Rwanda Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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RWANDA
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Rwanda Payroll and Employer of Record: Employment Contracts
To enter and stay in Rwanda, almost all foreign nationals must apply for a visa. They will also require a work permit, as a visa only allows them to enter the country but not work. Work permits, like visas, are divided into categories, but the two main options are temporary or permanent. There are five types of permits that describe the various types of employment, such as:
- Skilled labour in a high-demand occupation
- Skilled workers sponsored by a company
- Journalist or media professional
- Semi-skilled or artisan employees
- Employees of international organizations
There are additional Rwanda work permit categories for people who want to study or invest in the country. To complete their work permit application, applicants will need to provide relevant documents in either French or English.
PAID TIME OFF
Annual Vacation
Employees are generally entitled to 18 days of paid yearly leave every year. For every three years of continuous service, an additional day of leave is granted, up to a maximum of 21 days.
Sick
Employees are normally entitled to up to six months of sick leave with medical confirmation. The first three months are compensated, whereas the latter three months are not.
Maternity
In most cases, female employees are entitled to 12 weeks of paid maternity leave. Leave can be taken up to two weeks in advance of the due date.
Paternity
Fathers are entitled to four days of paternity leave in a row and can be paid or unpaid as it is dependent on the employer.
Family
No family paid leave in place yet.
National Holidays
Rwanda has a total of 14 public holidays which are paid.
Other Paid Time Off
N/A
STATUTORY EMPLOYEE BENEFITS
Unemployment
Unemployment insurance and benefits are not covered by the law.
Workers Compensation
The first law was enacted in 1949. (Compensation for work accidents and occupational diseases in Belgian Congo and Rwanda-Urundi). Current legislation: 1974 (social security) and 2003 (electronic voting) (social security). Social insurance system is a type of program.
Coverage
- People who are employed.
- Self-employed individuals are excluded.
Funding Source
- There are no insured people.
- Self-employed: This does not apply.
- Employer: 2% of gross monthly payroll
- Contributions are calculated using earnings.
- Government: None; employer contributes.
- Conditions of Eligibility
Social Security
All paid workers in Rwanda, both residents and foreigners, are required to contribute to the Rwanda Social Security Fund, commonly known as the Caisse Sociale du Rwanda (CSR). The company must contribute 5% and the employee must contribute 3%, based on the employee’s gross wage. Every month, the employer deducts social security contributions and remits the entire amount quarterly.
Retirement
Pension Scheme:
- Assisting the worker who grows elderly and unable to work for a pay-check, or who becomes invalid and unable to support himself by working;
- Assisting the survivors of the departed employee
As a result, the Social Security benefits provided by the pension branch are separated into two categories:
- Those supplied to the insured individual when he or she is elderly or infirm.
- Those distributed to his qualified survivors
Enrolment in pension benefits is required for the following people:
- All salaried employees (regardless of nationality)
- Prominent political figures
The rates of contribution are 3% paid by the employer and 3% paid by the employee.
Individuals might also choose to become a volunteer member. This may be accomplished by applying to join the plan and contributing the requisite 6% of salary. Voluntary members must be under the age of 45 to be accepted. Once you’ve had required insurance, you can only apply for optional insurance within the first 12 months following the day your mandatory insurance expired.
The salary stated under voluntary insurance must be at least the minimum monthly wage, with a maximum of 104,000 RWF.
Health
All people of the nation have free access to medical care in public hospitals and health insurance. Foreign funding pays for the country’s health-care costs. Facilities given by foreign aid are covered by the national health insurance system. Rwanda now has a well-functioning decentralized public healthcare system. Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
There is no private workers compensation yet in Rwanda.
Retirement
- Private retirement schemes are available.
- Options in the complementary occupational pension schemes, such as : BNR Complementary Occupational Pension Scheme.
- Options in the personal pension schemes, such as: Axis Pensions Ltd (Personal Pension Scheme).
Health
- Private Health Insurances are available.
- In 2006, private insurers began offering health insurance services to private firms as an alternative to the RAMA plan. Rwanda now has three health insurance companies: the Société rwandaise d’assurance (SORAS), the Compagnie rwandaise d’assurance et de reassurance (CORAR), and Africa Air Rescue (AAR). Certain private employers also cover their workers’ medical expenses to some extent.
Insurance
- Private life insurance is available.
PERSONAL INCOME TAX
Tax Year
Tax year runs from January 1st to December 31st.
Tax Tables
A resident taxpayer is required to pay income tax on all domestic and international sources of income throughout the tax period. A non-resident taxpayer is solely responsible for income tax on income earned in Rwanda.
Taxable Income | Rates of Taxes |
0 – 360 000 | 0% |
360 001 – 1 200 000 | 20% |
1 200 001 + | 30% |
Taxation Method
A resident taxpayer is required to pay income tax on all domestic and international sources of income throughout the tax period. A non – resident taxpayer is subject to liability to income tax which has a source in Rwanda. Pay As You Earn (PAYE) is a tax that must be withheld, disclosed, and paid to the Rwanda Revenue Authority (RRA) by any employer that provides employment income to an employee within 15 days of the end of the month in which the employment income was provided.
The legislation defines three types of employees with different tax rates: permanent employees, casual laborers, and employees with a second employer. Nonetheless, the first RWF 30,000 in employment income paid to permanent workers and temporary laborers is taxed at 0%.
Double Taxation
Rwanda has multiple double taxation agreements.
Residence Requirements
If an individual has a permanent residence, a habitual abode, is a citizen representing the country abroad, stays in Rwanda for more than 183 days in any 12-month period (either continuously or intermittently), and is resident for the tax period in which the 12-month period ends, the individual is considered to be a resident of Rwanda.
Payroll Calendars
- Employees are not required to be paid on a set schedule.
- Payrolls can be done weekly, biweekly, fortnightly, or monthly.
Rebates & Tax Credits
In Rwanda, there are no additional substantial tax credits or incentives for individuals.
Health Insurance
In Rwanda, health insurance is mandatory. RSSB contributions are equal to 15% of the employee’s base wage. It is paid at a rate of 7.5 percent by both the employer and the employee. RSSB also covers retirees’ medical insurance, with a 7.5 percent payment taken from their monthly income. Employers are responsible for deducting, disclosing, and paying their employees’ RSSB contributions. The contribution is deducted monthly and must be paid by the 10th of the following month.
Unemployment
Unemployment insurance and benefits are not covered by the law.
Social Security
All paid workers in Rwanda, both residents and foreigners, are required to contribute to the Rwanda Social Security Fund, commonly known as the Caisse Sociale du Rwanda (CSR). The company must contribute 5% and the employee must contribute 3%, based on the employee’s gross wage. Every month, the employer deducts social security contributions and remits the entire amount quarterly.
PAYROLL ELEMENTS
Income
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
Bonuses are added to an individual’s monthly income. Gratuities paid as a result of a termination, severance, settlement, or mutual agreement must be taxed at a rate determined by the authority in accordance with a tax directive.
Allowances
- Allowances are not mandatory by law, it is dependent on the employer
- Examples of sick pay and medical allowance
- Allowances for the expense of living, such as sustenance allowances, housing allowances, and entertainment or travel allowances.
Benefits in Kind
Benefits in kind are included in taxable remuneration. Rwandan law establishes the foundation for taxation of the following in-kind benefits:
- Housing is taxed at 20% of gross work income, excluding in-kind benefits.
- Motor vehicle benefit: This is taxed at 10% of work income, excluding in-kind benefits.
- Rent for a house or a car paid directly by an employer for an employee: This is taxed in the same way as any other allowance.
- Loan to employees at a low interest rate: The benefit occurs if the loan is three times the monthly wage. The benefit is calculated as the difference between the National Bank of Rwanda’s rate of interest provided to commercial banks and the employee’s actual interest paid that month.
Investment Income
Capital Gains Tax
- Capital gains tax is levied on the sale or transfer of shares or debentures, whether direct or indirect. The capital gains tax is levied at a rate of 5% of the capital gain. The capital gain on the sale or transfer of shares is calculated as the difference between the share’s purchase value and its selling or transfer price.
- In Rwanda, there is a general capital gains tax legislation that states that capital gains from the sale of commercial immovable property are taxed at a rate of 30%. Capital gains on secondary market transactions on listed securities, on the other hand, are tax-free.
Dividends Tax
- Dividend income comprises revenue from shares in any society, other comparable income earned by all organizations that pay CIT, and the outstanding amount after taxation of income from the tax administration’s adjustment in transfer pricing.
- WHT is levied at a fixed rate of 15% on dividend income. If the receiving nation and Rwanda have a double taxation agreement (DTA), the lower rate specified in the DTA will apply.
- If the dividend payout was subject to WHT, this is the ultimate tax. As a result, dividends distributed between resident corporations that are subject to WHT are not taxable income for CIT purposes.
Royalty revenue consists of the following items:
- any cash received as a prize
- any cash received as a reward for any types of design
- any payments that are considered from natural resources
- WHT is taxed at a set rate of 15% on royalties. If a DTA exists for Rwanda, the lesser rate will apply.
Rental Income:
- Rental income in Rwanda includes all money earned from the rental of machinery and other equipment, including agricultural and animal equipment. This is lowered by 10% of gross income considered costs, loan interest, and depreciation charges.
Retirement Funding
The rates of contribution are 3% paid by the employer and 3% paid by the employee. Individuals might also choose to become a volunteer member. This may be accomplished by applying to join the plan and contributing the requisite 6% of salary. Voluntary members must be under the age of 45 to be accepted. Once you’ve had required insurance, you can only apply for optional insurance within the first 12 months following the day your mandatory insurance expired. The salary stated under voluntary insurance must be at least the minimum monthly wage, with a maximum of 104,000 RWF.
Health Insurance
In Rwanda, health insurance is mandatory. RSSB contributions are equal to 15% of the employee’s base wage. It is paid at a rate of 7.5 percent by both the employer and the employee. RSSB also covers retirees’ medical insurance, with a 7.5 percent payment taken from their monthly income. Community-based health insurance (CBHI) is a community healthcare system in Rwanda in which individuals (families) band together and pay payments for the purpose of protection and medical care.
Risk Insurance
N/A
Taxable Income
Rwandan residents are taxed on their international earnings. Non-residents are taxed on income earned in Rwanda. Residents and non-residents are subject to the same tax rates. A person’s taxable income for any year is the sum of that person’s income for the year less the entire amount of deductions that person is permitted. Employment income, company earnings, and investment income are all examples of taxable income.
Allowable Deductions
Any cost incurred totally and exclusively in the generating of work income may be deducted by an individual. Genuine reimbursement of business expenditures such as travel and automobile expenses is not taxable employment income. The legislation makes no provision for tax-deductible personal deductions.
Costs of employment
- Any cost incurred totally and exclusively in the generating of work income may be deducted by an individual.
- Genuine reimbursement of business expenditures such as travel and automobile expenses is not taxable employment income.
Personal deductions
- Personal exemptions
- The legislation makes no provision for tax-deductible personal deductions
- Deductions that are standard
- Rwanda does not have any standard deductions.
Allowances for personal expenses
- Rwandan law has no provision for particular personal allowances.
Tax breaks for businesses
The legislation provides for the deduction of costs that are employed entirely and only in the generating of revenue. The costs must meet the following criteria:
- Expenses incurred for the exclusive purpose of the business and immediately charged to income.
- Correspond to a genuine expenditure that can be supported by accurate purchase receipts.
- As a result, the company’s net assets will drop.
- Used for actions that are relevant to the tax period in which they occur.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
In Rwanda, Health Insurance is mandatory and both the employer and employees have to make monthly contributions. RSSB contributions are equal to 15% of the employee’s base wage. It is paid at a rate of 7.5 percent by both the employer and the employee. RSSB also covers retirees’ medical insurance, with a 7.5 percent payment taken from their monthly income. The employer must also contribute 5% towards the Rwanda Social Security Fund (CSR) every month.
Unemployment
Unemployment insurance and benefits are not covered by the law.
Social Security
All paid workers in Rwanda, both residents and foreigners, are required to contribute to the Rwanda Social Security Fund, commonly known as the Caisse Sociale du Rwanda (CSR). The company must contribute 5% and the employee must contribute 3%, based on the employee’s gross wage. Every month, the employer deducts social security contributions and remits the entire amount quarterly.
Workers Compensation
The first law was enacted in 1949. (Compensation for work accidents and occupational diseases in Belgian Congo and Rwanda-Urundi). Current legislation: 1974 (social security) and 2003 (electronic voting) (social security). Social insurance system is a type of program.
Coverage:
- People who are employed.
- Self-employed individuals are excluded.
Funding Source:
- Self-employed: This does not apply.
- Employer: 2% of gross monthly payroll
- Contributions are calculated using earnings.
- Government: None; employer contributes.
- Conditions of Eligibility
ADMINISTRATION
Income
An individual’s income is taxed under the Personal Income Tax Act. Obligations of the concerned income tax payers. A resident taxpayer is required to pay income tax on all domestic and international sources of income throughout the tax period. A non-resident taxpayer is solely responsible for income tax on income earned in Rwanda.
Income that is taxable
- Income from employment
- Profits from business
- Income from investments
An individual who receives taxable income produces an annual tax statement in line with the Commissioner General’s rules and submits it to the Tax Administration no later than March 31st of the following tax period.
Payroll Taxes
The employer must also contribute 5% towards the Rwanda Social Security Fund (CSR) every month. RSSB contributions are equal to 15% of the employee’s base wage. It is paid at a rate of 7.5 percent by both the employer and the employee.
Unemployment
Unemployment insurance and benefits are not covered by the law.
Social Security
The employer must also contribute 5% towards the Rwanda Social Security Fund (CSR) every month.
Workers Compensation
Employers must ensure that 2% of gross monthly payroll goes towards workers compensation.
Statutory Benefits
Rwanda has mandatory health insurance that both the employer and employee contribute towards.
Employee Benefits
Many benefits are likely to be included in your Rwanda benefits management plan, but we recommend starting with those that are legally guaranteed. For example, the country observes 14 paid national holidays, and employees should be entitled to paid time off on those holidays. In most cases, all employees are entitled to at least 18 days of paid yearly leave. In Rwanda, most female employees are entitled to 12 weeks of paid maternity leave. Paternity leave is up to 4 days paid leave.
LEGISLATION
The New Labour Code
STATUTORY BODIES
- Rwanda Utilities and Regulatory Authority
- Rwanda Revenue Authority
- Rwanda Bureau of Standards
- Road Transport and Development Agency
- Rwanda Development Board
- Rwanda Information Technology Authority
- Rwanda Environment Management Authority
