The government of Rwanda has unveiled a series of tax reforms aimed at expanding the country’s revenue base and financing key development projects under the second National Strategy for Transformation (NST2). 

The reforms, which include new taxes and adjustments to existing levies, are designed to ensure sustainable economic growth while preparing the country for its long-term vision of becoming an upper-middle-income nation by 2035 and a high-income country by 2050.

Minister of Finance and Economic Planning Yusuf Murangwa emphasized that the changes will help Rwanda progressively increase its tax-to-GDP ratio, which currently stands at 14.6 percent—below the global benchmark of 16 percent. The goal is to raise this figure to at least 19 percent by 2029, aligning with the economic targets set in NST2.

“In the short term, by the end of NST2, we aim to reach at least 18% or 19%, with further increases in the following years, To achieve upper-middle-income status by 2035, Rwanda will need a tax-to-GDP ratio of around 23%.” He said. 

The reforms include higher taxes on select products and services such as cigarettes, alcoholic drinks, and airtime, as well as the introduction of new taxes on digital services. The government has also reinstated value-added tax (VAT) on ICT equipment, mobile phones, and cars, including hybrid vehicles, which will be subject to an 18 percent VAT rate starting in the 2025/2026 fiscal year.

Murangwa assured that the implementation of these tax measures will be phased to minimize the financial burden on taxpayers. For instance, the excise duty on airtime will increase gradually from the current 10 percent to 12 percent in 2024/2025, reaching 15 percent by 2027/2028. This adjustment may cause slight price increases, but officials believe the impact will remain manageable.

The tax reforms align with Rwanda’s broader economic transformation goals, ensuring that increased revenue is directed toward critical sectors such as infrastructure, education, and healthcare. Murangwa underscored that raising tax revenue is essential to facilitating Rwanda’s transition to the next stages of economic development.

Stephen Ruzibiza, CEO of the Private Sector Federation (PSF), noted that the phased implementation of tax measures will help businesses adapt, particularly those involved in manufacturing and technology. Additionally, he highlighted that broadening the tax base will distribute the tax burden more fairly and reduce reliance on existing taxpayers.

With these tax reforms, Rwanda aims to create a stronger financial foundation for sustainable growth, ensuring that government revenue keeps pace with the country’s ambitious development agenda.