To further bolster investment activities, Rwanda enacted the new investment promotion and facilitation law N° 006/2021 of 05/02/2021 (official gazette no 04 bis of 08/02/2021). The new law repealed the law nº 06/2015 of 28/03/2015.
The new investment law has incentives for key priorities such as construction and development of Kigali Innovation City, creation and growth of Kigali International Financial Centre (KIFC) as well as emphasize on start-ups. Apart from new provision that are newly introduced, the new law enriched some provisions of the repealed law.
Kigali Innovation City
KIC is designed as a technology cluster in Kigali. Through the KIC, the Government of Rwanda hopes to attract both domestic and foreign universities, technology companies and biotech firms, utilizing real estate zoned for commercial and retail use. The aim is to build a critical mass of talent, research, and innovative ideas that will transform Rwanda and the continent. The new investment law grants attractive incentives under KIC ranging from a 5 years’ tax holiday to a property tax exemption for investors.
Kigali International Financial Center
KIFC is an initiative intended to position Rwanda as a preferred financial jurisdiction for investments into Africa, as well as reforming the domestic industry. KIFC is intended to nurture domestic and foreign talent, support leading technologies that drive value and inspire trust amongst investors, regulators and other stakeholders.
Investment promotion and facilitation
The law emphasizes on the openness to investment where it says that all business sectors are open to private investment regardless of the origin of the investor. The priority economic sectors that benefit from investment incentives include:
- Export;
- Manufacturing in the textiles and apparel, electronics, information communication and technology equipment,
large scale agricultural operations excluding coffee and tea, pharmaceuticals, processing in wood, glass and ceramics, processing and value addition in mining, agricultural equipment and other related industries that fall in these categories;
- Energy generation, transmission and distribution;
- Information and communication technologies, business process outsourcing and financial services;
- Mining activities relating to mineral exploration;
- Transport, logistics and electric mobility;
- Construction or operations of specialised innovation parks or specialised industrial parks;
- Affordable housing;
- Tourism that includes hotels, adventure tourism and agro-tourism;
- Horticulture and cultivation of other high-value plants included on the list approved by the Board;
- Creative arts in the subsector of the film industry;
- Skills development in areas where the country has limited skills and capacity as determined by the Board.
In addition to investment incentives that are granted to a registered investor fulfilling requirements that are provided by the law, an Order of the Minister may determine other investment incentives as well as additional priority economic sectors.
Concerning other guarantees to an investor, the board ensures day-to-day facilitation to an investor in the implementation of his or her project and also facilitates him or her in the following:
- Acquiring visas and work permits;
- Water and electricity connection;
- Being granted a license by the business sector in which he or she intends to operate, where applicable;
- Getting an environmental impact assessment certificate;
- Other investment-related support that may be required.
Validity of investment certificate
Regarding the validity of an investment certificate, the law says that an investment certificate is valid for a period of five (5) years from the date of its issuance. However, an investment certificate can be renewed on request by a registered investor. Investment incentives granted to an investor in accordance with the old law, and which are not provided for by the new law or whose period of validity has not been fixed, shall remain valid for twelve months from 5 February 2021.
Existing Incentives
Nine (9) incentives as per the repealed law include:
- Preferential corporate income tax rate of zero per cent (0%);
- Preferential corporate income tax rate of fifteen percent (15%);
- Corporate income tax holiday of up to seven (7) years;
- Corporate income tax holiday of up to five (5) years;
- Exemption of customs tax for products used in Export Processing Zones;
- Exemption of Capital Gains Tax;
- Value Added Tax refund;
- Accelerated depreciation; and
- Immigration incentives.
Newly introduced incentives
The new law introduces new incentives as it provides in total twenty-two (22) incentives. New incentives to note are:
- Preferential corporate income tax rate of three per cent (3%);
- Preferential tax incentives for a philanthropic investor;
- Preferential corporate income tax rate for export investments;
- Incentives for internationalization ;
- Preferential withholding tax of zero per cent (0%);
- Preferential withholding tax of five per cent (5%);
- Preferential withholding tax of ten per cent (10%)
- Incentives for specialized innovation park developers and specialized industrial park developers;
- Incentives for Start-ups ;
- Research and development incentives ;
- Incentives for the mining sector;
- Preferential tax incentives for film industry investors;
- Talent attraction incentives
Apart from 13 incentives that were newly introduced, it is important to note that some of existing incentives were reviewed.
It is advised to examine the qualification to investment incentives and start applying for the certificate, in order to benefit from incentives starting from the year 2021.
By Fidele Ukwishaka
Tel: +250 788 876 772