LESSONS FROM COOPERATION WITH THE PRIVATE SECTOR AND LOCAL GOVERNMENTS IN TAX COLLECTION OF SMEs

1. LESSONS FROM COOPERATION WITH THE PRIVATE SECTOR AND LOCAL GOVERNMENTS IN TAX COLLECTION OF SMEs By UZARAMA Vincent Deputy Commissioner in charge of Small and Medium Taxpayers - RRA ITD Africa Conference Kigali, 22-24 April 2009

2. Content • Background • Overview of the cooperation • Main achievements • Lessons learnt • Challenges • Conclusion

3. BACKGROUND • Widening the tax base and enhancing compliance is one of the most challenging tasks for a tax administration • Incomes from micro and Small businesses are not taxed adequately • Need to foster the cooperation with the private sector (PSF) and local governments (LG) • Rwanda Revenue Authority (RRA) has developed strong cooperation with PSF and LG through Tax Issues Forum (TIF) and Tax Advisory Councils (TAC) respectively

4. Overview of that cooperation • Private Sector • PSF is an umbrella organization for all businesses, it is therefore the right channel of any business related information exchange i.e Taxpayers recruitment, tax education, awareness campaign, etc • TIF has proved to be a platform to exchange information and to discuss all tax related matters

5. COOPERATION CONT…… • PSF census of businesses is an opportunity for RRA to identify those who are not registered taxpayers. • Through technical committee meetings RRA officers get opportunity to understand better issues related to an industry since all business sectors are represented in PSF • Likewise the PSF takes advantage to know clearly taxpayers rights and obligations, and filtrates that to the business community.

6. 2. LOCAL GOVERNMENTS • Local administration is structured into Provinces, Districts, Sectors, Cells and villages • With Local Governments RRA has good cooperation through Tax Advisory Councils (TAC) and Fiscal Decentralisation Steering Committee (FDSC)

7. 2. LOCAL GOVERNMENTS CONT • TACs are a forum in which local authorities, civil society and opinion leaders discuss tax related matters and come up with some concrete actions (compliance, service delivery, role of taxes, anti fraud awareness) • FDSC brings together senior officers from MINECOFIN, RRA and MINALOC and discusses tax related issues to ensure harmony in the tax system.

8. Main achievements • Reconciliation of information from fiscal census by LD countrywide has helped to update RRA taxpayers register • Revision and update of tax laws with the aim to bring new small businesses into the tax net. • Successful celebration of the taxpayers day every year

9. Lessons learnt • Decentralized Taxes have helped in small businesses identification and recruitment in the tax net • Strongcooperationbetween PSF, LG has been an instrument to improveSMEstaxcompliance. • Harmonisation of the taxation laws of both LG and RRA isnecessary to improve the system of taxation and to avoid possible double taxation • Enhancedinformaiton sharing has led to the expansion of the tax base

10. Challenges • Mobility (moving from one place to another) of small business owners • Inadequate taxation skills by local Governments staff • Lack of strong database and IT facilities in local government s

11. Conclusion • RRA appreciates the cooperation with the PSF and with LG, because it helps to address taxpayers concerns and insures a strong and sustainable tax administration for small and medium taxpayers. • Cooperation with the PS and LG can raise awareness of informal businesses on the importance of paying taxes. • Improved cooperation with local governments can facilitate and improve small businesses compliance management.

12. THANK YOU