By May 2021 Rwandan taxpayers will not have to deal with problems of reclaiming their taxes which have been wrongly miscalculated in the e- tax collection system, Rwanda Revenue Authority has told parliament.
This resolve comes after parliament on September 22 discovered that the current e-taxation system in which the government has injected a cumulative Rwf18billion has discrepancies in reconciling financial and tax collected.
RRA appeared before the Public Accounts Committee (PAC) to respond to issues raised in the Auditor General’s (AG) report 2018/19 which showed that despite investment in IT based tax collection systems, there was incoherence between money collected and taxes paid.
The system according to the audit report was said to have different tax data recorded compared to the actual taxes paid by thousands of taxpayers thus creating a scenario of service dissatisfaction and tax reclaims.
The AG said that despite RRA having a clean financial audit in the previous year, RRA has a problem of confidence in tax collection where the tax collectors don’t know how much was paid and at times have to repeat their controls.
The Auditor General Obadiah Biraro said that the RRA system and human resource has no reconciliation to an extent that between the IT system and its sub systems, the control account which links the RRA taxes to the commercial banks and central bank don’t match.
“We have not seen assurance that this technology is used appropriately because subsystems are not reconciled, thus mismanagement and revenue loses,” AG Biraro said adding that this gap has led to mismanagement and revenue losses of about Rwf7billion in a period of a year, due to delays in reconciliations.
RRA Tax revenue collections have increased from Rwf62.8 billion in 1998 to Rwf1,399.5 billion in 2018/19 fiscal year surpassed its revenue targets especially due to technology in detecting defectors.
However, the report showed that delay also caused arrears to increase by 40% from Rwf161billionn in 2017 to Rwf270billion in 2019.
These tax arrears represent 20% of total government revenue collected by RRA for the financial year ended 30 June 2019, of which the RRA Commissioner General (CG) said that this was caused by a lack of an Integrated Financial Management System (IFMIS) in some private and government entities- such as schools, hospitals and health centers.
MP Beline Uwineza who analyzed the RRA report for PAC, said the same gaps (un-reconciled IT systems) are also in the tax collection, tax payers’ accounts, Value Added Tax (VAT) management and use of the e-tax systems which is still weak.
For example one of the taxpayers, parliament showed that he was supposed to pay taxes of over Rwf390 million, but the RRA system showed a count of Rwf700 million of which after its disclosure, the payment had to be refunded.
RRA IT officials explained that mistakes happened in the technology especially where banks sent and notifications didn’t reach or got canceled in process and sometimes the cancelation in e-payment doesn’t inform the e-tax system thus the need to reconcile the systems starting with the tax account of the taxpayer all the way up.
“Why is it that the information is not reconciled in the RRA report accounts, with differences in tax accounts of E-Systems to an extent RRA has to correct mistakes done in vat collection and some clients complaining of paying twice?” Uwineza asked.
In response RRA CG, Pascal Bizimana Ruganintwali said despite the gaps they are working with the Ministry of Finance and Economic Planning (MINECOFIN) on integrating the whole system and each step that is completed is implemented and by May next year the whole system will be reconciled.
“We don’t deny the inconsistencies but the problem is payment made through government entities which is not automatic and we had to put in suspension the account since they didn’t indicate the payment purpose,” Ruganintwali said.
The funds on suspended accounts are reflected in the accumulated overdue arrears of Rwf270billion, of which Ruganintwali said that so far some funds have been retrieved and the rest is being followed up through confiscation of defaulters’ property and through auction options before the ask for a write off procedure.
“We are working with minecofin to integrate all government systems to pay using IFMIS. We have already retrieved amounts and by May next year this will be history.
From the arrears in bad debts, Ruganintwali revealed that RRA has so far recovered Rwf66million since the report publication but most of the money has not been paid to the government (Rwf90billion) especially in the ministry of infrastructure despite several notices.
RRA said that so far they confiscated their property (with Rwf13billion) which will enable the recovery through auction if RRA gets a legal go ahead however AG Biraro said that this is absolute laziness of which if RRA wanted would use the same previous efforts to get the taxes back
MPs and the AG advised RRA that in order to win the trust of taxpayers, RRA needs to start with reconciling the manual tax paperwork before thinking of reconciling it automatically.