Republic of Rwanda

Rwanda’s income tax system is governed primarily by Law No. 027/2022 of 20/10/2022 on Income Tax and Law No. 020/2023 of 31/03/2023 on Tax Procedures. Employment income is taxed under Pay As You Earn (PAYE), which is administered by the Rwanda Revenue Authority (RRA). PAYE applies to employment income based on monthly progressive tax bands, with rates ranging between 0% and 30%. Non-residents are subject to tax on Rwanda-sourced income, while residents are taxed on their worldwide income. The tax system includes various allowances and deductions to reduce taxable income. Benefits in kind and non-cash allowances are subject to specific valuation rules for tax purposes.

Payroll taxes include income tax and mandatory social security contributions, which are shared between employers and employees. Employers are required to deduct PAYE tax from employees’ salaries each month. In addition to PAYE, employers and employees contribute to the Rwanda Social Security Board (RSSB) for pension, maternity, occupational hazards and medical insurance. From 1 January 2025, the pension contribution under the RSSB has doubled – rising to 12% of gross salary, split equally between employers and employees at 6% each, with the contribution base now including transport allowances. Further increases are scheduled from 2027, with annual increments of 2% until the total contribution reaches 20% by 2030. Employers and employees may also contribute to other RSSB schemes, including medical insurance (7.5% each), maternity benefits (0.3% each) and occupational hazards (2%, employer-only), alongside a modest community health insurance employee-only deduction of 0.5%. Overall contribution costs vary according to the applicable schemes and contribution bases.

Employers are responsible for timely reporting and payment of all statutory payroll obligations, including PAYE tax and social security contributions.
Monthly PAYE and social security declarations and payments are generally due by the 15th day of the following month. Employers are also required to register new employees with the RSSB, shortly after employment commences, typically within a few days of hiring. Monthly declarations for both PAYE and social security contributions must be submitted through the RRA’s e-Tax (MyRRA Unified Declaration) platform. Employers with an annual turnover below the threshold set by the RRA may opt to file quarterly, with payments due by the 15th of the month following each quarter.

Employers are required to register with both the RRA and the RSSB, maintain accurate payroll records and ensure timely filing and payment of all statutory obligations, including PAYE and social security contributions. Records should detail employee remuneration, tax withholdings, social security deductions, attendances and leave for a prolonged statutory period, generally up to ten years, depending on the applicable legal requirement. Labour regulations also mandate written employment contracts, adherence to working hour standards, and compliance with occupational health and safety requirements. These records must be accessible in one of Rwanda’s official languages. Non-compliance with payroll documentation and reporting requirements can result in administrative penalties and interest charges. Late payments may attract surcharges and monthly interest, with specific rates varying depending on the nature and duration of the default.