Rwanda Investment Incentives and Tax Holidays: 10 Questions Answered
The annex to Law N° 006/2021 sets out the incentives available to registered investors: reduced corporate income tax rates, tax holidays, accelerated depreciation, withholding-tax relief and more. Each carries conditions, and incentives are performance-based, so the detail below matters as much as the headline rate.
Re-checked against official Rwandan sources every month · Reviewed
What incentives does the Investment Code offer registered investors?
The annex to Law N° 006/2021 offers preferential corporate income tax rates (0%, 3%, 15%, and 25% or 15% for exporters), tax holidays of up to seven years for large investments and five years for park developers and microfinance institutions, 50% first-year accelerated depreciation, VAT refunds within 15 days, capital gains exemption, reduced withholding tax, and talent and visa incentives. Incentives depend on registering with RDB, meeting the sector and size conditions, and continuing to meet them; they can be clawed back if obtained on false declarations.
How does the 0% corporate tax regime for regional headquarters work?
A 0% corporate income tax rate is available to an international company with its headquarters or regional office in Rwanda that invests at least USD 10 million in tangible or intangible assets, provides employment and training to Rwandans, conducts at least USD 5 million a year of international financial transactions through a licensed Rwandan bank, spends at least USD 2 million a year in Rwanda and has effective administration in Rwanda performing at least three listed services. Entities set up by approved philanthropic investors also qualify.
Which entities can access the 3% corporate tax rate?
A 3% rate is available to licensed pure holding companies, special purpose vehicles registered for investment, collective investment schemes, global or paper trading companies (on foreign-sourced trading income) and intellectual property companies (on foreign-sourced royalties). Each must meet substance conditions, such as a physical office, a minimum share of Rwandan professional staff, a minimum share of directors resident in Rwanda, board meetings held in Rwanda and at least two qualified Rwandan resident directors, plus size or expenditure thresholds specific to the entity type.
Which sectors qualify for the 15% preferential rate?
Registered investors qualify for 15% in listed activities, including renewable energy generation, transmission and distribution; trucking and bus fleets meeting minimum fleet sizes; manufacturing in named sub-sectors; ICT and knowledge-based services (excluding retail, wholesale, repair and telecommunications); innovation and research facilities; licensed financial-services businesses such as fund managers, private banks and reinsurers; affordable housing; electric mobility; and adventure and agro-tourism. Each has criteria in the annex or related orders, so confirm eligibility for your exact activity.
A registered investor with at least 30% but under 50% of turnover from exports pays 25% corporate income tax, and one with at least 50% pays 15%, for up to five years starting from the first year exports reach 30% of turnover, tested year by year. The rates do not apply to unprocessed minerals, tea and coffee exported without value addition. Small and medium exporters can also claim a 150% deduction on qualifying internationalisation costs, capped at USD 100,000 a year, and export processing zone products are exempt from customs duties.
Is there a corporate income tax holiday in Rwanda?
Yes, up to seven years, for a registered investor (other than in private equity and venture capital) that invests at least USD 50 million, contributes at least 30% of it as equity, and fully invests it within seven years, in energy projects of at least 25 megawatts, manufacturing, tourism, health, ICT manufacturing, assembly or services, or export-related projects. The holiday starts the year after the full amount is invested. Park developers and licensed microfinance institutions can get a five-year holiday.
What about accelerated depreciation, VAT refunds and the capital gains exemption?
Registered investors in listed sectors can claim 50% accelerated depreciation in the first year on assets costing at least USD 50,000 each, provided they keep the assets for three years. VAT refunds are due within 15 days of the tax administration receiving the documents (not for VAT-exempt sectors). Registered investors also do not pay capital gains tax, although income from selling commercial immovable property is taxable. Meeting the conditions and filing on time are essential to keep these benefits.
What incentives exist for start-ups and angel investors?
Angel investors who put up to USD 500,000 into a qualifying start-up (private equity and venture capital funds are excluded) can be exempt from capital gains tax on shares originally bought as a primary issuance, and from withholding tax on dividends for five dividend issuances, provided the investment stays in the start-up for at least two years. Foreign start-up founders and innovative entrepreneurs can obtain a two-year entrepreneurship visa. Strategic and SME investors may also access the Seed Innovation Fund.
What incentives apply to special economic zones and industrial parks?
Developers of specialised innovation or industrial parks can obtain a five-year property tax exemption from the construction permit, exemption from land transfer fees in qualifying cases, seven years of loss carry-forward, 50% accelerated depreciation, zero-rated VAT on construction materials, a 10% withholding tax rate on loans, dividends, royalties and fees, and a five-year corporate tax holiday. Products used in export processing zones are exempt from customs duties. Zone occupiers have their own conditions, so check the zone's rules.
Can the Government negotiate extra incentives for a large project?
Yes, for strategic investment projects of national importance. Under Articles 5, 7 and 8 of the Investment Code, the Cabinet can approve a project and additional incentives on the proposal of the Private Investment Committee, and an agreement is then negotiated between the investor and the Government. Criteria include an anchor investment with first-mover effect, significant impact on a value chain, proof of concept, market-creating innovation, or significant scale in amount, output and jobs. Incentives are performance-based and time-bound.
This page gives legal and tax information, not legal advice. Rates, thresholds and procedures change; the answers are re-checked against official sources every month, but you should confirm anything important with the relevant authority or a licensed Rwandan advocate before you act.