Rwanda is taking a bold step toward full e-mobility by revising its tax policies to discourage aging hybrid vehicles and promote the adoption of electric cars. The government has proposed reintroducing an 18% VAT on hybrid vehicles while maintaining incentives for fully electric models.

Minister of State for National Treasury, Godfrey Kabera, announced the changes on Wednesday, March 19, while addressing Parliament. He explained that despite initial efforts to encourage hybrid vehicle adoption, many of the imported models are outdated and no longer serve their intended environmental purpose.

“Between July 2021 and July 2024, 45% of hybrid vehicles brought into the country were between 10 and 14 years old. When hybrids get too old, they mainly rely on fuel rather than battery power, which defeats our environmental objectives,” Kabera said.

The Rwanda Revenue Authority (RRA) reports that out of 7,172 hybrid and electric cars imported between 2020 and 2024, only 512 were fully electric—just 7% of the total. In contrast, over 92% were hybrids, most of which arrived after Rwanda’s 2021 decision to exempt them from VAT.

Recognizing this trend, the government is adjusting its approach. The new bill, which amends the 2023 VAT law, proposes scrapping tax exemptions for hybrid cars while introducing excise duties based on vehicle age.

Under the proposed structure, hybrid vehicles not exceeding three years from manufacture will be taxed at 5%, those between three and eight years at 10%, and those older than eight years at 15%. This measure aims to reduce the importation of outdated hybrids and encourage Rwandans to consider newer, more efficient options.

MP Odette Uwamariya suggested a more selective approach, asking whether newer hybrid models could still benefit from tax incentives. However, Kabera emphasized that Rwanda’s long-term goal is to transition fully to electric vehicles.

“In line with our commitment to environmental protection and reducing emissions, we want full-electric vehicles to become the preferred choice.” he said.

Parliament has approved the relevance of the bill, which will now be analyzed by a committee before being voted into law. If passed, these changes will reshape Rwanda’s automotive market, making electric vehicles the primary focus of the country’s sustainability efforts.