Our guide to Payroll in Rwanda

Doing Business in Rwanda

Investing in Rwanda

Investing in Rwanda offers a range of opportunities across various sectors, supported by a pro-business government and a growing economy. Here are some key points to consider:

Investment Opportunities

• Energy: Rwanda is pioneering renewable technologies, including a methane gas plant on Lake Kivu and a growing solar sector
• Manufacturing: The "Manufacture and Build to Recover Program" offers incentives like VAT exemptions and tax credits to boost investments in manufacturing and construction
• Agriculture: There are significant opportunities in agro-processing, with incentives for investments starting from USD 100,000
• Financial Services: The financial sector is expanding, offering various investment opportunities
  
  

Basic Facts about Rwanda

• Population: Approximately 13.6 million (2024 estimate)
• Capital: Kigali
• Primary Languages: Kinyarwanda, French, English, and Swahili
• Main Religion: Christianity
• Monetary Unit: Rwandan franc (RWF)
• Main Exports: ores (such as niobium and tin), coffee, tea, and food preparations
• GNI per Capita: As of 2023, the Gross National Income (GNI) per capita in Rwanda is approximately $9806
• Internet Domain: .rw
• International Dialing Code: +250
  
  

Common Phrases in Kinyarwanda

• Hello: Muraho
• Good morning: Mwaramutse
• Good evening: Mwiriwe
• Do you speak English?: Uvuga Icyongereza?
• Goodbye: Murabeho
• Thank you: Murakoze
• See you later: Tuzabonana nyuma

Working Week

Typically, the workday runs from 8:00 am to 5:00 pm, including a one-hour lunch break.

Registrations and Establishing an Entity

In Rwanda, all companies must be registered with local authorities in order to process payroll. Registering a business in Rwanda is straightforward, with most procedures available online through the Rwanda Development Board (RDB). For Tax and Legal Requirements, understanding the local tax and legal landscape is crucial. Rwanda offers various tax incentives to attract foreign investors.

Employment Law

Holiday Accrual

If the employee receives commissions or variable payments monthly, you have to calculate the average of the three months before holidays and based on this average you calculate the payment.

Maternity Leave

An employee is entitled to 14 weeks paid maternity leave.

Paternity Leave

An employee shall be entitled to seven days paid paternity leave

Sick Leave

An employee shall be entitled to up to six months’ sick leave per year.

National Service

National service is not mandatory in Rwanda.

Tax & Social Security

The tax year runs from 1st January to 31st December.

Apprenticeship & Training Tax

The due date for remitting PAYE is by the seventh of the following month.
A PAYE summary statement is due within 30 days after each six-month period.

Taxable Income (Per Month) – Rate % – Cumulative Tax Payable

• 0 - 60,000: 0% – 0
• 60,000 - 100,000: 10% – 0
• 100,000 - 200,000: 20% – 4,000
• 200,001+: 30% – 24,000
  
  

The penalty for late payment is the statutory rate of the year + 10% of the total outstanding amount.

Social Security

Rwanda Social Security Fund: The employer is required to contribute 5% of the employee's gross salary to the scheme, while the employee's contribution is 3% on monthly basis. However, submissions to the Fund are to be made quarterly by the employer.

Community Based Health Insurance: Employee is to pay 0.5% of the net salary.

Maternity Leave Scheme: The employer is required to contribute 0.3% of the employee's gross salary, with the employer matches the amount.

Payroll

It is legally acceptable in Rwanda to provide employees with online pay slips. The pay slips must be secured with restricted access.

Reports

By law, payroll reports must be kept for ten (10) years.

Pay-slip Example

Reporting

Monthly

For each document please provide the following information:

• Legal name/document number of each document
• PAYE return
• Skills Levy
• Pension schemes (NSSF, PPF, PSPF)

What type of information is required to complete the form?

• List of employee PAYE deductions
• List of employees on whose behalf employer is contributing the levy. (i.e. 6 per cent of gross pay)
• List of employee NSSF deductions

Where are the documents to be sent to and by what date should they be submitted?

• To the Tanzania Revenue Authority within seven days of month-end.
• To the relevant scheme within one month after month of deduction.

Can the documents be submitted by a payroll partner or does it have to be submitted by the employer?

It is advisable to have the employer submit to avoid delays and to ensure a correct receipt is obtained to avoid future problems. 

Does the client need to sign the form

Yes

New Employees

When an employee first starts employment with a company, they must be registered with the RRA (Rwanda Revenue Authority) and the pension scheme.

RRA will provide a TIN (Tax Identification Number) and the pension scheme will also provide a scheme number. All registrations must be made within the first month for the new start commencing work.

• The only information that is required for setting up a new start is the employee’s personal data.
• The employer must ensure that a new employee is registered with the authorities.

Leavers

There are no legislative timescales for an employee’s final payment in Rwanda. The payment timescale will depend on the terms of the employment contract.

Employee Benefits

Expenses

• Any cash allowances pertaining to employee expenditure e.g. telephone; fuel, house, travel etc. will be added onto the basic salary and taxed accordingly.
• Any non-cash benefits e.g. company house, company car etc. will be taxed at prescribed rates.
• All allowances and benefits are provided at the employer’s discretion and are taxable.

Visas & Work Permits

In order to hire a foreign employee, the company must apply for a Class B permit for the employee. The application form for this is available from the Department of Immigration (Form TIF.1) at no cost and there is no processing fee.

The application form should be submitted with the following information:

• five photographs
• birth certificate
• curriculum vitae
• academic qualifications
• proof of experience
• organizational chart
• offer of employment
• proposed contract

The labor department will review the application and make a positive or negative recommendation to the Department of Immigration.

Class B permits have a fee of US $600 for two years. There is a renewal fee of US $300.

• There are no legislative timescales for employee final payments
• All payroll reports must be kept for 10 years
• Registration for new employees must be completed within the first month of employment
• Documents must be submitted to relevant authorities within 7 to 30 days depending on the requirement
• Local payroll compliance includes quarterly social security fund submissions and monthly tax filings
• Electronic payslips are legal but must be securely restricted
• Reporting forms must be signed and are best submitted directly by the employer
  
  

Further Information

For more information, or assistance with Rwanda enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.