RWANDA Law and Practice Contributed by: Aimery de Schoutheete and Penina Ngabire, Liedekerke Great Lakes
4.2 Tax Incentives for Mining Investors and Projects Under Law No 006/2021 of 5 February 2021 on investment promotion and facilitation (the “Invest - ment Law”), mining activities related to exploration, processing and value-addition, and export are con - sidered priority economic sectors. A mining company registered in Rwanda can become a registered inves - tor by registering their investment with the RDB and can thus benefit from various tax incentives. Regis - tered mining investors can also negotiate tax stabilisa - tion agreements with the state. Tax Incentives for Mining Investors and Projects A mining investor registered with the RDB can benefit from various tax incentives, including: • a preferential corporate income tax of 15% (instead of 28%) provided that at least 50% of the turnover of the company comes from exporting minerals processed in Rwanda; • a corporate income tax holiday of up to seven years, provided that the company invests at least USD50 million and that at least 30% of this invest - ment is in equity; • exemption from CGT (instead of paying 10%); • exemption from customs taxes and duties for products used in export processing zones (accord - ing to RDB’s website and guidelines, this exemp - tion applies to all heavy mining machinery imported into Rwanda); • VAT exemption on mining equipment (instead of paying 18%); • accelerated VAT refund where applicable; and • accelerated depreciation for the first year for new or used assets. In addition, a registered investor holding a valid explo - ration licence is entitled to carry forward losses for a period of ten years (instead of five years) from the first year of making the loss, by deducting losses in the order in which they were incurred. This incentive is applicable if the exploration expenditure has account - ed for at least 50% of the investor’s total expenditure during the years in which losses were made. It is not clear from the Investment Law whether these losses can still be carried forward once the registered
investor has obtained a mining licence. However, the company could seek to obtain such a guarantee from the RDB (and the RMB) during negotiations. The company cannot in principle benefit from a prefer - ential withholding tax on dividends, royalties, interest and service fees (the standard rate of 15% applies), unless it is entitled to preferential treatment under an international instrument (bilateral investment treaty or multilateral treaty). Tax Stabilisation Agreements Tax stabilisation agreements are not currently covered by Rwandan tax legislation. That said, there is nothing to prevent investors from negotiating a tax stabilisa - tion agreement with the state, particularly since min - ing exploration is a priority sector and the Investment Law provides that registered investors are entitled to additional investment incentives over and above those provided in the law. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects The Rwandan tax system imposes taxes on the sale or transfer of an ML or a QL. In addition, under the 2024 Mining Law, an ML cannot be transferred unless the LH has already invested a certain fixed percentage of the committed investment. Direct Transfer of an ML or a QL If a company directly transfers an ML or a QL, for instance by selling it, this operation would be subject to: • 18% VAT paid by the transferee (which the trans - feree can claim back if they are registered in Rwanda); and • 28% CIT paid by the transferor (who must include the sale proceeds in their taxable income). Indirect Transfer of an ML or a QL Through a Share Transaction If a company indirectly transfers an ML or a QL through a share transaction, the seller is usually sub - ject to a 10% capital gains tax on the profit made. This applies whether the sale happens in Rwanda or abroad, unless a special exemption applies, eg, when the seller is a registered investor with a tax exemp -
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