Rwanda: Govt Lifts Duty on Luxury Cars in Move to Woo Tourists

Rwanda will forgo millions of dollars in tax exemptions from importers of expensive vehicles as it attracts high-end tourists into the country.

It is the latest attempt to boost tourism, which is struggling to recover from the second wave of Covid-19 infections that have led to new travel restrictions by some countries.

In a letter dated January 22, 2021, the Ministry of Finance instructed the Rwanda Revenue Authority to exempt excise duty, value added tax and withholding tax on imported vehicles valued at $60,000 and above.

Ordinarily, such vehicles each pay an average of Rwf43 million ($43,000) in Customs and clearance taxes, according to the Rwanda Revenue Authority.

The rationale behind the exemptions, as explained in the letter, aims at facilitating the importation of expensive cars to promote high-end tourism, meetings incentives conferences and exhibitions (MICE), and foreign investment.

“It is important to note that the cap on import duty has been catered through the requested stay of application in the EAC pre-budget meeting of May 2020.”

“The purpose of this letter is, therefore, to request your good office to implement the government policy adopted by Cabinet,” reads the letter.

Foreign exchange earner

Despite the pandemic dampening global tourism, Rwanda is maintaining investment in the sector which was the leading foreign exchange earner in 2019, bringing in approximately $498 million in revenue. The target is to grow to at least $800 million by 2024.