Call for harsher penalties as land lease tax evasion persists

Rwanda Revenue Authority (RRA) is faced with a challenge of collecting land lease taxes as property owners and members of the public continue to show defiance, with some people suggesting that none compliance could be down to the existence of negligible penalties.

In a statement released last week, the revenue body extended the deadline for payment of the tax to February 29 adding there would be no penalties on those that will meet the new deadline.

The original deadline was December 31.

Drocella Mukashyaka, the deputy commissioner in charge of taxpayer services at RRA, attributed the low level of compliance to negligence when it comes to decentralised taxes.

She, however, said the reason they extended the deadline was to allow more time for taxpayers to master the technology that the revenue body set up to ease tax collection from decentralised entities.

“Some taxpayers had not yet been conversant with land lease fee declaration and payment using the new IT systems. Because of this, the tax administration has decided to extend the deadline, automatically and the penalties will be waived,” she said.

Mukashyaka further stated that the impact on the non-realised December projected collections will as well affect the tax collection forecast in this year although the tax-body will make sure they are collected in the first quarter of the year.

While lawmakers cite lack of robust campaigns at the local government levels for tax compliance and continuous irregularities in paying property tax, local leaders and tax collectors suggest that light penalties may be responsible for the reluctance among taxpayers to pay their dues.

In an interview, Jacques Masengo, a tax officer at the City of Kigali, said low levels of compliance will only be resolved if government imposes harsher penalties for defaulters.

Specifically on the land lease tax, he said that landlords have been reluctant to declare true extent of their estates or making up other excuses to avoid payment.

“Despite the upcoming law about property that is set to increase penalties, land lease taxpayers have been finding fines levied against them negligable that they can still pay it anytime,” Masengo said, adding that very often people had been fined less than Rwf10,000.

The laws put interest rate on arrears at 1.5 per cent per month to any person who pays late or who fails to pay and penalty equal to 10 per cent of the payment amount due.

On the other hand, legislators welcomed the new deadline coming after recent mapping of new settlers in the new city areas that were once considered as rural areas.

Speaking to The New Times, MP Gabriel Semasaka, who is the chairperson of parliamentary committee in charge of agriculture, livestock and environment, said more sensitisation will be needed mostly at the local leaders’ level.

“The culture of evading tax, no doubt is still there, which calls for more measures at all levels, the collections might as well be minimal due to taxable quantities of land because many in the rural areas were absolved of paying taxes,” he said.

“Last year, we saw expansion of settlements in some city outskirts which we understand the mapping is yet capture, it is possible people are yet to declare fully their property,” Semasaka said.

Figures indicate that 82 per cent of the land owners in rural areas have declared it for subsistence farming and that the yield is used to meet other needs like mutual health insurance, security fee, garbage collection fee, and school fees.

According to a ministerial decree, land lease tax is Rwf80 per square metre in urban areas and Rwf30-50 per square metre for rural areas.

RRA had recently put in place an online platform helping taxpayers to declare their taxes and some attribute the extension of the deadline to the malfunction of the tax declaration software.

The land lease tax, whose latest tariff was set up in 2012, has faced stiff resistance from members of the public as many decided to subdivide their land and classified it for subsistence farming, which is exempted from the tax.

The New Times

UM– USEKE.RW