Post by miriammuraba on Oct 13, 2018 2:47:38 GMT 4
RWANDA: Draft law on property taxes passed by parliament
Parliament passed a draft law on property taxes on 2 August 2018. The draft law proposes to repeal and replace Law No. 59/2011 of 31 December 2011 and contains the following proposals:
harmonising the fixed asset tax regime by repealing the provision requiring only taxpayers with a freehold land title to pay fixed asset tax. Currently, property owners pay either land lease fees or fixed asset tax based on their choice of title (ie, leasehold or freehold);
gradually increasing the fixed asset tax rate for residential buildings over a period of four years from 0.25% in the first year to 1% in the fourth year and beyond;
granting the district councils discretionary power to set the rates of land tax;
exempting one residential house per person from fixed asset tax;
exempting government properties that do not make profit, properties donated by the government to vulnerable groups, immovable properties that belong to foreign diplomatic missions, as well as land used for agriculture activities not exceeding two hectares, from the fixed asset tax regime;
granting a reduced fixed asset tax rate of 0.1% for other buildings and for small and medium-sized enterprises ("SMEs") and granting a two-year exemption from trade licence tax for SMEs recently established;
incentivising the construction of high-rise residential apartments to promote organised settlement and granting preferential fixed asset tax rates for commercial buildings in order to support urbanisation;
providing special fixed asset tax rates for industrial buildings to make them competitive on both regional and international markets;
providing a standard plot size per type of building for determining the applicable land tax rate. The land tax will be increased by 50% for each extra square meter beyond the set standard plot size;
increasing the income threshold reserved for the maintenance and upkeep of rented property from 30% to 50%;
permitting businesses with several branches to use the turnover of the main business as the basis for determining the trading licence tax to be paid by each business branch where the individual branch does not maintain separate accounting records; and
capping the maximum amount of trading licence tax to be paid per year at RWF250 000.
Parliament passed a draft law on property taxes on 2 August 2018. The draft law proposes to repeal and replace Law No. 59/2011 of 31 December 2011 and contains the following proposals:
harmonising the fixed asset tax regime by repealing the provision requiring only taxpayers with a freehold land title to pay fixed asset tax. Currently, property owners pay either land lease fees or fixed asset tax based on their choice of title (ie, leasehold or freehold);
gradually increasing the fixed asset tax rate for residential buildings over a period of four years from 0.25% in the first year to 1% in the fourth year and beyond;
granting the district councils discretionary power to set the rates of land tax;
exempting one residential house per person from fixed asset tax;
exempting government properties that do not make profit, properties donated by the government to vulnerable groups, immovable properties that belong to foreign diplomatic missions, as well as land used for agriculture activities not exceeding two hectares, from the fixed asset tax regime;
granting a reduced fixed asset tax rate of 0.1% for other buildings and for small and medium-sized enterprises ("SMEs") and granting a two-year exemption from trade licence tax for SMEs recently established;
incentivising the construction of high-rise residential apartments to promote organised settlement and granting preferential fixed asset tax rates for commercial buildings in order to support urbanisation;
providing special fixed asset tax rates for industrial buildings to make them competitive on both regional and international markets;
providing a standard plot size per type of building for determining the applicable land tax rate. The land tax will be increased by 50% for each extra square meter beyond the set standard plot size;
increasing the income threshold reserved for the maintenance and upkeep of rented property from 30% to 50%;
permitting businesses with several branches to use the turnover of the main business as the basis for determining the trading licence tax to be paid by each business branch where the individual branch does not maintain separate accounting records; and
capping the maximum amount of trading licence tax to be paid per year at RWF250 000.