Rwanda Approves New VAT & Digital Services Tax Rules for 2026

February 26, 2025

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The Rwanda Cabinet approved the package of tax policy reforms on February 10, 2025, which aims to introduce new tax rules. The decision was made as part of the 2024 to 2029 National Strategy for Transformation (NST2).

The Rwanda Cabinet's new rules aim to broaden the tax base by imposing new levies on digital services, excise duties on consumer goods, and reintroducing certain taxes.

Impact on Taxable Persons

Under the published tax reform policy, the Rwandan government aims to introduce a new 1.5% on revenue of foreign digital platforms that provide advertising, search, and subscription digital services. Subjecting foreign digital service providers to the new tax aligns Rwanda with the global trend of imposing such tax on digital platforms.

Furthermore, the Rwandan government wants to reintroduce VAT on mobile phones, which have been VAT-exempt since 2010. VAT on ICT equipment will also be reintroduced, and only specific ICT equipment will remain VAT-exempt.

To support investments in the tourism and hospitality sector and industry, a 3% levy will be imposed on hotel accommodation costs. Additionally, cosmetics and beauty products will be subject to a 15% excise duty.

Also, hybrid vehicles will continue to benefit from a 25% import duty exemption, but 5% VAT and withholding tax will be reintroduced. Electric vehicles will remain fully VAT-exempt.

Conclusion

All the presented taxes, including the so-called Netflix and Amazon tax on foreign digital services, should come into force as part of the 2026/2027 financial year plans. The government is expected to publish other relevant information on the new tax for digital services in June this year. Still, some insights suggest that a tax representative may be required to fulfill this requirement.

However, monitoring the development of future policies is necessary to have a complete picture of how the Rwandan government will proceed with implementing and reintroducing specified VAT, tax on digital services, and other levies.

Source: Further Africa, The New Times, MSN

What are Rwanda's new Digital Services Tax (DST) regulations for foreign digital platforms?

Rwanda will impose a new 1.5% Digital Services Tax (DST) on revenues from foreign digital platforms offering advertising, search, and subscription services starting in 2026.

When will Rwanda's VAT reintroduction on mobile phones take effect?

Rwanda will reintroduce VAT on mobile phones and certain ICT equipment during the 2026/2027 financial year, ending their previous VAT exemption.

Which digital services will be subject to Rwanda's new 1.5% DST?

The new 1.5% DST in Rwanda applies specifically to revenues from digital advertising, search engine services, and subscription-based digital platforms.

What changes will Rwanda's new tax reforms bring to the tourism and hospitality sectors?

A new 3% levy will be imposed on hotel accommodation services to support Rwanda's tourism and hospitality sectors, effective from 2026/2027.

Are electric and hybrid vehicles affected by Rwanda’s recent tax changes?

Hybrid vehicles retain a 25% import duty exemption but will face a reintroduced 5% VAT. Electric vehicles remain fully VAT-exempt.

Do foreign digital companies need a local tax representative under Rwanda’s new DST rules?

Foreign digital companies may need to appoint a local tax representative in Rwanda, although specific rules will be clarified by June 2025.

Digital Services Tax (DST)

VAT