A trader delivers goods for clients on a busy street in Kigali. The new taxes are meant to ensure the consumer is not impacted much.
Rwanda has ushered in new fiscal reforms with the publication of a new package of tax laws in the Official Gazette on May 29, 2025.
The new measures—signed into law by President Paul Kagame and adopted by Parliament in April—are designed to expand the country’s domestic revenue base while addressing critical policy priorities in infrastructure development, environmental protection, and economic sustainability.
At the heart of the reforms is the introduction of new taxes and adjustments to existing ones that will affect virtually all sectors of the economy, from imports and local manufacturing to tourism and fuel consumption.
The changes mark one of the most comprehensive updates to Rwanda’s tax policy in recent years.
Among the most notable changes is the creation of a new environmental levy targeting imported items packaged in plastic. Under Law No. 010/2025, importers will pay a levy of 0.2 percent of the customs value on a wide range of plastic-packaged products. These include bottled water, juices, cosmetics, soaps, shampoos, body lotions, clothing, shoes, and mattresses.
The tax aims to reduce plastic waste and encourage environmentally friendly packaging practices. It comes into effect on July 1, 2025, and will be collected at border points through the Rwanda Revenue Authority.
In an effort to boost tourism-related revenue, the government has also introduced a 3 percent tourism tax on accommodation services. This charge, under Law No. 015/2025, will apply to the amount paid for accommodation—excluding VAT—and will be collected by hotels, guesthouses, and other lodgings before being remitted monthly to the tax administration.
Officials say the tax is intended to strengthen Rwanda’s ability to promote and support its tourism industry, which has become a key pillar of the national economy.
To address growing demands for infrastructure and energy resilience, two new levies have been introduced on petroleum products and motor vehicles. Law No. 012/2025 imposes a 15 percent levy on the customs value of petrol and gas oil, with revenues earmarked for building strategic fuel reserves.
Meanwhile, Law No. 013/2025 creates an annual levy on road users, requiring vehicle owners to pay annual fees ranging from 50,000 RWF for sedans to 150,000 RWF for heavy trailers. The revenue will go toward road maintenance and rehabilitation.
A significant overhaul of excise duties has also been enacted through Law No. 011/2025. This law increases or redefines taxes on select goods and services, especially those deemed harmful or luxury.
Cigarettes, for example, are now taxed at 36 percent of their retail price plus an additional 230 RWF per pack. Cigars are taxed at a hefty 160 percent, while electronic cigarettes face a fixed tax of 30,000 RWF per unit. Their liquid cartridges are taxed at 24,400 RWF.
Motor vehicle lubricants now attract a 37 percent excise duty, while fuel prices will be further burdened by an excise tax of 183 RWF per litre for premium petrol and 150 RWF per litre for gas oil.
Vehicles are also taxed based on engine size and age. Those with engines below 1500cc or hybrid vehicles that are three years old or newer will be charged an excise duty of 5 percent. For vehicles between 1500cc and 2500cc—or older hybrids between three and eight years—the rate is 10 percent. Vehicles over 2500cc or hybrids older than eight years will be taxed at 15 percent.
In a progressive move, the new legislation also expands the list of goods and services exempt from value added tax (VAT). Law No. 009/2025 introduces exemptions for medical services and pharmaceutical products, sanitary pads, educational materials (including online learning tools), books, newspapers, and raw agricultural products.
Electric vehicles and their charging infrastructure, as well as machinery and raw materials for industries, are also exempt—until June 30, 2028, and June 30, 2026, respectively.
Government officials say these changes reflect Rwanda’s strategic intent to balance tax fairness with the need to fund long-term national goals. By taxing consumption of luxury and environmentally harmful products while easing the burden on basic services and productive sectors, the government hopes to encourage responsible consumption, support industrialization, and safeguard environmental and public health.
All laws take effect immediately upon publication unless otherwise stated, with July 1, 2025, being the effective date for the environmental levy and tourism tax.
Businesses have been urged to prepare for the changes by adjusting pricing models and compliance systems, while consumers should anticipate moderate price shifts on affected goods and services.
As Rwanda positions itself for the next phase of growth, these new tax measures are expected to serve as a critical fiscal tool in building a self-reliant, equitable, and sustainable economy.
This raft of taxes are part of a broader tax reform totaling 14 new taxes that will be implemented over the next f=five years, with the aim to generate over Rwf 350billion ($310m)
