Tax Alert

Rwanda gazettes a new law on

investment promotion and facilitation
On 8 February 2021 the Government of Rwanda gazetted yet another law, amongst a series
February 2021 that are currently under review. The new investment law, number 006/2021 dated 5 February
2021, repeals law number 06/3015 dated 28 March 2015 that has governed investment
promotion and facilitation in Rwanda for the past six years.

In an effort to understand the key changes Transitional rules

introduced in the new investment law, it is What does the new investment law mean
helpful to compare it to the old one. The first for current investors holding investment
Paul Frobisher general consideration is the shift in vision. certificates issued under the old investment
Mugambwa law?
Associate Director and Tax
Whilst the old law was designed to focus on
Leader, PwC Rwanda maximising cost effectiveness and incentives The new investment law provides that
T: +250 252 588203/4/5/6 for registered investors, which rendered it investment incentives granted to an investor
M: +250 782 537 377 time-bound and performance-based, the new in accordance with the old law, and which
[Link]@pwc. law aims to develop a thriving, diversified and
com are not provided for by the new law or whose
high-productivity private sector that is viable period of validity has not been fixed, shall
LinkedIn without public support. The new law intends remain valid for twelve months from 5 February
to prioritize long-term Government revenue 2021. Therefore, investors affected by the
specifically in support of public investment and new investment law will have to reapply for
development objectives, rather than prioritizing new investment certificates under the new
private sector support. investment law before 6 February 2022. It is
Broadly, there are three new strategic
investment areas (in addition to the current
priority areas) that the Government is targeting
to enhance, promote and facilitate in order to
Kesly Kayiteshonga achieve these long-term objectives: the Kigali
Associate, Tax Services Innovation City (KIC), the Kigali International
+250 252 5882 03/04/05/06 Financial Center (KIFC) and start-ups.
[Link]@[Link]
In this Alert, we summarize the key
improvements to the new investment law,
followed by a breakdown of the incentives for
each strategic sector including the KIFC, KIC,
start-ups and other sub-sectors.

This publication has been prepared as general information on matters of interest only, and does not constitute professional
advice. You should not act upon the information contained in this publication without obtaining specific professional advice.
important that investors holding old corresponding additional incentives Upon reviewing the requirements for
certificates review the new investment that the investor wishes to apply for and renewing investment certificates, the
law requirements and update their which are central to the implementation new law seems to suggest that every
business plans during this 12 month of the project, the commercial and five years, an investor is expected to
transition period as they prepare for economic impact of the investment and increase his or her investment in the
reapplication. In the new investment a cost-benefit analysis of the investment project. For example, when applying for
law, the qualification requirements incentives, where applicable. a renewal of an investment certificate,
are more stringent and investors the application must be accompanied
We note that the PIC will only review
must prepare adequately and submit by a five year investment plan detailing:
investment incentives that are not
a convincing case for investment
already provided for under the ● the estimated investment amount
to the Rwanda Development Board
investment law, or investments provided and number of employees,
(RDB). However, fixed-term investment
for under the law that require additional ● detailed information on raw materials
agreements concluded between the
incentives. Therefore, where the to be sourced in Rwanda,
Government of Rwanda and an investor
priority sector/strategic investments
remain valid until the expiry of their ● details on financing to be sourced
are provided for under the new law,
validity. from abroad and
the application would be directed to
Key Improvements to the the Rwanda Development Board (RDB) ● the timeframe in which the assets
for review and approval and then the and financing will be utilized.
investment law
granting of the investment certificate.
This requirement may not be practical
Enhanced flexibility to adapt to
In order to reduce the potential for for a number of capital intensive
evolving priorities
bureaucratic inefficiency, the Ministry projects such as power plants and
In order to adapt to evolving investment
of Finance and Economic Planning mining or manufacturing operations
priorities capable of attracting Foreign
(MINECOFIN) now has the authority to since the initial investment period is
Direct Investment (FDI), the Government
update the list of priority sectors and usually longer than five years and a
has granted the Cabinet authority to
their sub-sectors through ministerial significant portion of the investment
approve special additional incentives
orders, after review and approval of the occurs in the first five years. The RDB
for strategic investment projects that
PIC. may need to be flexible with these types
are not provided for by the investment
of investments.
law. Strategic investment projects must
Validity of an investment certificate
be reviewed and pre-approved by the
The new investment law introduces
Key Sector-Specific Incentives
Private Investment Committee (PIC)
an expiry date for all investment for Priority Areas
before approval by the Cabinet.
certificates which are issued. The main new strategic areas that have
Strategic investments are those of been granted incentives under the new
Under the new investment law, an
national importance impacting the investment law are the KIC, KIFC and
investment certificate is valid for a
development of Rwanda. Strategic start-ups, although there are also a
period of five (5) years from the date of
investors looking to benefit from few other sub-sectors that have been
its issuance. However, an investment
investment incentives must present a included.
certificate can be renewed on request
proposal to the PIC which includes the
by a registered investor for another The common theme for all of these
sector of their investment, the estimated
period of five (5) years, which period is incentives is that for investors to access
investment amount and number
also renewable. them, they have to fulfill both minimum
of prospective jobs to be created,
economic substance requirements and
also demonstrate that management and
control resides in Rwanda. The new
positioning of Rwanda at regional and
Pan African levels requires Rwanda to
comply with international standards
from the EU and OECD, in particular the
assessments of preferential tax regimes
conducted by the Forum on Harmful
Tax Practices (FHTP), comprising more
than 130 member jurisdictions of the
Inclusive Framework.

Countries and financial centres

competing with aggressive tax
incentives to attract capital flow are
now under high scrutiny by international
institutions. In line with the new
compliance standards on harmful tax
activities, Rwanda’s new investment law
has been designed with the following
key principles and objectives:

● No competition on aggressive tax

incentives that will be detrimental to
the reputation of Rwanda,
● No (minimum) erosion of the existing attract both domestic and foreign KIFC’s umbrella network of laws and
tax revenue and universities, technology companies regulations is intended to nurture
and biotech firms, utilizing real estate domestic and foreign talent, support
● Full compliance with international
zoned for commercial and retail use. leading technologies that drive value
tax standards with the development
The project is under way on 70 hectares and inspire trust amongst investors,
of incentives requiring minimum
of land in Kigali’s Special Economic regulators and other stakeholders.
economic substance.
Zone. Universities like Carnegie Mellon
Investors under the KIFC are granted
For an investor to qualify for certain University Africa and African Leadership
a preferential corporate income rate of
incentives under the KIC and KIFC, they University have already set-up shop
3% and exemption from withholding
must demonstrate minimum economic in this zoned area. KIC is part of the
tax on dividends, interest and royalty
substance and also show that the Government of Rwanda’s National
payments. Companies that support
governance, management and control Strategy for Transformation 2017–2024.
investors under the KIFC such as fund
of the investment resides in Rwanda. It is an innovative effort, focused on the
managers, corporate service providers
Regarding management and control, future workforce and competitiveness
and family office services are granted a
for example, investors will need to on the world stage and it is the first of
15% preferential corporate income tax
demonstrate that: its kind in Africa. The aim is to build a
rate and exemption from withholding
critical mass of talent, research, and
● At least (minimum quorum) one tax on dividends, interest and royalty
innovative ideas that will transform
director or twenty-five percent of payments. See Table 2 for the detailed
Rwanda and the continent. The new
directors reside in Rwanda; KIFC investments package. The table
investment law grants attractive
● 50% of board members should be in also details the economic substance
incentives under KIC ranging from a
Rwanda for board meetings. Virtual requirements to qualify for these
5 years’ tax holiday to a property tax
meetings are acceptable, incentives.
exemption for investors. See Table 1 for
● Board meetings for strategic the detailed KIC incentives package. Incentives for start-ups
decisions should occur in Rwanda,
Incentives under the Kigali Start-ups may be small, at least initially,
● Board resolutions should be in but they can have a ripple effect
International Financial Center
Rwanda for safe keeping and throughout the wider economy that
KIFC is an initiative intended to position
● The Board must include at least two changes lives. Start-ups may create
Rwanda as a preferred financial
professional or qualified Rwandan jobs and meaningful employment which
jurisdiction for investments into Africa,
residents. benefits the economy overall.
as well as reforming the domestic
industry. KIFC is the first of its kind Not only that, start-ups may also
Incentives under the Kigali in Africa, in that it is not offering a contribute to economic dynamism
Innovation City location, a building, an economic free by spurring innovation and injecting
Inspired by America’s Silicon Valley and zone or a specific category of company competition. Entrepreneurs may
its success in producing and developing registration. bring new ideas to the table, stirring
technological advancements, KIC innovation and generating competition.
Instead, KIFC provides a conducive
is designed as a technology cluster For these and other reasons, the
ecosystem for these organisations
in Kigali. Through the KIC, the Government has provided special
to operate and invest in Rwanda
Government of Rwanda hopes to incentives targeted at start-ups and
as a gateway to the rest of Africa.
entrepreneurs.
Angel investors ● grants and funds are exempted from Film Industry
Angel investors investing a maximum both VAT and corporate income tax; Registered film investors are entitled to
of US$50,000 in a start-up excluding ● goods and services procured locally the following incentives:
private equity and venture capital funds, by the entity are zero rated for VAT ● Goods and services procured locally
are: purposes; and are zero rated for VAT purposes
● exempted from capital gains tax ● PAYE on foreign nationals resident ● Foreign specialised services
upon the sale of shares, provided the in Rwanda is exempted, provided procured by the investor are
shares were initially purchased as a that foreign employees do not exempted from withholding tax
primary equity issuance by the start- exceed 30% of the professional
up; and staff. Additionally, foreign employees A list of the qualifying foreign
of the entity are entitled to a refund specialised services is to be jointly
● exempted from withholding tax on approved by the Rwanda Film Office
dividends paid for five dividend of social security contributions
that have been paid, upon their and the Rwanda Revenue Authority.
issuances by the start-up.
permanent departure from Rwanda.
A number of new priority sub-
Incentives for internationalization sectors have be accorded a 15%
Export incentive
A small and medium investor, or an preferential income tax rate and they
The following preferential corporate
emerging investor registered as an include:
income tax rates apply to registered
investor with an investment project ● investors involved in manufacturing
investors exporting goods and services:
involved in export, is entitled to a one within the sub-sectors of textiles and
hundred and fifty percent (150%) tax ● 25% corporate income tax rate, if apparels, electronics, information
deduction of all qualifying expenditures exports account for at least 30% of and communication technology
relating to internationalisation. the total turnover but less than 50%; equipment, large scale agricultural
and operations, processing in wood,
Research and development glass and ceramics, value addition
● 15% corporate income tax rate - if
incentives
exports account for at least 50% of and professional operations in
Strategic investment projects, small and mining and agricultural equipment
the total turnover
medium investors or emerging investors
may be eligible for financing under The export incentive is available to the ● investors involved in the construction
Rwanda’s Seed Innovation Fund. The investor for a maximum of five years of affordable houses
fund provides a variety of instruments commencing from the first year the ● investors with an investment involved
including convertible grants, equity company achieves 30% of turnover in electric mobility
and debt for the following qualifying from exports. The incentive is only
● investors with an investment project
activities: granted each year the investor meets
involved in adventure tourism and
this export threshold.
1. qualifying manpower costs, agriculture tourism

2. training costs,
3. costs for materials, equipment,
software and technology acquisition,
4. professional services engaged and
5. costs incurred on intellectual
property rights.

Talent attraction incentives

● Start-up founders and innovative
entrepreneurs who are foreigners
and their dependents are eligible for
a two (2) year entrepreneurship visa
to start a business in Rwanda.
● Qualifying international students
from qualifying higher institutions of
learning are eligible for a two (2) year
talent visa commencing from the
date of completing their studies.

New incentives in other sub-

sectors
Incentives for a philanthropic
investor
Upon approval by the PIC, an entity
established by a philanthropic investor
is granted the following incentives:
Table 1: KIC incentive package

Type of investor Tax/fiscal incentives

A specialized innovation/ ● entitled to a corporate income tax holiday of a period of five (5) years maximum from the first year
industrial park developer that the project makes a positive net income.
● a preferential withholding tax of ten per cent (10%) on interest on foreign loans, dividends,
royalties, and service fees, including management and technical service fees.
● exempted from paying property tax for a period of five (5) years from the date of issuance of the
construction permit.
● exempted from paying land transfer fees provided that the transferor holds shares equivalent to
the value of immovable property transferred.
● allowed to carry forward accumulated tax losses in the event of a change of ownership of share
capital or voting rights amounting to more than twenty-five per cent (25%) in a given year.
● entitled to carry forward losses for a period of seven (7) years from the first year of making the
loss, by deducting losses in the order in which they incurred. After this period, the developer may
request for an extension of the carryforward period.
● eligible for accelerated depreciation of fifty per cent (50%) in respect of capital expenditures
incurred for a period of one (1) year from the date on which construction works were started.
● zero-rated (0%) VAT for construction materials and finished goods for construction projects.
● exempted from paying import taxes including withholding tax and excise duty, if applicable, on
importation of construction materials and finished goods.
Innovative foreign ● are eligible for a two (2) year entrepreneurship visa to start a business
entrepreneurs
Qualifying international ● are eligible for a two (2) year talent visa commencing from the date of completion of their studies.
students from qualifying higher
institutions of learning
Qualifying remote workers in ● are eligible for a two (2) year visa allowing them to live in Rwanda and legally work for an employer
priority professional fields registered abroad or their own company
a registered investor that ● 15% preferential corporate income tax rate.
establishes

● an innovation research and

development facility,
● information and
communication technology
training centre,
● software build and test lab,
● information and
communication technology
and innovation specialised
institution of higher learning,
● business incubation centre
and related activities in the
area of information and
communication technology
and innovation sector
● an investment involving ● 15% preferential corporate income tax rate.
one of the following
activities: information and
communication technology
and knowledge-based
services, manufacturing or
assembly
Table 2: KIFC tax incentives package

Type of investor Economic Substance required Tax incentive

Pure holding company ● total net assets consolidated in Rwanda ● 3% preferential corporate income tax
not less USD 1,000,000 rate.
● annual expenditure in Rwanda of at least ● 0% preferential withholding tax on
USD 15,000. dividends, interest and royalty payments
● a physical office of the company in
Rwanda;
● at least 30% of the professional staff are
Rwandan
A special purpose vehicle registered for ● registered for investment purpose in ● 3% preferential corporate income tax
investment purposes projects, which are meant to last for more rate.
than 2 years ● 0% preferential withholding tax on
● total net assets consolidated in Rwanda dividends, interest and royalty payments
not less USD 1,000,000
● annual expenditure in Rwanda of at least
USD 15,000.
● a physical office of the company in
Rwanda;
● at least 30% of the professional staff are
Rwandan
Collective Investment Scheme ● minimum fund size not less than USD ● 3% preferential corporate income tax
Defined as: a type of scheme where 1,000,000) within the first 3 years. rate.
there is an arrangement for collecting ● minimum expenditure in Rwanda of USD ● 0% preferential withholding tax on
and pooling funds from investors 50,000 per year. dividends, interest and royalty payments
or participants for the purpose of ● Collective Investment Scheme manager,
investment in the interest of each custodian and operator established in
participant or investor represented by Rwanda;
his or her proportional ownership in the ● at least 30% of the professional staff are
pool. Rwandan
Global trading or paper trading ● an annual turnover or trade volume of not ● 3% preferential corporate income tax
Defined as: a commercial entity making less than USD 10,000,000 rate.
deposits in financial entities in Rwanda ● an annual expenditure in Rwanda of at ● 0% preferential withholding tax on
to finance its trading activities outside least USD50,000 dividends, interest and royalty payments
Rwanda and not authorised to import or ● at least 30% of the professional staff are
export goods in Rwanda; Rwandan
● a physical office of the company in
Rwanda
Intellectual property company ● annual expenditure in Rwanda of at least ● 3% preferential corporate income tax
Defined as: a commercial entity that USD 10.000) rate.
is established for the sole purpose of ● a physical office in Rwanda; ● 0% preferential withholding tax on
owning intellectual property rights. ● to have a bank account in a bank dividends, interest and royalty payments
operating in Rwanda;
● at least thirty per cent (30%) or three
(3) of the staff are Rwandan residents,
whichever is higher
a registered investor licensed to operate No Economic substance requirements ● 15% preferential corporate income tax
as a provided rate.
● fund management entity, ● 0% preferential withholding tax on
● collective investment scheme, dividends, interest and royalty payments
● wealth management service provider,
● financial advisory commercial entity,
● family office services entity,
● fund administrator,
● financial technology commercial
entity,
● Captive Insurance Scheme entity,
● private bank,
● mortgage finance institution,
● finance lease commercial entity,
● Asset Backed Securities entity,
● reinsurance company, trust and
● corporate service providers

© 2021 PricewaterhouseCoopers Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Rwanda Limited which is a member firm of
PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.