Government has officially scrapped Value Added Tax (VAT) on commissions charged on remittances sent into the country.
This major policy shift was published in the Official Gazette n° Special of 17/04/2025 under Ministerial Order Nº 001/25/10/TC, which outlines the financial and insurance services now exempt from VAT.
Previously, money sent by the Rwandan diaspora—through banks, mobile money, or money transfer agencies—incurred service fees ranging from 0.2% to 15%, depending on the agency used.
The Rwanda Revenue Authority (RRA) then levied 18% VAT on these commission fees, increasing the overall cost of sending money home.
The new Ministerial Order exempts these commissions from VAT, directly reducing the cost of remittances. Specifically, the VAT exemption covers:
- Commissions on money remittance transactions from abroad,
- Commissions from correspondent banks working with Rwandan financial institutions,
- Agent banking commissions, and
- Mobile money and e-transfer commissions.
This exemption comes at a time when Rwanda is actively seeking to boost formal remittance channels and reduce the reliance on informal methods.
In 2024, Rwanda’s diaspora sent home a total of $502 million in remittances, according to the Central Bank.
With this move, more of the funds sent by Rwandans abroad will now reach their intended recipients without being eroded by tax on transfer fees.
