Rwanda's Revised VAT Exemptions and Digital Services Tax (DST) Enacted in 2025

On May 29, 2025, several laws were published in the Rwanda Official Gazette, including amendments to the VAT Law and the Law on Income, which contain relevant provisions relating to the taxation of digital services. The enactment of laws aligns with the previous announcement from the Rwanda Cabinet, which approved the package of tax policy reforms on February 10, 2025.

Key VAT and Digital Services Tax (DST) Measures

Regarding the amendments to the VAT Law, the Rwandan government expanded the list of goods and services exempt from VAT to include medical services, pharmaceutical products, sanitary pads, educational materials, including online learning tools, books, newspapers, and raw agricultural products. 

Additionally, the VAT exemption also applies to gaming activities. However, under the amendment to the Law on income, companies engaged in gaming activities must withhold 25% tax on the difference between the player’s winnings and the amount wagered by the player. Furthermore, e-vehicles and the necessary charging infrastructure will benefit from VAT exemptions until June 30, 2028. 

The Official Gazette also includes amendments to the income tax, which impose a 1.5% digital services tax (DST) on companies that provide digital services and have a substantial presence in the country. The DST applies to gross revenue derived from within the country during the applicable tax period.

However, it is necessary to highlight that specific details, including which digital services are considered taxable, what constitutes a substantial national presence, and how businesses should handle registration, tax declarations, and payments, are established through a Ministerial Order.

Conclusion

The amendments took effect on the day they were announced in the Official Gazette. The recent enactment of Rwanda's revised tax laws represents a step forward in modernizing the country's fiscal framework to meet better the requirements and challenges of the evolving digital economy. 

By broadening the tax base through the introduction of a DST, the Rwandan government has underscored its commitment to ensuring fair taxation in a globalized digital marketplace, reaffirming the principle that all economic actors, including foreign digital service providers, contribute their fair share to the national budget.

Source: Rwanda Official Gazette, VATabout