China and Rwanda have signed an agreement that will see the two countries eliminate double taxation in income tax and the prevention of tax fraud and evasion (DTAA).
The agreement was signed in Kigali by Uzziel Ndagijimana, the Minister of Finance and Economic Planning and Rao Hongwei, the Chinese Ambassador to Rwanda.
The agreement is expected to play a decisive role in promoting bilateral trade and investment between the two countries, removing the burden of double taxation for investors from both countries.
Double taxation avoidance is an agreement between two countries aimed at avoiding or minimizing territorial double taxation of the same income by both countries.
For example, if a Chinese entrepreneur is doing business in Rwanda. The profits or gains thus accruing to the Chinese entrepreneur would previously be liable to be subject to tax in China where they are based and as well as in Rwanda where the gains were made.
This would see them taxed twice, their profits eroding, reducing the chances of further investment. Following the new agreement comes to avoid or minimize the territorial double taxation of the same income by the two countries.
The existing DTAAs already in place in Rwanda have shown a significant impact in terms of increasing the influx of investment and trade from treaty partners.
Some of the factors that have informed development officials include the growing number of investors from China, robust cross-border trade, Rwandans’ growing appetite to invest in China, the appropriateness of tax systems as well as the warm economic ties between the two countries.
“This agreement marks an important step in our quest to position Rwanda as a financial hub. Rwanda is expanding its DTAA network to attract investment to Rwanda and Rwanda in the region and beyond, ”said Minister of Finance and Economic Planning Dr Uzziel Ndagijimana.
Rao Hongwei, Chinese Ambassador to Rwanda, said signing the agreement and its affiliated protocol will effectively reduce the tax burden on taxpayers investing in either country and further facilitate economic and trade cooperation. bilateral.
“It will also be a good start for the future cooperation of countries in different fields, including improving the capacity of tax administration, strengthening the system for preventing tax fraud and evasion, safeguarding tax interests. bilateral and international tax order, ”he said.
Nick Barigye, CEO of Rwanda Finance Limited, said the signing of the agreement marks another important step towards strengthening this relationship to better support the expansion of Chinese companies through the Kigali International Financial Center (KIFC).
Currently, more than twelve (12) DTAAs have been signed and several more are under negotiation. The government’s goal is to conclude more DTAA in fiscal year 2021/22 with the aim of expanding the DTAA network and improving the ease of doing business in Rwanda.
There has been an increase in the number of investors entering the Rwandan market from countries that have already concluded a DTTA agreement with Rwanda, such as Turkey, Qatar, United Arab Emirates, Mauritius, Morocco, South Africa and Singapore.