Withholding Taxes in Rwanda

At a glance

Main withholding categories and payment rules covered in this guide.^1,2,3

Source: Rwanda Revenue Authority: Types of Withholding Tax; Official Gazette of the Republic of Rwanda: Law No. 014/2025 amending Law No. 027/2022 establishing taxes on income (May 2025); Rwanda Development Board: Business Procedures in Rwanda — Paying Taxes^1,2,3

What withholding tax covers

Withholding tax is collected from income when a payment is made. The payer deducts the applicable amount and the recipient receives the balance. Rwanda’s tax rules distinguish between several categories rather than applying one rate to every payment. The category, tax base and sometimes the recipient’s status determine the amount withheld.^1,3

For specified payments, the Rwanda Revenue Authority (RRA) describes a 15% withholding rule for payments made by resident persons, including tax-exempt entities, to individuals who are not registered with the tax administration or to registered taxpayers without a recent income-tax declaration. Dividends have a separate 15% rule. These categories should not be read as a blanket 15% deduction from every invoice or payment.¹

Withholding is also relevant to cash-flow planning. It reduces the amount paid directly to a recipient, but tax withheld on payments to a person registered with the tax administration is deducted from that person’s income tax during the income-tax declaration. Keep payment and withholding records so the deduction can be reconciled.^1,3

Rates and tax bases

The rate and calculation base depend on the type of payment.¹

Source: Rwanda Revenue Authority: Types of Withholding Tax¹

For example, a public-tender invoice with a value of RWF 1,000,000 excluding VAT would have a standard 3% withholding amount of RWF 30,000. The calculation uses the invoice amount excluding VAT, not the total including VAT. For an import with a CIF value of RWF 2,000,000, a 5% calculation gives RWF 100,000. These examples illustrate the stated rates and bases; they are not additional tax categories.¹

Who withholds and when

For payments made to a recipient, the payer or withholding agent deducts the applicable tax when paying. In a public tender, the tax is withheld from the successful bidder’s invoice when the bidder is paid. The standard rate is 3% of the invoice excluding VAT; the RRA identifies a 15% rate where the recipient is not registered with the tax administration or is registered but has no recent income-tax declaration.¹

Commercial-import withholding follows a different process: the 5% tax on CIF value is paid at customs before the goods are released. The RRA describes the payment point, while the Rwanda Development Board lists import withholding among taxes payable at customs before release. The rule is distinct from other customs charges that may apply to an import.^1,3

Public procuring entities also withhold VAT at 18% on payments for taxable goods and services supplied by successful bidders. This is separate from income-tax withholding. When reviewing a tender payment, calculate the 3% withholding on the amount excluding VAT, and account for the VAT withholding separately where it applies.¹

Exemptions and credits

The RRA identifies exceptions to dividend withholding. These include dividends paid between resident companies and income distributed to holders of shares or units in collective investment schemes. The listed exceptions are specific to those distributions; they should not be treated as a general exemption for all payments between companies or to investors.¹

The RRA also lists unrealised foreign-exchange gains on outstanding loans among exceptions to its dividend withholding description. For other payments, the recipient’s registration and recent income-tax declaration status can affect whether the 15% rule applies. Establish the payment category and the relevant recipient status before calculating a deduction.¹

Where withholding has been made on a payment to a person registered with the tax administration, the RRA states that the amount is deducted from that person’s income tax during the income-tax declaration. Retain evidence of the gross payment, tax withheld and net amount paid so the credit can be matched to the recipient’s tax records.¹

Declarations and deadlines

Use this sequence when handling an ordinary payment subject to withholding:^1,3

• Classify the payment, such as a tender payment, dividend, board-member allowance or payment covered by the specified-payments rule.
• Check whether the recipient’s tax registration or recent income-tax declaration status changes the applicable rate.
• Identify the tax base. For tenders, use the invoice excluding VAT; for commercial imports, use CIF value; for gaming, subtract the amount invested from winnings.
• Deduct the tax when making the payment and record the gross amount, withholding and net amount paid.
• Pay ordinary 15% and 3% withholding amounts within 15 days after the month in which the payment was made.

Source: Rwanda Revenue Authority: Types of Withholding Tax; Rwanda Development Board: Business Procedures in Rwanda — Paying Taxes^1,3

The Rwanda Development Board’s tax guidance places withholding on other payments at 15% and withholding on public-institution payments at 3% in the monthly payment cycle. It gives a payment deadline of 15 days following the end of the month in which those payments were made. This is a payment deadline; keep declaration obligations separate when planning the tax process.³

Capital gains have their own timing rule. Under the 2025 amendment, the resident company whose shareholding structure changes, or the seller or buyer in specified asset transfers, withholds the tax. The company, shareholder or buyer identified by the law declares and pays within 15 days after the month in which the sale or transfer occurred. This deadline is tied to the transaction month.²

Capital gains and practical checks

Law No. 014/2025 sets capital gains tax at 10% of the gain. It covers direct or indirect sales or transfers of shares, licences, debt instruments, options, guarantees and similar assets. The law assigns responsibility for withholding according to the asset and transaction: it may be the resident company whose shareholding structure or shareholders change, or the seller or buyer for specified transfers.²

Before making a payment or completing a transaction, check:^1,2,3

• Which withholding category applies, rather than assuming a single rate covers all payments.
• Whether the rate depends on the recipient’s tax registration or recent income-tax declaration.
• Which base to use and whether VAT is excluded from it.
• Whether the payment follows the ordinary monthly schedule, the customs release process or the capital-gains deadline after a transfer.
• Whether the recipient can use tax withheld as a credit against income tax.

Source: Rwanda Revenue Authority: Types of Withholding Tax; Official Gazette of the Republic of Rwanda: Law No. 014/2025 amending Law No. 027/2022 establishing taxes on income (May 2025); Rwanda Development Board: Business Procedures in Rwanda — Paying Taxes^1,2,3

Withholding can affect supplier cash flow, tender reconciliation and the timing of cross-border imports. Rates and procedures can change, so confirm the treatment with the Rwanda Revenue Authority when a payment does not fit a listed category or when a transaction involves a potentially exempt distribution.^1,2,3