The Cabinet approved the changes during a meeting chaired by President Paul Kagame on Monday, February 10, 2025.

According to the Finance Ministry, the changes are part of Rwanda’s medium-term strategy to strengthen economic resilience and promote self-reliance.

“These new tax policy reforms are part of the Government’s medium-term strategy to broaden the tax base, increase revenue mobilization, and streamline tax administration in order to meet Rwanda’s development goals,” the Minister of Finance Yusuf Murangwa stated in a statement on Tuesday.

The reforms touch on multiple sectors, including consumer goods, transportation, telecommunications, tourism, and gambling. They also introduce new levies aimed at enhancing economic sustainability while ensuring the continued transformation of the country as outlined in the Second National Strategy for Transformation (NST2).

One of the most notable changes is the introduction of a 15% excise duty on cosmetic and beauty products, including makeup, body lotion, and hair products. However, essential pharmaceutical beauty products will be exempted in consultation with the Ministry of Health.

Vehicle owners will also feel the impact of the reforms, as registration fees for all types of vehicles, including electric cars, will be increased. However, the exact figure was not immediately revealed.

Similarly, the fuel levy has been adjusted from a fixed fee of Rwf 115 per litre to 15% of the Cost-Insurance-Freight (CIF) to support road maintenance initiatives.

Mobile phone users will now have to pay 18% Value Added Tax (VAT) on mobile phones, which had been exempted since 2010. The government argues that while the exemption initially helped to boost digital penetration and smartphone affordability, the reintroduction of VAT will allow for more sustainable revenue collection without stifling smartphone access.

A similar VAT exemption introduced in 2012 on ICT equipment will also be revoked, though selected ICT devices will remain tax-free based on consultations with the Ministry of ICT and Innovation.

The gambling industry is set to face higher tax measures, with the tax on Gross Gambling Revenue (GGR) rising from 13% to 40%, and withholding tax on winnings increasing from 15% to 25%. The government said the move aims to encourage responsible gambling while also increasing tax revenues from the industry.

Additionally, the tourism sector will be subject to a new Tourism Levy, which imposes a 3% tax on accommodation costs. This measure aims to fund investments in the country’s tourism and hospitality industry, a critical pillar of Rwanda’s economic growth.

Green transportation incentives and increased excise taxes

In a bid to encourage green mobility and reduce carbon emissions, the government has maintained a 25% import duty exemption for hybrid vehicles while introducing an age-based excise duty system. Under the new system, hybrid cars less than three years old will be taxed at 5%, those between four and seven years old at 10%, and vehicles older than eight years at 15%.

Additionally, VAT and a 5% withholding tax will be reinstated for hybrid vehicles, while fully electric vehicles will remain tax-exempt to encourage their adoption. However, this measure will only take effect in the 2025/2026 fiscal year.

Excise taxes have also been adjusted in other areas. The tax on cigarettes has increased from Rwf 130 to Rwf 230 per pack, along with an additional 36% tax on the retail price.

The excise duty on beer has risen from 60% to 65% of the factory price. For airtime, the tax has been raised from 10% to 12% in 2024/2025, with a gradual increase to 15% in the medium term.

Additional tax policy measures

Beyond these direct tax changes, the government has also signalled upcoming policy adjustments targeting financial services, transportation, and ICT in the next financial year.

Among the expected measures are an environmental levy on single-use plastics, new VAT charges on select fee-based financial services, and taxes on fossil fuels and road transportation services of goods.

Under the ICT sector, the government is expected to roll out the Digital Services Tax, which will be imposed on digital platforms such as Netflix, Amazon, and others.

The government has assured taxpayers that public awareness programs will be rolled out to educate citizens and businesses on these new tax provisions to facilitate a smooth transition.

“The Government of Rwanda remains committed to working closely with taxpayers to ensure a smooth transition and to foster a prosperous future for all,” the Ministry added.

The Government of Rwanda, through the Ministry of Finance and Economic Planning, has announced a new set of tax policy reforms for the fiscal year 2024/2025 aimed at broadening the tax base, increasing revenue mobilization, and streamlining tax administration.