Can foreigners start a business in Rwanda?
Yes, a foreigner may set up a business in Rwanda. The Rwandan government welcomes all international investment in all fields, with no restrictions on ownership or stock. In a recent World Bank Group annual assessment on the ease of doing business, Rwanda was placed as the second-easiest country in Africa and 56th overall. The quickest and fewest steps are required to register a business in Rwanda. The country is good for investing. Having one of the most favorable business climates on the African continent, it has a consistent and high growth rate (averaging over 7% in the past ten years), significant progress in governance and relative political stability, access to a market of over 10 million people with a rapidly expanding middle class, and untapped investment opportunities in infrastructure, agriculture, energy, tourism, ICT, real estate and construction, financial services, and other sectors.
However, Rwanda has restricted the sectors that a limited company is allowed to operate in. For example, banking, insurance, finance, and leasing all require the creation of a public company.
Two broad sorts of companies are used;
A private corporation has fewer transfer restrictions on its shares and debentures, a cap on the number of shareholders at one hundred and is not permitted to issue any invitations to the public to subscribe to its shares or debentures. A corporation is assumed to be a private company if there is just one stakeholder.
Public Companies are organizations that have made shares of stock available to the general public through a private placement or an IPO and whose securities have been listed on one or more stock exchanges.
There are several options for business owners to establish themselves in Rwanda, but the most popular structure is the limited liability corporation (LLC). Options like a Rwanda Private Limited company, a Branch, or a Representative Office are available to foreign corporations seeking to invest and establish businesses in Rwanda.
How much does it cost to register a business in Rwanda?
You can submit an application to the aforementioned organization if you want to conduct business in Rwanda. The price is RWF150,000 (USD 158). the business registration certificate, the police clearance certificate (from the country of residence for the previous six years), the detailed curriculum vitae, the photo (with a white background), the completed application form, and the application letter to the director of Immigration and emigration were all required documents.
Exemption from corporate taxes for businesses moving their headquarters to Rwanda
Energy, transportation, affordable housing, ICT, and financial services are among the sectors with a favorable corporate income tax rate (15%).
Depreciation acceleration of 50% for important industries, such as tourism, building, manufacturing, and agro-processing
Capital gains tax exemption for investors that are registered
Large initiatives in certain industries, including energy, exports, tourism, health, manufacturing, and ICT, are exempt from corporate income taxes.
Ease of returning money and other assets
Rwanda’s tax system is quite simple, with personal income taxes ranging from 0% to 30%, corporation taxes at 30%, and VAT at 18%. In Rwanda, there is a minimum wage.
Specific special economic zones exist. These areas are mostly used for industrial and manufacturing activities.
Pay As You Earn has a tiered scale, with 30% being the highest.
The corporate income tax rate is 30%, but there are reductions based on a company’s listing status, investment industry, global hub, and investment amount.
Exports are not subject to VAT, which is 18%.
A monthly pension contribution is made, with a 5% employer match and a 3% employee match.
A 0.3% monthly maternity contribution is also available, with contributions coming from both the company and the employee.
The Rwandan Revenue Authority collects taxes quarterly (RRA). Although the online filing process is simple, there are severe penalties for missing deadlines. Accountants are inexpensive and working with a firm is advised.
Businesses that make less than FRw 20,000,000 ($21,300) each year can elect to submit their taxes using the lump sum regime, which entails a 3% tax rate and no-cost reporting requirements. Businesses that generate more revenue are required to operate under the actual system, which accounts for expenses and imposes a 30% tax on net income.
The majority of products and services are subject to an 18% value-added tax (VAT). If your company makes more than FRw 200,000,000 ($213,000) a year, you must collect VAT and pay it to RRA on a quarterly basis (but you can claim VAT on your business-related expenses). Consult the RRA for more information as there are numerous extra taxes based on your situation.
What is the process of registering a business in Rwanda?
The Fundamentals of Business Registration in Rwanda – In sub-Saharan Africa, Rwanda is a country where investments are secure. According to the most recent World Bank annual evaluations, Rwanda is placed 38th out of 190 economies in terms of how easy it is to do business there. The Rwanda Development Board’s office of the registrar general, a division in Kigali, is where you can apply to register a business. Additionally, the application may be submitted online.
You can make use of the services of several consulting companies that are qualified to assist with company formation and other associated business advising services. The Rwanda Development Board (RDB) is a government department that unifies all the departments in charge of luring, keeping, and facilitating investments in the economy of the country.
All three of these procedures are completed electronically through the company registration system, which functions as a single electronic window. Following successful registration, the business receives a special identification number that serves as its social security number, TIN, and registration code. To register for various taxes like VAT and PAYE, however, as well as to register employees with the Rwanda Social Security Board, go to Rwanda Revenue Authority.
Foreign nationals need the power of attorney to present the company in Rwanda, A duly authenticated copy of the memorandum articles of association, a certificate of Registration/Incorporation issued by the registration authority in the country of incorporation, notarized resolution from the authorized agency authorizing to open a branch, passport copies of the shareholders/directors, list of directors residing in Rwanda (at least one).
Rwanda (Kigali) is one of the nations with one of the quickest formation times for a foreign-owned limited liability company (LLC), requiring only three procedures and 4 days. If a foreign corporation wants to engage in international trade, all that is needed is a trade license, which can be obtained in only one day. If foreign investors do not want to take advantage of the many investment incentives that the law offers, they do not need to apply for investment approval. The Rwanda Development Board, which centralizes start-up processes and manages company registrations, is an effective “one-stop shop” available in Rwanda. The procedure for registering a business is not currently accessible online. Only Mauritius permits electronic registration among the 21 Sub-Saharan African nations surveyed by the IAB.
Rwanda allows international investors to open and maintain business foreign currency bank accounts. Rwanda does not impose any limits on the makeup of the boards of directors of completely foreign-owned businesses or a minimum capital requirement for investors.
Rwanda is one of the nations that are most open to foreign equity ownership, with no legal ownership limits on any of the thirty-three industries included in the research. It is challenging for foreign investors to enter a variety of sectors in practice because of monopolistic or oligopolistic market structures that are controlled by publicly held firms. Monopolies are particularly prevalent in the media sector, the transportation and electrical sector groups, and the energy sector.