Rwanda Revenue Authority (RRA) headquarters in Sonatube, Kicukiro, Kigali.
Since the beginning of July, a wave of confusion has swept across about changes to Value Added Tax (VAT) on banking services. Many people have received messages — from their banks — that seem to suggest the government has started charging new taxes on bank accounts, loans, or interest.
Some customers are now worried that they will have to pay more for basic banking, while others are unsure whether their savings or business loans are now taxable.
But here are the facts, clearly and fully explained:
The government has not introduced new VAT on banking services.
There is no new tax on your savings, your loan, or your interest income.
What has changed is clarity — the government has issued a Ministerial Order to clearly define which services are exempt from VAT and which are not, so that banks, customers, and tax authorities all understand the rules the same way.
This guide will explain everything in simple, plain language, using real examples from public messages — including the Bank of Kigali’s client notice you shared — to show why confusion arose, and why a full explanation like this one is urgently needed.
What Is VAT?
VAT stands for Value Added Tax. It is a consumption tax applied to most goods and services in Rwanda at a rate of 18%. When you buy food, clothes, mobile data, or pay for internet, VAT is usually included in the price.
But not everything is taxed. The law says that certain essential or complex services — like healthcare, education, and financial services — should be exempt from VAT to protect consumers and support economic activity.
The New Ministerial Order
On 16 April 2025, the government issued Ministerial Order No. 001/25/10/TC, titled: “Annex to Ministerial Order N° 001/25/10/TC of 16/04/2025 Determining Financial and Insurance Services Exempted from Value Added Tax.”
This order does not create new taxes. It does not remove any existing exemptions. Instead, it lists clearly which financial services are exempt from VAT, so there is no more guesswork.
Before this order, the VAT Act (Law No. 14/2006) stated that financial services were exempt, but it didn’t say exactly which ones.
This led to inconsistent practices — some banks charged VAT on services that should have been exempt, while others didn’t. Customers were confused. Auditors were confused. Even banks were unsure.
Now, with this order, the rules are clear, official, and binding.
Misleading Messages
Let’s look at two real messages that have caused misunderstanding.
Message 1:
“Mukiriya Wacu, Tugendeye ku Iteka rya Minisitiri No.001/25/10/TC ryo ku wa 16/04/2025, turabamenyesha ko hari servisi za banki zizatangirwa umusoro wa 18% TVA.”
(“Dear Citizen, According to Ministerial Order No. 001/25/10/TC of 16/04/2025, we inform you that certain banking services will now be subject to 18% VAT.”)
This message is misleading. It says “zizatangirwa” — “will now be subject to” — which implies that new services are being taxed. But that is factual. The order does not introduce new VAT. It only confirms what was already the case.
This wording has caused panic among citizens who think their loans or savings are now taxable.
Message 2:
“Hashingiwwe ku iteka rya Minisitiri No 001/25/10/TC ryo ku wa 16/04/2025, turabamenyesha ko guhera ubu, zimwe muri bakiliya bacu, umusoro wa TVA ungana na 18% ntabwo washyizweho na banki. Ni umusoro usabwe na Leta. Turi gushyira mu bikorwa ibyo itegeko ritenganja.”
(“Following Ministerial Order No. 001/25/10/TC of 16/04/2025, we inform our customers that VAT at 18% will continue to apply to certain services. This is a tax imposed by the State. We are implementing what the law requires.”)
While some bank message are more accurate, they still focused only on the services that are taxed, without clearly stating which ones are exempt.
This imbalance makes customers worry that most banking is now taxable, when in fact, the opposite is true.
The Big Picture: Most Banking Services Are Exempt
Let’s be absolutely clear; The vast majority of banking services — especially those involving money, credit, and investment — are EXEMPT from VAT.
Only ancillary, administrative, or technical services — where the bank is providing a physical or digital service, not a financial one — are subject to VAT.
Below is the most complete list ever published of banking services in Rwanda, categorized as VAT-Exempt or VAT-Applicable (18%).
FULL LIST: Banking Services EXEMPT from VAT (You Do NOT Pay VAT)
These services are financial in nature — they involve lending, borrowing, investing, or risk. They are fully exempt from VAT under Ministerial Order No. 001/25/10/TC.
| Exempt Banking Service | Explanation |
|---|---|
| Acceptance of deposits (savings, current, fixed accounts) | No VAT on opening or maintaining deposit accounts as financial products |
| Granting of loans and credit facilities | Personal loans, business loans, mortgages, etc. |
| Interest income or payments | Interest earned on savings or paid on loans |
| Overdraft facilities | Short-term borrowing against account limit |
| Discounting of bills and promissory notes | Financial advance against future payment |
| Treasury bill and bond transactions | Buying or selling government securities |
| Foreign exchange transactions (financial aspect) | The act of converting currency as investment or trade |
| Bank guarantees and standby letters of credit | When issued as part of financing or trade |
| Letters of credit (trade finance) | Used in import/export transactions |
| Financial leasing and hire-purchase financing | When structured as credit |
| Investment management and portfolio management (financial) | Managing funds in stocks, bonds, etc. |
| Custody services for financial instruments | Holding shares, bonds, etc. (financial aspect) |
| Insurance and reinsurance services | Life, health, property, and liability insurance |
| Currency exchange margins (profit from rate difference) | The bank’s profit from FX, not the fee |
| Interbank lending and borrowing | Banks lending to each other |
| Overnight and short-term placements | Temporary fund transfers between banks |
| Nostro account interest and operations | International settlement accounts |
| Debt restructuring and rescheduling | Modifying loan terms |
| Credit risk assessment (as part of lending) | Evaluating borrower risk for loan approval |
| Loan syndication services | Arranging loans from multiple banks |
These services are NOT subject to VAT — now, before, and after the new order.
FULL LIST: Banking Services SUBJECT to 18% VAT (You MAY Pay VAT)
These are non-financial, administrative, or technical services — where the bank is acting more like a service provider than a financial institution. VAT applies only to the fee, not to the financial transaction.
| VAT-Applicable Service | Explanation |
|---|---|
| Account maintenance fees | Monthly or annual fees for keeping an account open |
| Transaction fees (local transfers, mobile banking) | Charges for sending money within Rwanda |
| ATM usage fees (non-network or international) | Fees for using ATMs outside your bank’s network |
| Chequebook issuance fee | Cost of printing and delivering a chequebook |
| Bank draft or cashier’s cheque fee | Service charge for issuing a guaranteed cheque |
| SMS banking and mobile app alerts | Subscription or per-message fees |
| Online banking setup or access fees | One-time or recurring digital service charges |
| Safe deposit box rental | Physical rental of a secure box at the bank |
| Certified statements or bank letters | Fees for issuing official documents (e.g., proof of balance) |
| Stop-payment requests | Charge for canceling a cheque |
| Unpaid item fees (e.g., bounced cheque) | Administrative penalty for failed transactions |
| International wire transfer fees (service portion) | The processing fee, not the exchange rate |
| Currency exchange service fee (commission) | The fee charged for the service, not the rate |
| Loan processing or documentation fee (if not part of credit) | If charged separately and not integral to the loan |
| Late payment reminders or collection notices | Administrative follow-up services |
| Card issuance fees (debit, credit, prepaid) | Cost of producing and delivering a card |
| Card replacement fees | For lost or damaged cards |
| PIN generation or reset fees | Technical service for card access |
| Standing order setup fee | One-time charge for automated payments |
| Direct debit setup fee | For recurring bill payments |
| Account closure fees (if charged) | Only if it’s a service fee, not tied to financial terms |
Important: VAT applies only to the service fee, not to the principal amount of money involved.
Why This Distinction Matters
The key is understanding that:
- Financial services = Exempt (no VAT)
- Service fees = Taxable (18% VAT)
For example:
- You take a loan of RWF 10 million → No VAT on the loan or interest.
- But if the bank charges RWF 5,000 to process the paperwork → 18% VAT on the RWF 5,000 (if it’s a standalone fee).
This has always been the rule. The new order just makes it clearer.
No New Burden on Clients
The Ministerial Order has not increased the number of services subject to VAT. In fact, by clearly listing exemptions, it protects customers from being wrongly charged VAT on loans, interest, or guarantees.
Banks that used to charge VAT on exempt services must now stop doing so. This is a win for consumers.
However, VAT on service fees remains — but again, this is not new.
What Should You Do?
- Check your bank statements — if VAT is charged on a loan, interest, or guarantee, ask for clarification.
- Share this guide with family, friends, and small business owners.
- Contact RRA or your bank if you’re unsure.
- Demand clear communication — banks and authorities must explain both sides: what is taxed and what is not.
