The impending implementation of value added tax (VAT) by the Rwanda Revenue Authority (RRA) has caused a stir among timber dealers.
The timber dealers called for revision of the VAT rate to less than the current 18 per cent. The dealers and furniture makers say many of them operate small businesses that would be affected by the tax if it is enforced.
However, Emmy Mbera, the EBM project co-ordinator at RRA, said the 18 per cent VAT rate is a law that affects all businesses, including timber traders, and so should be embraced by everyone.
This was during a one-day tax education workshop for representatives of timber dealers and carpenters’ co-operatives from across the country conducted by RRA on Monday in Kigali. The sensitisation workshop sought to educate the dealers and carpenters on VAT payment and using Electronic Billing Machine (EBMs) for invoicing in preparation for implementation of the policy. According to RRA officials, businesses with turnover of Rwf20 million per year and above will start paying VAT soon, which is paid per trimester.
Speaking at the workshop, Mbera said most timber traders have not yet embraced EBMs despite numerous sensitisation drives, claiming that the move would increase furniture prices and affect their profits. The dealers claim the move will force Rwandans to resort to buying imported products that are cheaper, and thus affect the Made-in-Rwanda initiative.
Valentin Ntijyinama, a carpenter in Gisozi, said prices were already going up, claiming if timber traders start paying VAT, the rates will rise further. “If I buy timber and pay VAT, I will automatically increase the price of furniture,” he said. The increase means that locally-made furniture could be more expensive compared to imported products.
Jean de la Croix Twagirayezu, the vice-president of ADARWA, a carpenters’ cooperative in Kigali, echoed similar sentiments, saying, “Customers will ignore the quality of our products and buy cheap, but fragile imported furniture.” He was, however, optimistic that RRA will reconsider the move and postpone implementation of the tax.
RRA’s Mbera advised those who claim that the tax will affect their earnings to show it through tax declaration. “It’s a matter of mindset change. The more we explain, the more they will understand and embrace the change,” he said, noting that the tax body would continue sensitising the group. He warned that whoever evades tax intentionally would be apprehended and penalised.
When the President visited Agakiriro Co-operatives last year, members raised challenges of high import taxes on timber and the sale of wood products on the black market.
Meanwhile, timber dealers have decried the many challenges affecting their businesses, including transport authorisation and other charges that hurt their earnings.