Gabriel Uzabakiriho
Starting in the 2026/2027 financial year, Rwanda plans to implement a new tax targeting digital services, affecting both local and foreign providers. Platforms such as Netflix, Amazon, and eBay could be subject to local taxation under this new regime, announced by the government on Monday, February 10.
The tax will apply to a wide range of services, including Business-to-Customer (B2C) and Business-to-Business (B2B) transactions. B2C refers to services or products sold directly to individual consumers, while B2B involves transactions between businesses.
The tax will cover various digital services consumed in Rwanda, including video and audio streaming platforms, e-commerce sites, software updates, and online gaming platforms. According to the Ministry of Finance and Economic Planning, a 1.5 percent tax will be applied to the revenue generated by these companies within Rwanda.
Implementation Strategy
Between now and June, the finance ministry will collaborate with relevant institutions to develop a policy framework for collecting the new tax. Angello Musinguzi, a Senior Tax Manager at KPMG East Africa, suggests that tax agents could play a key role in the collection process. Tax agents are individuals or organizations authorized to manage tax obligations on behalf of taxpayers, including filing returns, making payments, and ensuring compliance with tax laws.
In the case of foreign digital service providers like Netflix, which lack a physical presence in Rwanda, tax agents could act as intermediaries between these companies and the Rwanda Revenue Authority (RRA). Musinguzi proposed that telecom companies or internet service providers operating in Rwanda could serve as tax agents.
“Some foreign digital service providers may appoint tax agents to collect revenue, withhold taxes, and remit them to the tax administration, along with the remaining profits,” he explained.
Musinguzi acknowledged that the tax is a positive step toward generating revenue but emphasized the need for additional investment in technology to effectively implement the system.
Why 1.5 Percent?
When asked whether the 1.5 percent rate is too low, Musinguzi explained that starting with a modest rate allows for gradual increases over time. A 2021 joint paper by the Rwanda Revenue Authority (RRA) and the International Centre for Tax and Development (ICTD) highlighted the importance of taxing the digital sector fairly, ensuring it meets the same requirements as other industries.
The paper noted that while taxing digital services is crucial for equity and revenue generation, it must be balanced against Rwanda’s long-term goal of becoming an ICT hub. Foreign digital services have gained significant global traction, amassing billions of dollars in revenue. For example, as of February 2025, Netflix reported over 300 million paid subscribers worldwide, spanning more than 190 countries.
This new tax initiative reflects Rwanda’s efforts to adapt its tax system to the growing digital economy while ensuring fairness and sustainability in revenue collection.