profession.
- The first FRW 12,000,000 per year of income from agriculture and
livestock activities is tax-free
- Small businesses can pay income taxes based on their sales, either as a
percentage of sales or as a flat tax for micro businesses. Larger companies
are taxed on their profits.
- Accounting profit will be adjusted for tax purposes before being taxed.
- Assets are not deductible from business profits; instead, they are relieved
by the tax depreciation.
- The tax treatment of items in the profit and loss account such as stock,
long-term contracts and foreign exchange differences will generally follow
GAAP; adjustment is only required if the accounts do not correctly follow
GAAP.
- Transactions between related parties are taxed as if they happened on an
arm’s-length basis.
- Other expense items in the profit and loss account such as entertainment
may not be given tax relief; profit will need to be adjusted for these.

6.7. Additional Information for Teachers

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

6.8. End unit assessment

148 Experimental Version

Net profit FRW'000
Add: wages and salaries (sole trader personnel expenses) 15,000
rent and rates (20% deemed private proportion) 1,000
depreciation 1500 FRW'000
bad debt - allowable as relevant conditions met 0
entertainment expenses for customers 350 17,710
patent royalties (no cap as not related party) 0
legal expenses (capital) 650
bank interest paid 0
18,500
36,210
Less: profit on disposal of fixed asset
(860)
Profit adjusted for tax purposes 35,350

6.9. Additional activities

6.9.1. Remedial activities (Questions and answers)
1. A Rwandan business has turnover of FRW 3,000,000 the tax period,
resulting in profit of FRW 1,300,000. Which of the following statements
are TRUE?
i) The income tax will be calculated based on business profits unless the
taxpayer elects for the flat tax regime to apply.
ii) If the flat tax regime is used, the income tax will be FRW 60,000
A. 1 is true, 2 is false
B. 2 is true ,1 is false
C. Both are true
D. Both are false

Answer:

B. 2 is true, 1 is false (the default is for flat tax to apply, and the real regime
is by election)
1. Which of the following expenses would fail the general conditions
for an expense to be deductible from business profits in the tax period
2021?
A. An accrual for an electricity bill with an invoice dated 28 December
2021, relating to the period 1st October 2021 to 31st December 2021
B. A provision for warranties calculated as a percentage of all sales

Experimental Version 149

 C. Rent paid in the year on business premises
D. Contractual bonuses for sales staff accrued at the year end

Answer:
B. A provision for warranties calculated as a percentage of all sales (it would fail
the general condition of being a real expense incurred able to be substantiated
with a document or receipt)
6.9.2. Consolidation activities (Questions and answers)
1. Mr. John Kubwayo runs a snack shop in Kigali town. He submitted his
return of income for 2006 showing losses of FRW 64,000. In support of
this figure, the following receipts and expenditure account and information
were submitted:

Income: FRW
Sale of snacks 340,000
Sale of old furniture 30,000
Roto Rotary winnings 10,000
380,000
Expenses:
Purchase of snacks 265,000
Electricity 20,000
PAYE/Social Security 4,000
Wages for staff 60,000
Salary to wife 10,000
Rent 50,000
Insurance 10,000
Fuel expenses 25,000 444,000
Loss 64,000

Additional information
• The family lives in the flat above the business premises; the rent is
apportioned 3/5 flat and 2/5 for the shop.
• The insurance includes premiums amounting to FRW 4,000 in respect

150 Experimental Version

 of Mr. John life insurance policy.
• It is estimated that Mr. John’s personal use of the car is about 40% of
the total mileage; the fuel for the car was included as part of business
expenses.
• Mr. John has not yet paid rent for December 2021 amounting to 2,000
and snacks for the shop amounting to 5,000.

Required
Calculate the adjusted profit/loss for the year of income tax purposes.
1. The following expenses appeared in the profit and loss account of Mr.
Mugisha who is running a business as a sole proprietor for the year of
income 2018.
FRW
Electricity and water 40,000
Salaries and wages 200,000
Income tax paid 24,000
Repairs and replacement 50,000
Legal expenses 12,000
Bad and doubtful debts 15,000
General expenses 4,000
Postage and telephone 8,000
Rent 12,000
The following further information was also given:
a) Bad debts included a general provision of FRW 6,000
b) Analysis of repairs and replacement:
Repair of business premises 15,000
Repair of machines 10,000
Painting the business 10,000
Purchase of new machine 15,000
50,000
c) Rent comprises of 4,000 for Mr. Mugisha’s security guard who lives in
a servant quarter adjacent to the office.
d) d) Analysis of legal expenses

Experimental Version 151

Bad debts collection 8,000
Parking fines 4,000
12,000
e) General expenses include:
Donations 3,000
Audit fees 1,000
4,000
Required
From the above information, classify the expenses under:-
i) Deductions allowed
ii) Deductions not allowed

Solution
Q1.
Computation of Adjusted Profit
FRW
Profit as per receipts and expenditure a/c (64,000)
Add back deductions not allowable FRW
Salary to wife W1 10,000
Rent- Flat W2 30,000
Insurance- PersonalW3 4,000
Fuel-personal W4 10,000 54,000

Less deductions allowed but not paid

Accrued rent 2,000
Accrued snacks purchases 5,000 (7,000)
(17,000)

152 Experimental Version

Less income exempted/not business income
Sale of furniture 30,000
Roto winnings 10,000 (40,000)
Taxable income (57,000)
Q2.
i) Deductions allowed
FRW
Electricity and water 40,000
Salaries and wages 200,000
Repairs and replacement 35,000
Legal expenses 8,000
Bad and doubtful debts 9,000
General expenses 1,000
Postage and telephone 8,000
Rent 8,000
ii) Deductions not allowed
FRW
Income tax paid 24,000
Repairs and replacement 15,000
Legal expenses 4,000
Bad and doubtful debts 6,000
General expenses 3,000
Rent 4,000

6.9.3. Extended activities (Questions and answers)

1.
• Two registered taxpayers
– Kasongo

Experimental Version 153

 – ABC Ltd
• Kasongo is an individual business
• ABC Ltd has 2 shareholders:
– Kasongo
– Byuma
– 50 % of shares each
• EDR (Effective date of registration) for the two taxpayers: November
1st, year 1
• At the end of year 1, haphazardly both businesses made a profit of
FRW 1,750,400 each
• ABC Ltd decides to reinvest 25 % of its profit and to give dividend to
shareholders for the rest;

Task:
• Income tax for Kasongo and ABC Ltd for year 1
• Pre-payment for 1st quarter of year 2 for Kasongo and ABC Ltd
• Dividend for the shareholders of ABC Ltd.

Solution
EDR 1st Nov year 1
Gross profit 1 750 400
Nearest thousands 1 750 000

Income tax calculation

PIT Base Tax
From 0 to 360,000 : 0% 360 000 0
From 360,001 to 1,200,000 : 20% 840 000 168 000
From 1,200,001 to 1,750,000 : 30% 550 000 165 000
Income tax for Kasongo is 1 750 000 333 000

CIT
Income tax for ABC Ltd (30% of 1 750 000) 525 000

First pre-payment for year 2

499 500
For Kasongo (Year 1 tax x x 25%)
787 500
For ABC Ltd (Year 1 tax x x 25%)

154 Experimental Version

Calculation of dividend
Remember gross profit of ABC Ltd is 1 750 400
Tax paid 787 500
Net profit 962 900
25% for reinvestment 240 725
Amount subject to dividend 722 175

For Kasongo
50% of amount subject to dividend 361 088
WHT of 15% 54 163
Dividend to be collected by Kasongo 306 924

For Byuma (the same as Kasongo)

50% of amount subject to dividend 361 088
WHT of 15% 54 163
Dividend to be collected by Kasongo 306 924

Experimental Version 155

156 Experimental Version
 UNIT 7 ESTABLISH PAYROLL
REQUIREMENTS AND
PAYROLL PREPARATION

7.1. Key unit competence: To be able to prepare of payroll

according to organizational policy

7.2. 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, senior 4 accounting in
unit 3 on taxation of employment income So, with this prior knowledge, skills,
attitudes and values it should help them to prepare of payroll according to
organizational policy.

INTRODUCTION
7.3. Cross-cutting issues to be addressed:

TO ACCOUNTING
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 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
our background, economic or social setup have right to develop an ethical

Experimental Version 157

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
customs procedures 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.

7.4. 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 challenges of paying staff
salaries on time, secondly complains on discrepancies of wrong computation,
wrong deduction, missing allowances are often raised by staff.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 to 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)

1. Payroll
2. Gross salary is the amount of money employees receive before any tax
deduction or taken out.

Net salary is the amount of money employees receive after all deductions.

158 Experimental Version

7.5. List of lessons/sub-heading
Lesson title/ Learning objectives (from the Number
No Sub-heading syllabus or set according to the of
lesson title) periods
Identify the scope of payroll services
Employment
1 according to organization policies 4
contract
and procedures
Valid contract
requirements and Identify valid contact requirements
2 4
general working and general working condition
conditions
Leaves Explain types of leave according to
3 4
the current labour law
Identify relevant documents required
4 Payroll process to produce payroll and importance of 4
payroll

Payroll system and Identify the payroll system and the

5 4
Elements of payroll elements of payroll
Explain the payroll requirement data
Salary computation
to calculate, the payment methods
6 and the payment 4
of payroll according to legislative
methods of payroll
requirements
End Unit Assessment 3
Total number of periods 30

Lesson 1: Employment contract

a) Learning objective

Identify the scope of payroll services according to organization policies and

procedures.

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

Experimental Version 159

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 7.1
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 7.1

A contract is a legal bond between two or more persons that gives rights to one
or some of them to impose or to claim something. It is an agreement between two
or more persons by which they commit to do, to give or to do not do something.
Legally saying the object is something that parties are committing to do within
their contract when the purpose refers to reason why they are committing to do
such thing.

e) Application activities 7.1

Students analyse and discuss about the questions either in groups or in pairs

160 Experimental Version

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 7.1

1. Types of employment contract

a) Permanent employment contact
Permanent employment contracts apply to employees who work regular hours
and are paid a salary or hourly rate. The contracts are on going until terminated
by either the employer or employee and may be for full or part time work.
Employees on these contracts are entitled to the full range of statutory
employment rights.
b) Fixed-term contracts
Fixed-term contracts give a set end date, for example six months or one year.
c) Casual employment contracts

2. Duration of probation period

The probation period cannot exceed three (3) months.
However, after the written evaluation of the employee’s performance has been
notified to the employee, the employer can for valid reasons related to the nature
of work, employee’s performance and conduct, decides that an employee
retakes the probation for a period not exceeding three (3) months.
If the probation period comes to an end and proves to be conclusive, the
employee is immediately offered employment and notified in writing by the
employer.

Lesson 2: Valid contract requirements and general working conditions

a) Learning objective

Identify valid contact requirements and general working condition

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.

Experimental Version 161

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

In previous lesson, lesson 1 for this unit students covered the employment
contract. That will help to identify valid contract requirements and general
working condition leant in this lesson.

d) Learning activities

Activity 7.2
• Put students in small groups and give clear instructions 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 identify valid
contact requirements and general working condition
• Answers or address any questions or challenges about the activity.
Guide them to make notes in referring in their students’ book.
Answer to Activity 7.2
1. Parties of contract are persons who can sign the contract. For a contract
to be considered valid, it should include three parties. These are; Offeror who
makes an offer, Offeree to whom an offer is made and Witness who sees an
event happening.
2. Obligations of an employer
Subject to collective convention, rules of procedure or employment contract,
the employer has the following main duties:
• to provide an employee with an employment contract and its copy
• to give the employee the agreed work at the time and place as agreed
upon;
• to supervise the employee and ensure that the work is done in suitable
working conditions, as far as security and health in the workplace are
concerned;
• to pay the employee the agreed salary on time;
• to avoid whatever can hamper the company’s life and safety, its

162 Experimental Version

 employees and the environment
• to affiliate and contribute for an employee to the social security organ
in Rwanda;
• to discuss with the employees or their representatives on matters
relating to work;
• to provide employees with professional training and continue upgrading
their capacity;
• to provide an employee with working equipment;
• to notify the labour inspector work-related accident or death of an
employee

e) Application activities 7.2

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 7.2

1. Obligations of parties

Obligations of the employer

Subject to collective convention, rules of procedure or employment contract,
the employer has the following main duties:
- to provide an employee with an employment contract and its copy
- to give the employee the agreed work at the time and place as agreed
upon;
- to supervise the employee and ensure that the work is done in suitable
working conditions, as far as security and health in the workplace are
concerned;
- to pay the employee the agreed salary on time;
- to avoid whatever can hamper the company’s life and safety, its employees
and the environment
- to affiliate and contribute for an employee to the social security organ in
Rwanda;

Experimental Version 163

 - to discuss with the employees or their representatives on matters relating
to work;
- to provide employees with professional training and continue upgrading
their capacity;
- to provide an employee with working equipment;
- to notify the labour inspector work-related accident or death of an employee

Obligations of an employee

An employee has the following main obligations:

- to personally carry out his/her work or service on time and achieve
performance;
- to respect the employer’s or his/her representative’s instructions;
- to abstain from an act that would threaten his/her security and that of his/
her colleagues or that of his/her workplace;
- to keep in good conditions tools given to him/her by the employer;
- to report at work on time;
- to protect the interests of the work.

2. Working hours

The maximum working hours are forty-five (45) hours a week. However, an
employee can work extra hours upon the agreement with his/her employer.
The daily timetable for work hours and break for an employee is determined by
the employer. The daily rest granted by the employer to the employee is not
counted as work hours.
An Order of the Minister in charge of labour determines modalities for the
implementation of working hours a week.

Lesson 3: Leaves

a) Learning objective

Explain types of leave according to the current labour law

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.

164 Experimental Version

 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 7.3
- 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 to Explain types of leave according
to the current labour law Answers or address any questions or challenges
about the activity.
- Guide them to make notes in referring in their students’ book.

Answer to Activity 7.3

Types of leave are:
- Annual leave;
- Incidental leave;
- Maternity leave;
- Sick leave;
- Public holiday;
- Authorised absence.

e) Application activities 7.3

This activity can be given as a normal individual or group activity, where students
prepare payroll according to organizational policy, explain types of leaves
according to the current labour law.

Experimental Version 165

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 7.3

Q1:
- Seven (7) working days in case of death of his or her spouse.
- Five (5) working days in case of death of his or her child or adoptive child.
- Four (4) working days in case of death of his or her father, mother, father-
in law or mother-in-law.
- Four (4) working days in case of delivery of his wife.

Q2:
- Jan 01: new year day
- Feb 02: heroes’ day

Lesson 4: Payroll process

a) Learning objective

Identify relevant documents required to produce payroll and importance of

payroll

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.

d) Learning activities

166 Experimental Version

Activity 7.4
- Put students in small groups and give clear instructions about the activity
- Ask them to observe the pictures in student book and answer the questions
provided in the activity
- Guide students’ discussions 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 identify relevant
documents required to produce payroll and importance of payroll. Answers or
address any questions or challenges about the activity. Guide them to make
notes in referring in their students’ book.

Answer to Activity 7.4

Q1:
Payroll is a list of all employees showing the details of their gross wages,
deductions and net wages due to them. It is also known as wage sheet.

Q2:
- Employee clock card
- List of employee incomes and family information

e) Application activities 7.4

This activity can be given as a normal individual or group activity, where students
discuss payroll process. 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 7.4

Q1:
Payroll is a list of company’s employees showing the amount of money they are
to be paid.

Q2:
The main difference between salary and wage is that salaries are a fixed upon

Experimental Version 167

payment agreed to by both the employer and employee. Wages, on the other
hand, may vary depending on hours worked and performance
The essential difference between a salary and wages is that a salaried person
is paid a fixed amount per pay period and a wage earner is paid by the hour.
Someone who is paid a salary is paid a fixed amount in each pay period, with
the total of these fixed payments over a full year summing to the amount of the
salary. There is no linkage between the amount paid and the number of hours
worked.
The person receiving a salary is not paid a smaller amount for working fewer
hours, nor is he paid more for working overtime.
Someone who is paid wages receives a pay rate per hour, multiplied by the
number of hours worked.

Lesson 5: Payroll system and Elements of payroll

a) Learning objective

Identify the payroll system and the elements of payroll

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 unit 3 taxation of employment income, lesson 4 and lesson 5 studied

to explain different categories of employees, demonstrate RSSB contributions
of employee/employer and reliefs for employment income . That will help to
identify the payroll system and the elements of payroll discussed in lesson 5.

d) Learning activities

Activity 7.5
- Put students in small groups and give clear instruction about the activity
- Ask them to read the case study 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

168 Experimental Version

 - Harmonize their findings or answers, and link the findings to the learning
objective, help them draw conclusions/summary to discover the payroll
system and the elements of payroll.
- Answers or address any questions or challenges about the activity.
- Guide them to make notes in referring in their students’ book.

Answers to activity 7.5

Q 1:
Names of employee, basic salary, allowances, deductions, Pay as you earn
(PAYE), and gross pay and net wage, Q 2:
Payroll system:
a) Manual payroll
b) Computerized payroll
Manual payroll system means that accounting systems allow you to process all
your normal payroll tasks by hand. Computerized payroll accounting systems
allow you to process all your normal payroll tasks using a software.

c) Application activities 7.5

This activity can be given as a normal individual or group activity, where students
identify the payroll system and the elements of payroll. 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 7.5

Q 1:
Pension base = Basic salary + all allowances and benefits except transport
- Pension base = FRW 57,000 + FRW 3,000 = FRW 60,000
The compulsory pension contributions include:
- Contribution of the employee Innocent through Amahoro (the employer) =
FRW 60,000 * 3% = FRW 1,800
- Contribution of the employer = FRW 60,000 * 5% = FRW 3,000
- The maternity leaves contributions include:

Experimental Version 169

 • FRW 60,000 * 0.3% = FRW 180 withheld on behalf of Innocent
by Amahoro
• FRW 60,000 * 0.3% = FRW 180 paid by Amahoro
In total, Amahoro pays RSSB contributions of FRW 5,160 = 1,800 + 3000 +
180 + 180
In summary, Amohoro withholds FRW1,980 from Innocent gross salary and
pays it to RSSB. Besides, Amahoro pays directly FRW3,180.
Q 2: Allowance is a sum of money granted as a reimbursement for expenses a
salary that includes a cost-of-living allowance especially. It can also be a sum
regularly provided for personal or household expenses. E.g., Each child receives
a weekly allowance.

Examples:
o Transport,
o Accommodation,
o Communication,
o Recreation.
Q3.
a) P.A.Y.E: Pay As you Earn
b) R.S.S.B: Rwanda Social Security Board.

Lesson 6: Salary computation and the payment methods of payroll

a) Learning objective

Explain the payroll requirement data to calculate, the payment methods of payroll
according to legislative requirements

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 unit 3 taxation of employment income, lesson 4 and lesson 5 students

covered different categories of employees, RSSB contributions of employee/

170 Experimental Version

employer and reliefs for employment income. In this unit, lesson 5,payroll system
and elements of payroll were discussed. This will help students to explain the
payroll requirement data to calculate, the payment methods of payroll according
to legislative requirements as developped in this lesson.

d) Learning activities

Activity 7.6
- Put students in small groups and give clear instruction about the activity
- Ask them to read the case study 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 explaining the payroll requirement data to calculate, the
payment methods of payroll according to legislative requirementsAnswer
or address any questions or challenges about the activity.
- Guide them to make notes in referring in their students’ book.

Answers to activity 7.6

Q 1: RSSB contribution rates
The pension scheme totals a rate of 8%. This is made up of 3% withheld
from the employee and 5% paid by the employer including payments to the
Occupational Hazards Scheme. This is charged on all employment income
except for transport allowances and transport benefits in kind
• The maternity leave scheme totals a rate of 0.6%. This is made up of
0.3% withheld from the employee and 0.3% paid by the employer. This
is charged on all employment income except for transport allowances
and transport benefits in kind.
• The medical scheme totals a rate of 15%. This is made up of 7.5%
withheld from the employee and 7.5% paid by the employer. This is
charged on the ‘Basic Salary’.
Q 2: Payment methods
o Check
o Electronic means
o Payment order

Experimental Version 171

Q 3: Payrolls functions
o Calculation of the wages due to each employee, according to
their contracted payment basis.
o Calculation of bonuses
o Calculation of deductions according to the specific work done by
the employee during the period
o Calculation of taxes, social insurance and other pay-related
obligations.
o Determination of take-home amount (net salary)

e) Application activities 7.6

This activity can be given as a normal individual or group activity, where students
explain the payroll requirement data to calculate, the payment methods of payroll
according to legislative requirements.
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 7.6
Q 1:
o RSSB: Rwanda Social Security Board
o PAYE: Pay As You Earn
o RRA: Rwanda Revenue Authority
Q 2:
a) The gross salary paid by Mugisha to Munezero at the end of one
month = basic salary+ transport allowance + housing allowance =
FRW35,000 + FRW 5,000 + FRW 8,000 = FRW 48,000
b) Net salary computation
o PAYE = (FRW 48,000– FRW 30,000) 20% = FRW 3,600
o Pension participation paid by employee = (Gross salary –
transport allowance) 3% = (FRW 48, 000 - FRW 5,000) 3% =
FRW 1290

172 Experimental Version

 o Contribution for maternity leave = (FRW 48, 000 - FRW 5,000)
0.3% = FRW 129
o The net salary received by Munezero at the end of every month
=Gross Salary – (PAYE + RSSB pension of 3% + Maternity Leave
of 0.3%) = FRW 48,000 - FRW 3,600 - FRW 1290 - FRW 129 =
FRW 42,981
Q 3:
Payroll is a list of all employees showing the details of their basic salary,
allowances, gross salary, deductions and net salary due to each of them.
The details of a payroll are:
o Names and address of employer
o Names of employee
o Job title
o Rate of salary whether daily, weekly or monthly
o Basic salary
o Gross salary
o Deductions
o Net salary.

Skills lab activity 4

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.
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
- Let each team have the representative
- Ensure they have where to keep necessary notes from the findings
- Practice
- Guide students on listening resource person

Experimental Version 173

 - 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 fellows
iii) Conclusion
The teacher emphasizes on the objective of the visit reminding students that
they have to follow those steps in preparing and paying payroll accordingly.
The following are key areas for reference:
- Payroll process
- Preparation of payroll
- Payment methods of payroll prepared

7.6. Summary of the unit

1. Employment contract

Employment contract is an agreement between an employer and an employee

whereby an employee undertakes to work under the authority of the employer in
return for remuneration.

2. Valid contract requirements and general working conditions

Elements of a valid contract are of the following:

- Intention to be bound by the contract
- Offer and acceptance
- Consideration/price
- Capacity of the parties
- Free Consent
- Legality/lawful object
- Possibility of performance
- Certainty

174 Experimental Version

 3. Leaves

Types of leave are:

- Annual leave;
- Incidental leave;
- Maternity leave;
- Sick leave;
- Public holiday;
- Authorised absence.

4. Payroll process

Payroll is a list of all employees showing the details of their gross salary,
deductions and net salary due to them.
The employer gives the employee an individual monthly pay slip which details
the basic salary, other various allowances and bonuses, withholdings and the
net salary on employee’s request.

5. Payroll system and Elements of payroll

o Payroll system
- Manual payroll
- Computerized payroll
o Elements of payroll
- Serial number
- Name of employee
- Account number
- Basic salary
- Allowances
- Gross salary
- Deductions
- Net salary

Experimental Version 175

 6. Salary computation and the payment methods of payroll

a) Salary computation

o Calculation of gross salary

Gross salary is the amount of money employees receive before any tax deduction
or taken out.
Gross salary=Basic salary + accommodation allowance + transport allowance
+ communication allowances
o Calculation of deduction
ü For PAYE, Rwanda labor law should be enforced by
applying Personal Income Tax (PIT) formula on monthly
basis using the following tax bands:
FRW0-30,000: 0%
FRW 30,001-100,000: 20%
FRW >100,000: 30%
ü Rwanda Social Security Board (RSSB)
o What are the rates of the Pension Scheme?
The Pension Scheme totals a rate of 8%. This is made up of 3% withheld from the
employee and 5% paid by the employer including payments to the occupational
hazards scheme. This is charged on all employment income except for transport
allowances and transport benefits in kind.
• What are the rates of the maternity leave scheme?
The Maternity Leave scheme totals a rate of 0.6%. This is made up of 0.3%
withheld from the employee and 0.3% paid by the employer. This is charged on
all employment income except for transport allowances and transport benefits
in kind.
• What are the rates of the medical scheme?
The Medical Scheme totals a rate of 15%. This is made up of 7.5% withheld
from the employee and 7.5% paid by the employer. This is charged on the
‘Basic salary’.
• Calculation of net salary
Net salary= Gross salary - Deductions
a) Methods of payroll payment
– Cash payment

176 Experimental Version

 – Mobile money
– Cheque
– Electronic transfer

7.7. Additional information for teachers

ü Payment of salary in case of insolvency
In case of insolvency of the employer, an employee is paid his/her salary in
accordance with relevant Laws.
ü Seizure and assignment of salary
An employer cannot seize the employee’s salary, except for circumstances
provided for by this Law.
Except for compulsory deductions and other possible charges in accordance
with the provisions of employment contract, an employer seizes employee’s
salary in case of forced execution of court judgement or in case of voluntary
transfer.
ü Prescription of salary payment
Salary which is not paid in two (2) years from the date the employee is entitled
to it, cannot be claimed. However, the prescription period referred to above, is
interrupted by one of the following reasons:
v The employer starts calculating all amounts agreed with the
employee as the debt owed;
v The case is submitted to employees’ representatives in an enterprise
that has them;
v The labour inspectorate has been requested to settle the dispute
amicably and has not given its conclusions yet;
v The employee’s case is pending before the court.

7.8. End unit assessment (answers)

Q 1:
Basic salary: FRW500,000
Housing benefit: FRW 500,000*20/100= FRW 100,000
Transport benefit: FRW 500,000*10/100=50,000 RWF
Gross salary/ taxable income: basic salary +allowances

Experimental Version 177

Gross salary= FRW 500,000+ FRW 150000
Gross salary= FRW 650000
PAYE:
0-30,000:0%= FRW 30000*0/100=0
30,001-100000:20%= FRW 70000*20/100= FRW 14000
100001 and above: FRW 550000*30/100= FRW 165000
Total PAYE=0+ FRW 14000+ FRW 165000
Total PAYE= FRW 179000

178 Experimental Version

Q 2: payroll
MRK ltd COMPANY
Jenda sector
Nyabihu Pay period: June 2021
District
Western Province Bank:GJ
P.O Box 1123 Gisenyi
TEL; +250788888888-722222222
Payroll
Balance
Allowances Deductions
Account Basic Gross total CBHI due
S.NO NAMES RSSB Pension RSSB Maternity
Net salary
number salary Accommodation Transport salary P.A.Y.E deductions
5% 3% 0.3% 0.3% 0.5%
001 MAHORO 32 276,000 55200 27600 358,800 91640 16560 9936 993.6 993.6 102569.6 256,230 1281.152 254,949
002 UMUHOZA 123 235,000 47000 23500 305,500 75650 14100 8460 846 846 84956 220,544 1102.72 219,441
Allowances Deductions
CBHI
S No Name A/C No Basic sal Gross sal RSSB Pension RSSB Maternity Total deduction Net sal Bal due
Accommodation Transport P.A.Y.E

003 KAGABO 309 400,000 80000 40000 520,000 140000 24000 14400 1440 1440 155840 364,160 1820.8 362,339

004 KARAGIRE 406 260,000 52000 26000 338,000 85400 15600 9360 936 936 95696 242,304 1211.52 241,092

Total 1,171,000 234200 117100 1,522,300 392690 70260 42156 4215.6 4215.6 439061.6 1,083,238 5416.192 1,077,822

Prepared by………. Cheched by………………… Approved by………….

Experimental Version 179

Workings of MRK ltd company payroll

Working for calculation of Gross salary

MAHORO = basic salary FRW276000

accommodation
Add FRW 55200
allowance
Add transport allowance FRW 27600
Gross salary FRW358800
UMUHOZA = Basic salary FRW235000
accommodation
Add FRW 47000
allowance
Add transport allowance FRW 23500
Gross salary FRW305500
KAGABO = basic salary FRW400000
accommodation
add FRW80000
allowance
add transport allowance FRW40000
Gross salary FRW520000

Working for calculation of Pay as you earn (PAYE)

MAHORO 1 St Step 30000 X 0% FRW0

2 nd step 100000-30000=70000X20% FRW14000
3rd step 358800-100000=258800x30% FRW77640
FRW91640

UMUHOZA 1 St Step 30000 X 0% FRW0

2 nd step 100000-30000=70000X20% FRW14000
3 step
rd
305500-100000=205500x30% FRW61650
FRW75650

KAGABO 1 St Step 30000 X 0% FRW0

2 step
nd
100000-30000=70000X20% FRW14000
3rd step 520000-100000=420000x30% FRW126000
FRW140000

Working for Calculation of RSSB Pension

180 Experimental Version

 (358800-27600)
MAHORO Employer (Gross salary-transport allowance) *5%
*5%
(358800-27600)
Employee (Gross salary-transport allowance) *3%
*3%

(305500-23500)
UMUHOZA Employer (Gross salary-transport allowance) *5%
*5%
(305500-23500)
Employee (Gross salary-transport allowance) *3%
*3%

(520000-40000)
KAGABO Employer (Gross salary-transport allowance) *5%
*5%
(520000-40000)
Employee (Gross salary-transport allowance) *3%
*3%

Working for Calculation of RSSB Maternity

(358800-27600)
MAHORO Employer (Gross salary-transport allowance) *0.3%
*5%
(358800-27600)
Employee (Gross salary-transport allowance) *0.3%
*3%

(305500-23500)
UMUHOZA Employer (Gross salary-transport allowance) *0.3%
*5%
(305500-23500)
Employee (Gross salary-transport allowance) *0.3%
*3%

(520000-40000)
KAGABO Employer (Gross salary-transport allowance) *0.3%
*5%
(520000-40000)
Employee (Gross salary-transport allowance) *0.3%
*3%

Working for Calculation of Total deduction

MAHORO
PAYE FRW91640
Add RSSB Pension FRW9936
Add RSSB Maternity FRW993.6
Total FRW102569.6

Experimental Version 181

UMUHOZA
PAYE FRW75650
Add RSSB Pension FRW8460
Add RSSB Maternity FRW846
Total FRW84956

KAGABO
PAYE FRW140000
Add RSSB Pension FRW14400
Add RSSB Maternity FRW1440
Total FRW155840

Working for Calculation of Net salary

MAHORO Net salary=Gross Salary-Total deduction

FRW358800
LESS FRW102569.6
FRW256230.4

UMUHOZA Net salary=Gross Salary-Total deduction

FRW305500
Less FRW84956
FRW220544

KAGABO Net salary=Gross Salary-Total deduction

FRW520000
-FRW155840
FRW364160

Working for Calculation of CBHI

MAHORO Net salary FRW256230

* 0.5%
FRW1281.15

UMUHOZA Net salary FRW220544

* 0.5%
FRW1102.72

182 Experimental Version

KAGABO Net salary FRW364160
* 0.5%
FRW1820.8

Working for calculation of balance due

MAHORO Net salary FRW256230

Less CBHI FRW1281.15
FRW254948.85

UMUHOZA FRW220544
Less FRW1102.72
FRW219441.28

KAGABO FRW364160
Less FRW1820.8

Experimental Version 183

7.9. Additional activities (Questions and answers)
7.9.1. Remedial activities
Q1. What is a payroll
Q2. Define the term deduction
Q3. Differentiate gross salary from net salary
Q4. Aline receives monthly basic salary amounting FRW 100 000, Aline is also
allowed a car and an accommodation by the company

Required:
a) Who pays the P.A.Y.E to RRA?
b) Compute her contribution for RSSB pension and occupation hazard
c) Determine the amount paid at RRA.
d) Determine her net salary.
Q5. What are the benefits offered by RSSB?

Answers
Q1. Payroll is a list of company’s employees and their related details of amount
they are to be paid.
Q2. An amount that to be deducted from taxable income so as to compute the
tax base.
Q3. Gross salary is the amount received by an employee without any deductions
while the net salary is the amount that an individual receives after all deductions
have been taken out.
Q4. The P.A.Y.E is paid by Aline through her employer
Basic salary =FRW 100,000
Transport allowance =FRW 100,000*10%=FRW 10,000
Accommodation allowance = FRW 100,000*20%=FRW 20,000
Gross salary = FRW 100,000 +FRW 10,000 +FRW 20,000=FRW 130,000
Contribution to the RSSB Pension employer withhold Aline = (FRW130,000
–FRW10,000) ×3%=FRW 3,600
Contribution of RSSB pension and occupation hazard employer paid for her
contribution == (FRW130,000 –FRW10,000) ×5%=FRW 6,000

184 Experimental Version

c) Tax to be paid to the tax authority
(FRW 100,000- FRW 30,000) *20%= FRW 70,000*20%= FRW 14,000
(FRW 130,000- FRW 100,000) *20%= FRW 30,000*30%= FRW 9,000
Total P.A.Y.E=FRW 14,000+FRW 9,000=FRW 23,000
d)Net salary=FRW130,000 -(FRW23,000 +FRW 3600) =FRW103,400

Q5.
- Old age
- Survivorship
- Work injury
- Work-related disease
- Health insurance

7.9.2. Consolidation activities

Q1. Kanziga is entrepreneur. Her small business is located in HUYE District.
She employs one employee called Baziga. At the end of every month, she pays
him a basic salary of FRW 35,000, a transport allowance of FRW 5,000, and
a housing allowance of FRW 8,000. As a student of level three accounting,
calculate:
a) The gross salary paid by Kanziga to Baziga at the end of one month
b) The net salary received by Baziga after paying compulsory deductions
(PAYE, Pension, and Maternity leave only).

Answer
Q1.
– The gross salary paid by Kanziga to Baziga at the end of one
month = basic salary+ transport allowance + housing allowance =
FRW 35,000 + FRW 5,000 + FRW 8,000 = FRW 48,000
– PAYE= (FRW 48,000 – FRW 30,000) 20% = FRW 3,600
– PENSION participation paid by employee = (gross salary – transport
allowance) 3% = (FRW 48, 000 - FRW 5,000) 3% = FRW 1290
– Contribution for Maternity leave = (FRW 48, 000 - FRW 5,000) 0.3%
= FRW 129
– The net salary received by Baziga at the end of every month
=GS – (PAYE + RSSB Pension OF 3% + ML OF 0.3%) = FRW48,000
- FRW 3,600 - FRW 1290 - FRW 129 = FRW 42,981

Experimental Version 185

7.9.3 Extended activities
Question:
RUHIRE co ltd has employed 6 workers as follows: Thomas worked 37 hour
per week, Paul, Aimé and John, they worked 40 hour per week for each.
Louis and Peter worked 44 hour per week, and the rate per hour is FRW 720.
Every worker received money for accommodation as follow: Thomas FRW
8,000, Paul, Aimé and John received FRW 10,000for each while Peter and
Louis received FRW 12,000for each.
They received also money for transport respectively: Thomas FRW 12000,
Paul, Aimé and John FRW 14000 for each, Louis and Peter received FRW
15000 for each. Each worker received also FRW 10000 for communication.
Paul, Louis, Aimé and Tomas received FRW 8000 for overtime pay for each.
Thomas and Peter received advance of FRW 50000 before the end of the
month.
As accountant of RUHIRE co ltd, prepare a payroll of those workers, at the end
of March 2022.

Additional information
• Every worker must pay RAMA
• Pension and maternity must be paid by taking gross salary minus
transport.
• Employer must withhold CBHI to the employees according to Rwandan
labour law
• PAYE is deducted according to Rwandan labour law
• Use your name as accountant of RUHIRE co ltd
• Manager of RUHIRE co ltd is BAZAMBANZA Athanase

186 Experimental Version

Ans Q1: payroll

RUHIRE Co ltd

Deductions
Tot. dedu Net sal CBHI Bal. due
over- Advance
Basic Acc. Tran. Gross
S/ No Names hrs Rate time Co. all
salary All all salary RSSB Pension RSSB Maternity RSSB medical
pay
PAYE

5% 3% 0.3% 0.3% 7.5% 7.5%

1 Thomas 37 720 26640 8000 8000 10000 12000 64640 6928 2632 1579.2 157.92 157.92 1998 1998 10663.12 53976.88 269.9 50000 3,706.98

2 Paul 40 720 28800 10000 8000 10000 14000 70800 8160 2840 1704 170.4 170.4 2160 2160 12194.4 58605.6 293 58312.57

3 Aime 40 720 28800 10000 8000 10000 14000 70800 8160 2840 1704 170.4 170.4 2160 2160 12194.4 58605.6 293 58312.57

4 John 40 720 28800 10000 10000 14000 62800 6560 2440 1464 146.4 146.4 2160 2160 10330.4 52469.6 262.3 52207.25

Deductions
over- Tot. dedu Net sal CBHI Advance Bal. due
Basic Acc. Tran. Gross
S/ No Names hrs rate time Co. all PAYE RSSB Pension RSSB Maternity RSSB medical
salary all all salary
pay
5% 3% 0.3% 0.3% 7.5% 7.5%

5 Louis 44 720 31680 12000 8000 10000 15000 76680 9336 3084 1850.4 185.04 185.04 2376 2376 13747.44 62932.56 314.7 62617.9

6 Peter 44 720 31680 12000 10000 15000 68680 7736 2684 1610.4 161.04 161.04 2376 2376 11883.44 56796.56 284 50000 6,512.56

Total 176400 62000 32000 60000 84000 414400 46880 16520 9912 991.2 991.2 13230 13230 71013.2 343386.8 1717 100000 246,909.83

Prepared by: Approved by:

MANIRAGUHA john BAZAMBANZA Athanase

Experimental Version 187

188 Experimental Version
UNIT 8 RETIREMENT, OCCUPATION
HAZARD BENEFIT AND
DISMISSAL COMPENSATION

8.1. Key unit competence: Ability to compute retirement,

occupation hazard benefits and dismissal compensation

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

Students were introduced in senior 4 (unit 3) to the Taxation of employment
income. So, with this prior knowledge, skills, attitudes and values it should
help them to compute retirement, occupation hazard benefits and dismissal
compensation

8.3. Cross-cutting issues to be addressed:

INTRODUCTION
Note: The examples below are just to guide you on how to address cross-

TO ACCOUNTING
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 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
our background, economic or social setup have right to develop an ethical
understanding of Rwandan system that do not discriminate. Students need to

Experimental Version 189

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 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.

8.4. Guidance on introductory activity

This introductory activity is intended to:
1. Provide interest and motivation to the students about computation of
retirement, occupation hazard benefits and dismissal compensation.
2. Focus students’ attention on meaning, purpose of retirement, occupation
hazard benefits and dismissal compensation.
3. Convince students about what they will benefit from the unit.
4. Build on previous knowledge, skills, values, and attitudes to help the
teacher to assess the students’ prior knowledge and help to link with the
new content.
5. The new content can help to arouse students’ interest about what to
expect in the new content. That can be answered in one lesson.
6. Gradually, over a period as the unit progresses. At this point, there is no
right or wrong answers as students will gradually get more appropriate
answers progressively as they go through the unit.

Use an appropriate method such as small groups or pairs and provide students
with Unit 8 introductory activity, give clear instructions to the activity. They
read a scenario about RSSB, discuss about what could be done by RSSB to
be certain on information provided taking into consideration that the branches
currently managed by Rwanda Social Security Board that could be very difficult
to find and advise her on what to do in order to compute retirement, occupation
hazard benefits and dismissal compensation.
During grouping or pairing, mix boys and girls and students with different abilities.

190 Experimental Version

During the discussion, make sure everyone is following and actively participating.
Those who are not acting may have to listen attentively without disturbing and
should applaud/congratulate 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.
Harmonize their findings or answers, and help them draw conclusions/summary
to questions. Answer or address any questions or challenges about the activity.
Guide them to make notes in their books referring to students’ book.
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. Rwanda Social Security Board (RSSB) was established by the law
No.45/2010 of 14/12/2010 that determines its mission, organization
and functioning. This institution was established after the merger of
Social Security Fund of Rwanda (SSFR) with La Rwandaise d’Assurance
Maladies (RAMA). The above Law was modified and completed by the
law No 04/2015 of 11/03/2015 and gave RSSB the responsibility to
manage Community Based Health Insurance (CBHI). The mandate of
the institution is to administer social security in the country.
2. The branches currently managed by RSSB: Pensions, occupational
hazard insurance, medical insurance, Community-Based Health
Insurance (CBHI) and maternity leave benefits insurance.

8.5. List of lessons/sub-heading

Number
Lesson title/Sub- Learning objectives (from the syllabus
No
of
heading or set according to the lesson title)
periods
Identify the introduction to Rwanda Social
1 Introduction to RSSB 4
Security Board (RSSB)
Pension scheme Identify benefits and conditions of pension
2 4
scheme
Retirement benefit Demonstrate the computation and Survivors’
3 4
calculations benefit of retirement benefit

Experimental Version 191

 occupation hazard Demonstrate the computation of occupation
4 4
computations hazard benefit
Dismissal compensation Compute the dismissal
5 4
(terminal benefits) compensation(terminal benefits)
End Unit Assessment 3
Total number of periods 23

Lesson 1: Introduction to RSSB

a) Learning objective

Identify the introduction to Rwanda Social Security Board (RSSB)

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

192 Experimental Version

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 there 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

RSSB is expected to manage and promote pension, medical insurance,
occupational hazards insurance, maternity leave insurance, contributions before
retirement and other necessary schemes. Its main responsibilities are:
– To register employers, employees, beneficiaries and self-insured
persons in various schemes managed by RSSB;
– To collect and manage contributions as provided by laws;
– To receive and manage donations;
– To pay benefits for or to beneficiaries;
– To make investments in accordance with laws;
– To contribute to the elaboration of social security policy;
– To advise the Government on matters relating to social security;
– To establish relations and collaborate with other regional or international
institutions with similar mission.
– To continue providing medical care for retirees who have monthly
pension benefits.

e) 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 another activity.

Answers to application activity 8.1

Experimental Version 193

 1. RSSB Corporate Values are:
• Integrity
• Collaboration
• Accountability
• Respect
• Excellent
2. The mission of RSSB is to manage and promote social security in Rwanda
3. The branches currently managed: pensions, occupational hazard
insurance, medical insurance, Community-Based Health Insurance
(CBHI) and maternity leave benefits insurance

Lesson 2: Pension scheme

a) Learning objective

Identify benefits and conditions of pension scheme

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 introduction to RSSB. That will
help to identify benefits and conditions of pension scheme lean in this lesson.
Besides, in lesson 7 of this syllabus, student learnt how to prepare payroll which
has enough elements related to different RSSB branches.

d) Learning activities

Activity 8.2
– 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

194 Experimental Version

 objective, help them draw conclusions/summary on when to identify
benefits and conditions of pension scheme. Answers or address any
questions or challenges about the activity. Guide them to make notes
in referring in their students’ book.

Answer to Activity 8.2

Q1. All employers must register for the pension scheme, occupational hazards
and maternity leave. Public institutions must also register for the medical
scheme. In addition, private enterprises may also voluntarily apply to register for
the medical scheme. Individuals may also voluntarily apply to join the pension
scheme if they are not currently paying into the pension scheme.
Q2. An employer is required to register with RSSB within seven (7) working
days of starting a business.

e) Application activities 8.2

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 8.2
1. Enrolling for pension benefits is compulsory for the following individuals:
• All employees governed by the Law regulating labour in Rwanda
regardless of nationality, type of contract, duration of the contract or
the number of wages;
• Employees governed by the General Statutes for Public Service and
civil servants governed by special statutes;
• Political appointees;
• Employees of international organizations, national non-governmental
organizations, international non-governmental organizations, faith-
based organizations and employees of Embassies accredited to
Rwanda.
2. The law provides beneficiaries of pension benefits in case the affiliate
dies and these are restricted to spouses, orphans, and parents in case
the deceased does not have a spouse or any child.
3. The pension scheme totals a rate of 8%. This is made up of 3% withheld

Experimental Version 195

 from the employee and 5% paid by the employer, including payments to
the Occupational Hazards Scheme

This is charged on all employment income except for transport allowances and
transport benefits in kind

Lesson 3: Retirement benefit calculations

a) Learning objective

Demonstrate the computation and Survivors’ benefit of retirement benefit

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.

d) Learning activities

Activity 8.3
• 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
• 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 retirement benefit
calculations. 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. 38% x FRW 100,000 = FRW 38,000 per month pension for the rest of
his life

196 Experimental Version

 e) Application activities 8.3

This activity can be given as a normal individual or group activity, where students
demonstrate the computation and Survivors’ benefit of retirement benefit.
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 8.3

Q1: The following are eligible for survivors’ pension:
• The surviving spouse who did not divorce the deceased
• The children who are unmarried, not working for a salary and are either
the deceased’s legitimate children, legally adopted or those born
outside wedlock but recognized as his or hers by law. They must be
aged less than 18 years old, or less than 25 years old if still in full time
education and without age limit if they are disabled and cannot work
for a salary.
• The deceased’s own or adopted parents i.e., if he or she left no wife or
husband or children.

Q2: Calculation of survivors’ pension:

Survivors’ pensions are calculated in percentages based on the pension which
the deceased was receiving or was eligible to receive at the time of death. The
percentages are:
• 50% of the old age pension for the widow
• 25% for each child (where the other remaining parent is still alive)
• 50% for each child (where both parents are now deceased)
• 25% for each direct or adopted parent when the deceased leaves no
wife, husband or children

Lesson 4: occupation hazard computations

a) Learning objective

Demonstrate the computation of occupation hazard benefit

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

Experimental Version 197

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 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, for demonstrate the computation
of occupation hazard benefit. 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

Q1:
Occupational hazards are a scheme under RSSB which provides assistance to
employees and employers in the risk of illnesses or accidents at the workplace.
The benefits covered by RSSB under occupational hazards scheme are:
medical care, daily sickness allowances, incapacity social security benefits and
survivors’ benefits.
Q2.
A contribution of 2% of salary is paid on behalf of mandatory members by
employers. There is no employee contribution towards this benefit.
Q3:
Benefits for occupational hazards are:
• Free medical care
• Daily sickness allowances

198 Experimental Version

 • Incapacity social security benefits
• Incapacity lump sum benefits
• Survivors’ benefits

e) Application activities 8.4

This activity can be given as a normal individual or group activity, where students
demonstrate the computation of occupation hazard benefit. 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 8.4
Q1. The survivor’s allowances are fixed percentages of salary, as follows:
• 30% for the widow or widower
• 15% for each child of the father or mother (with the other remaining
parent surviving)
• 20% for each child of father and mother (with both parents deceased)
• 10% for each direct or adopted parent

Q2. The temporary incapacity benefit is:

• 75% of average daily earnings in the last 3 months payable until full
recovery or certificate of permanent incapacity for a maximum of 180
days.
• The permanent incapacity benefit is: a pension payable of 85% of
average monthly earnings in the last 3 months payable.
• Partial permanent incapacity benefit: is given according to the degree
of incapacity in proportion to the pension the beneficiary would get if
they had been permanently incapacitated:
- If the degree of the incapacity is at least 15% - the percentage of full
pension according to the degree of incapacity.
- If the degree of the incapacity is less than 15% - then a lump sum payment
equal to 3 years’ pension according to the degree of incapacity is awarded
to the beneficiary.

Lesson 5: Dismissal compensation (terminal benefits)

a) Learning objective

Compute the dismissal compensation(terminal benefits)

Experimental Version 199

 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 unit 7 students covered how to prepare a payroll according to organizational

policy. This will help to compute the dismissal compensation

d) Learning activities

Activity 8.5
– 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 computing the
dismissal compensation(terminal benefits)
– Answers or address any questions or challenges about the activity.
Guide them to make notes in referring in their students’ book.

Answers to activity 8.5

Terminal benefits can be expressed as benefit given to employee upon the ending
of the employment relationship as a result of economic reasons, technological
transfer or sickness

e) Application activities 8.5

This activity can be given as a normal individual or group activity, where students
compute the dismissal compensation(terminal benefits). 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.

200 Experimental Version

Answers to Application Activity 8.5

Q1. Answer:From 2003 to 2022: 19 years

From 0 to 5: 2 times monthly salary
From 5 to 10: 3 times monthly salary
From 10 to 15: 4 times monthly salary
From 15 to 20: 5 times monthly salary
From 20 to 25: 6 times monthly salary
Monthly average salary: FRW 6,600,000:12=FRW 550,000
Dismissal compensation: FRW 550,000FX5=FRW 2,750,000
Q2. Benefits are calculated as follows:
- Two (2) times the average monthly salary for the employee having less
than five (5) years of service with the same enterprise;
- Three (3) times the average monthly salary for the employee having
between five (5) and ten (10) years of service with the same enterprise;
- Four (4) times the average monthly salary for the employee having between
ten (10) and fifteen (15) years of service with the same enterprise;
- Five (5) times the average monthly salary for the employee having between
fifteen (15) and twenty (20) years of service with the same enterprise;
- Six (6) times the average monthly salary for the employee having between
twenty (20) and twenty-five (25) years of service with the same enterprise;
- Seven (7) times the average monthly salary for the employee having over
twenty-five (25) years of service with the same enterprise.

Skills lab activity 5

Guidance on the skills lab activity.
In conducting this skills lab activity, you can either invite a resource person
from RSSB for students to interview him/her or request students to conduct
research on the internet where needed.
i) Build

Given that students visit the RSSB website,

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

Experimental Version 201

 – 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.
ii) Practice
– Guide students on accessing the real website
– Ensure that internet is connected for all
– 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 their fellows
iv) Conclusion
The teacher emphasizes on the objective of the research reminding students
that they have to follow those steps in identifying the retirement, occupation
hazard profits and dismissal compensation benefits for employees in Rwanda.
The following are key areas for reference:
– Retirement of employees
– Occupation hazard profits of employees
– Dismissal compensation benefits for employees according to Rwanda
Labor Law

8.6. Summary of the unit

• Rwanda Social Security Board (RSSB)
Rwanda Social Security Board (RSSB) was established by the law No.45/2010
of 14/12/2010 that determines its mission, organization and functioning.
Mission of Rwanda Social Security Board (RSSB)
The mission of RSSB is to manage and promote social security in Rwanda
Except the contributions for occupational hazard and CBHI, all those contributions
are paid by both employee and employer as shown in the table below:
RSSB Occupational hazard Contributions
Pension and occupational hazard
Employee 3% - 3%
Employer 3% 2% 5%
Total 6% 2% 8%

202 Experimental Version

 Medical scheme
Employee 7.5% - 7.5%
Employer 7.5% - 7.5%
Total 15% - 15%
Maternity leave insurance
Employee 0.3% - 0.3%
Employer 0.3% - 0.3%
Total 0.6% - 0.6%
Community-Based Health Insurance (CBHI)
Employee 0.5% - 0.5%
Employer -
Total 0.5% - 0.5%
• Pension scheme
Pension scheme: Pension scheme is a scheme of social security which help
workers who becomes old and incapable of working for a salary or become
invalid and incapable of living by working
• Retirement Benefits
If you have 15 years of service, then your pension will be 30% of your higher
average salary in the last 5 years. If you have more than 15 years of service, then
you earn an additional 2% for each additional year.
• Occupation hazard computations
An occupational hazard is a scheme under RSSB which provides assistance to
employees and employers in the risk of illnesses or accidents in the workplace.
A contribution of 2% of salary is paid on behalf of mandatory members by
employers. There is no employee contribution towards this benefit.
• Dismissal compensation (terminal benefits)
Terminal benefits can be expressed as benefit given to an employee upon the
ending of the employment relationship as a result of economic reasons,
technological transfer or sickness

Benefits are calculated as follows:

- Two (2) times the average monthly salary for the employee having less
than five (5) years of service with the same enterprise;
- Three (3) times the average monthly salary for the employee having
between five (5) and ten (10) years of service with the same enterprise;
- Four (4) times the average monthly salary for the employee having between
ten (10) and fifteen (15) years of service with the same enterprise;
- Five (5) times the average monthly salary for the employee having between
fifteen (15) and twenty (20) years of service with the same enterprise;
- Six (6) times the average monthly salary for the employee having between

Experimental Version 203

 twenty (20) and twenty-five (25) years of service with the same enterprise;
- Seven (7) times the average monthly salary for the employee having over
twenty-five (25) years of service with the same enterprise.

8.7. Additional information for teachers

Stakeholders of RSSB

Contributing Members
Contributing members of the medical scheme and their dependants expect to
receive promised medical benefits once they fall sick. Contributing members
are therefore most interested in the security of that promised medical benefits.
Consequently, it is critical to preserve capital while maintaining a strong funding
ratio. Short- and medium-term growth is a fundamental investment objective.

Pensioners and Other Beneficiaries

Pensioners who retire when they were in the medical scheme expect to continue
receiving their promised medical benefit payments throughout their eligible
life. Beneficiaries are most interested in the security of their income stream.
Consequently, it is critical to preserve capital to create an income flow that
keeps up with inflationary pressures over time, since RSSB will subsidize the
pensioners’ medical benefits.

Employers
Employers want to control labor costs. As such employers are interested in
the financial stability of RSSB such that rates of contribution will not increase,
making the cost of labor prohibitive relative to their competitive position within
the East African Region. Consequently, it is critical to preserve capital and to
maintain a strong funding ratio.

Government of Rwanda
The Government of Rwanda, as the “guarantor” of RSSB bears many risks with
regard to the proficiency of the organization and the security and investment
performance of the investment portfolio. Sufficient investment returns earned
at an appropriate risk level will ensure social benefits are secure, while the
Government is also interested in seeing long-term investments made to build
the nation. Consequently, it is critical to preserve capital, have a strong funding
ratio, with focus on both long-term capital gains as well as sufficient income
revenue to sustain real benefits.

204 Experimental Version

8.8. End unit assessment (answers)
Answers to end unit assessment activities

Q1. Advice:

He has right to the old age pension of:

Average monthly remuneration: (FRW 480000+ FRW 540000+ FRW
600000+ FRW 660000+ FRW 720000):60= FRW 50000
After 15years, there are 32-15=17 years
PENSION RATE: 30 %+( 2%x17) =64%
PENSION= FRW 50000x64%= FRW 32,000
Q2. Excluding the transport allowance, the pension base is:
FRW 57,000 + FRW 3,000 = FRW 60,000
The compulsory pension contributions include:
- FRW 60,000 * 3% = FRW 1,800 withheld on behalf of Innocent by Amahoro
- FRW 60,000 * 5% = FRW 3,000 paid by Amahoro
Q3. RSSB contributions are paid by all employees and employers and go
towards providing social security schemes such as pensions, cover for work
related accidents, diseases, medical services or disease compensation, or to
provide maternity leave benefits.
Q4. RRA is mandated to collect social security contributions on behalf of Rwanda
Social Security Board (RSSB). This is because social security contributions are
also paid on the basis of employment income. Therefore, it makes it easier for
taxpayers to declare PAYE and social security contributions on one portal at the
same time. RRA then transfers all social security contributions directly to RSSB.
Q5. Amount each of them is entitled to:
Average daily earnings :( FRW340,000+ FRW 230,000+ FRW 450,000):90=
FRW11,333
Average monthly remuneration: FRW11,333X30= FRW339,990
ü AMANI’s temporary incapacity benefits: Average daily earnings x 75%
x 30
Daily temporary incapacity benefits: FRW11,333x75%= FRW8,500

Experimental Version 205

Temporary incapacity benefits for 30 days: FRW8,500x30= FRW255,000
ü ALICE’s total permanent incapacity benefits: Average monthly earnings
x 85%
FRW339,990X85%= FRW288,991.5
MUGISHA’s partial permanent incapacity benefits: Average monthly earnings
x85% x 25%= FRW339,990x85%x25%= FRW72,248

8.9. Additional activities (Questions and answers)

8.9.1. Remedial activities
1. What is the Community Based Health Insurance?
2. Give any 3 Objective of the Community Based Health Insurance
3. What are the requirements for pensioner to access monthly old-age
benefits?

Answer
Q1. Community Based Health Insurance (Mutuelle de santé) is a solidarity
health insurance system in which persons (families) come together and pay
contributions for the purpose of protection and receipt of medical care.
Q2. Objectives of the Community Based Health Insurance:
– To help people with low-income access medical care at affordable cost
– To ensure healthcare to all nationals
– To increase Government financing capacity for health sector.
Q3. Requirements for pensioner to access monthly old-age benefits:
- Having attained at least 65 years of age
- To be insured with the RSSB for at least 15 years.
- Cessation of work salaried

8.9.2. Consolidation activities

Q1. Kagina and Mukamana worked in the Banque Populaire du Rwanda (BPR)
and attained the age of 65 years and 62 years respectively. Their average
monthly salary for last three (3) years were respectively FRW 360,080 and
FRW 299,000.

206 Experimental Version

Kagina started a job in 1989 and Mukamana started a job in 1995. Last year for
2018 they requested for oldness pension and retired from job.
Calculate the pension fees allowed to both one by one.
Q2. ANNA has been employee in the company, respectively 32 years. He has
respectively attained 68 years and wishes to retire ended 2019 from employment.
Five years preceding the admissibility to the pension he received the following
salaries:
• 5th year (2015): FRW380,000
• 4th year (2016): FRW440,000
• 3th year (2017): FRW200,000
• 2nd year (2018): FRW460,000
• 1st year (2019): FRW220,000

Advise him on the benefits and amounts he is entitled to.

Q3. KANEZA is an employee in KEZA maize LTD company from year 2004 to
march 2022 with an annuary average salary of FRW 3,100,000. Last week he
has received a dismissal notice due to the economic issues of the company.
Required: Calculate the KANEZA’s dismissal compensation.

Answer:
Q1.
Calculation of the Pension KAGINA
Data for KAGINA:
KAGINA’s monthly salary: FRW 360,080
He started in 1989
He ended in 2018
Working years: 2018-1989=30 years
He has been employed for 15 years beyond the 15 years which entitles him to
30% of his average monthly earnings. Thus, he gets an increase of 2% for every
additional year he has worked ; making 15x2% = 30%
The rate to apply becomes: 30% + 30% = 60 %KAGINA
pension=FRW360,080x60%= FRW216,048
Calculation of the Pension for MUKAMANA

Experimental Version 207

Data for MUKAMANA:
MUKAMANA’s monthly average salary: FRW299,000
He started in 1995
He ended in 2018
Working years: 2018-1995=24 years
He has been employed for 9 years beyond the 15 years which entitles him to
30% of his average monthly earnings. He gets an increase of 2% for every
additional year he has worked: 9x2% = 18%.
The rate to apply becomes: 30% + 18% = 48%
MUKAMANA Pension=FRW299,000X48%= FRW143,520
Q2. ADVICE:
He has right to the old age pension.
• Amount of pension:
Average monthly earnings: (FRW380,000+ FRW440,000+ FRW200,000+
FRW460,000+ FRW220,000):60= FRW28,333
After 15years, there are 32-15=17 years
Pension rate: 30%+(2%x17) =64%
Pension= FRW28,333x64%= FRW18,133
Q3.
Time worked: from 2004 to 2022 making 19 years
From 0 to 5: 2 times monthly salary
From 5 to 10: 3 times monthly salary
From 10 to 15: 4 times monthly salary
From 15 to 20: 5 times monthly salary
Monthly average salary: FRW3,100,000:12=FRW258,333
Dismissal compensation: FRW258,333 x5=FRW1,291,665

208 Experimental Version

 8.9.3 Extended activities
Question:
After the work accident, ZUZU, MIMI, and DIDI were seriously hurt. ZUZU was
hospitalized during 30 days. MIMI’s incapacity was total and that of DIDI, less
than his colleague was evaluated to 14%. Each of them received the following
monthly wages during the three (3) months preceding their accident: July: FRW
270,000; August: FRW 360,000; September: FRW 450,000.
Advise them on their benefits and amounts each of them is entitled to.

Answer:

a) Advice:

ü ZUZU will have right to the temporary incapacity benefits for 30 days and
she will get it once.
ü MIMI will have right to the total permanent incapacity benefits she will get it
for her life.
ü DIDI will have right to the partial permanent incapacity benefits she will get
lump sum once because her incapacity is under 15%.
b) Amount each of them is entitled to:

Average daily earnings: (FRW270,000+FRW360,000+FRW450,000):90=

FRW12,000
ü ZUZU’s temporary incapacity benefits:
Daily temporary incapacity benefits: FRW12,000*75%= FRW9,000
temporary incapacity benefits for 30 days: FRW9,000*30= FRW270,000
ü MIMI’s total permanent incapacity benefits: Average monthly earnings x 85%
FRW360,000 x 85%= FRW306,000
ü DIDI’s partial permanent incapacity benefits: MMR*85%*14%*12*3
ü FRW 360,000*85%*14%*12*3= FRW 1,542,240

Experimental Version 209

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March Wednesday, 2022, from https://www.rra.gov.rw/: https://www.rra.gov.rw

210 Experimental Version

RRA. (2022, March 30). rra.gov.rw/index.php?id=32. Retrieved from rra.gov.
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Experimental Version 211