The centre for tax analysis in developing countries

Overseas Development Institue Institue for Fiscal Studies

In May 2022 the Government of Rwanda published its tax expenditure report for 2020/21. The report was collaboratively produced with TaxDev and published by Rwanda's Ministry of Finance and Economic Planning as an annex to the Budget Framework Paper.

The report finds that total tax expenditure has continued to grow, forming 19.3% of potential tax revenue in 2020/21. The increase in import duties tax expenditure compared to 2019/20 is partly explained by the Stays of Application on specific products like sugar, wheat and rice; and partly by increased imports of industrial inputs by investors. VAT expenditure changes are driven by increases across a range of sectors, but particularly financial services and healthcare. Income tax expenditure has become more concentrated in the loss carried forward provision.

Over a period of four months, TaxDev supported the drafting of the report, and oversaw a review of tax expenditure modelling and of potential improvements to the previous report. Our assistance is not only focused on supporting the improved transparency of reporting on expenditure through the tax system, but building capabilities within the Ministry in order to establish the reporting on an annual basis.

This is the fourth annual report that TaxDev has supported, and the team looks forward to continuing to work with the Ministry in its future efforts to integrate information on tax expenditure into tax policy choices.

Published on: 8th June 2022

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