Registering a business in Rwanda has become easier and quicker over the years. In 2014, the time required to obtain a registration certificate was reduced from one day to six hours, and online registration was introduced. The latter method became mandatory in 2015.
In 2016, Rwanda made starting a business easier by eliminating the need for new companies to open a bank account in order to register for Value Added Tax (VAT).
In the 2017 Doing Business Report, further progress was made by improving the online registration one-stop centre and streamlining post-registration procedures.
This was done by updating the online business registration system by removing the need to obtain a username and password collectively known as electronic signature.
In the past, the applicant had to wait to receive username and password from an officer at the office of the registrar, whereas today, he can do it himself. This is a key to company files and the business owner can change it at any time.
This simplification saves time and creates security confidence since the business applicant is the sole custodian of his username and password.
Secondly, VAT registration was included in the online business registration process. This reform started last year in May 2015 but became fully operational in July 2015.
An option to register for VAT is now part of the business registration system, and it is mandatory for any company with an approximated turnover of at least Rwf 20 million.
The company registration code issued is also used for social security, tax identification and VAT.
Companies which at the start do not have the required turnover to register for VAT, can always do so once they reach the Rwf 20m level, yet they can simply use the business registration system to change their status, instead of having to go to Rwanda Revenue Authority (RRA) as was the case in the past.
Again, this reform has simplified the procedure of registering for VAT, thus saving time and money.
Lastly, the obligation of having an electronic billing machine (EBM) in order to start any type of business was eliminated.
Initially, the Ministerial order Nº 002/13/10/TC of 31/07/2013 on the modalities of the use of EBMs in article 11 (20) stated that an EBM user has the obligation “not to start business activity without acquisition of a certified electronic billing machine with and its installation at sales location.”
According to Karim Tushabe, the Head of Doing Business Reforms Division at RDB, this particular paragraph caused confusion as it gave the impression that all businesses are required to have an EBM when in practice, it is only an obligation for companies that are VAT-registered, so those that have an annual turnover of at least Rwf 20 million and above.
Furthermore, this section of the order was contravening article 4 of the same order which gives the Commissioner General of the tax body the right to put in force the criteria for the use of EBMs, making it clear who is exempted and for whom it is mandatory.
A new ministerial order Nº008/16/10/TC of 01/11/2016 amended article 11 by removing the obligation of purchasing an EBM by any person starting a business – although it is still required for businesses that project to immediately make the minimum Frw 20m turnover.