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Rwanda introduces new law to boost investment

Xinhua, July 3, 2015 Adjust font size:

Rwanda has put in place a new investment law that seeks to increase investment in priority sectors of the country's economy.

The law will see more investments channelled into the sectors of energy, ICT, transport and logistics, improved agriculture, tourism, manufacturing, business process outsourcing and real estate.

Initially, the previous law which has been in existence since 2005 was not adequately catering for the country's strategic sectors. But the new one is expected to extend generous incentives only to investors in Rwanda's priority areas of investment.

Speaking to reporters on Thursday shortly after briefing investors about the new law, Yvette Umutoni, head of investment promotion at the Rwanda Development Board, said the new investment law reduces corporate tax to 15 percent for priority sectors– up from the current 30 percent.

"Whether you invest in Kigali or in the countryside, the new Investment law provides 50 percent accelerated capital depreciation," she noted. "It focuses on increasing the level of investment for instance it provides an opportunity for emerging sectors such as Business Process Outsourcing to grow."

Umutoni stated that the law will also provide clearly defined tax holidays of up to seven years depending on which sector one has invested in and how much is involved.

Investors were keenly awaiting the new law, which was initiated in a bid to avail incentives to help shore up investment in priority sectors.

Article 15 of the law mandates RDB to facilitate the provision of fiscal and non-fiscal incentives to investors and aftercare services to investors from the time of registration to operational stage, among others.

Presently, Rwanda faces challenges with balance of trade, importing far more than the exports. The new law will seek to promote exports instead.

The post-Genocide country is regarded as one of the most generous countries for investors with figures indicating that the government was probably losing billions in tax holidays.

According to a report, released in 2011 by the Rwanda Institute of Policy Analysis and Research and ActionAid International, in 2008 and 2009, Rwanda lost over 234 million U.S. dollars in tax incentives.

The new investment law is expected to create more employment opportunities, increasing VAT, Personal Income Tax Collections and as well increase government revenue collection and economic growth.

Official data show last year Rwanda attracted 500 million U.S. dollars worth of investment and the government is targeting to double the investment in 2015.

According to 2014 World Bank's Doing Business ranking, Rwanda was ranked 46 out of 189 economies surveyed globally, registering improvements in the ease of obtaining construction permits, getting electricity and getting credit. Endi