July 17, 2023: The Ministry of Finance and Economic Planning - Rwanda and the Ministry of Finance of the Republic of Poland today signed a Tax Solidarity Memorandum of Understanding (MoU) aimed at improving efficiency of Rwanda’s tax system by reducing the tax gap, combating tax avoidance, tax evasion and digitalizing tax administration.
The Memorandum was signed by Dr. Uzziel Ndagijimana, the Minister of Finance and Economic Planning on behalf Rwanda, and Finance Minister Ms Magdalena Rzeczkowska, on behalf of the Republic of Poland.
The MoU between the two countries follows Rwanda’s ongoing tax reforms intended to reduce tax rates, broaden tax base, improve tax compliance and reducing tax evasion.
The nonbinding agreement will mainly focus on Value Added Tax (VAT), in particular on reducing the tax gap, combating tax crime, providing solutions against informal economy, as well as proposing reforms facilitating entrepreneurship. It will provide Rwanda’s tax authority with insights into Polish solutions on base erosion profit shifting, based on but not limited to OECD standards. The MoU will also allow Rwanda to improve its digitalization of tax administration, in particular on using digital systems to detect tax crime, improving taxpayer digital services, enabling submission of digital tax returns and invoices as well as improving tax administration work efficiency.
“Tax solidarity MoU will contribute towards Rwanda’s ongoing fiscal policy reforms. As we target to increase in our tax to GDP ratio, we are confident that cooperation in this area will contribute to achieving our goal and be a steppingstone for further cooperation,” Minister Ndagijimana said.
He added: “We have learnt about Poland’s successful reforms in areas of taxation and automation of the tax system and are ready to work with you on this exchange to accelerate our reforms in this area”.
“This MoU gives us a very solid ground on which to share knowledge, information and best practices regarding tax management. In the past 5 years we have managed to increase compliance, doubled income tax and reduce VAT gaps and therefore, we believe there is a lot we can share with Rwanda with regards to best practices in effective tax administration,” Minister Rzeczkowska said.
Both Poland and Rwanda are looking to build on the signed agreement to further cooperate in various areas such as Double Taxation Avoidance Agreement (DTAA), private sector investments and education among others.