VAT Reform Overview: What's Changed and Why It Matters

17.06.25 08:21 AM

Rwanda Previous Law (N° 049/2023) VS. New Amendments (N° 009/2025)

On 29 May 2025, Rwanda enacted significant amendments to its Value-Added Tax (VAT) regime through Law No. 009/2025, which revises Article 8 of Law No. 049/2023. This legislative update marks a pivotal shift in how VAT exemptions are granted and regulated, affecting a wide range of industries and signaling the government's intention to broaden the tax base, promote transparency, and encourage targeted economic activity.

Key Highlights of the Reform 

Removal of Key VAT Exemptions

  • Land Transport of Goods: Previously exempt under Law No. 049/2023, this exemption has now been removed, significantly impacting logistics and distribution sectors.

  • Mobile Phones and SIM Cards: Entirely removed from the exemption list, increasing costs for importers, retailers, and ultimately, end-users.

  • ICT Equipment and Services: Devices and services previously exempt under ministerial designation are now subject to VAT, which may influence pricing in Rwanda’s digital and communications economy.

Introduction of Temporary VAT Exemptions

  • Energy Supply Equipment: Equipment used for energy production and supply is VAT-exempt until 30 June 2028, intended to support Rwanda’s energy expansion goals.
  • Industrial Machinery & Raw Materials: Exemptions extended until 30 June 2026 to encourage industrialization and manufacturing sector growth.

Clarifications & Legal Refinements

  • Pharmaceutical Clarification: The term “drugs” has been clarified to mean “pharmaceutical products,” ensuring clearer interpretation and application.
  • Agricultural Services: VAT exemption now explicitly includes livestock insurance, recognizing its role in supporting rural and agrarian economies.

Restructuring Flexibility

  • Business Asset Transfers: Previously, both parties needed to meet strict criteria to qualify for VAT exemption during restructuring. Now, exemption applies if either: a) The acquirer has operated for at least 3 years, or b) The transferor deals in exempt goods.
  • This change enables greater flexibility in mergers, acquisitions, and internal reorganizations.

Electric Vehicle Policy Shift

  • VAT exemption now applies only to pure electric vehicles, batteries, and charging stations—valid until 30 June 2028. Hybrid vehicles are excluded, although locally assembled EVs and hybrids remain zero-rated under Article 7.

Who Should Pay Attention?

Importers and Retailers (especially mobile, ICT, industrial machinery)

Energy Sector Operators (both traditional and renewable)

Manufacturers and Agro-processors

Transport & Logistics Providers

Businesses undergoing mergers, acquisitions, or internal restructuring


Need help adapting to the new VAT law?

Let ALSM Ltd’s experts guide your compliance and tax planning strategy.
📩 Email: info@alsm.ltd | ☎️ +250 784 441 144

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