KIGALI, Feb. 11 (Xinhua) -- The Rwandan Cabinet has approved tax policy reforms to bolster the country's financial resources and drive economic growth, the finance ministry said Tuesday.

The changes, to take effect in the 2024/2025 fiscal year and beyond, aim to broaden the tax base, enhance revenue mobilization, and streamline tax administration, according to the statement, which followed a Cabinet meeting Monday evening.

The measures include a 15 percent excise duty on imported cosmetic and beauty products (with exemptions for critical pharmaceutical beauty products), increased vehicle (including electric vehicles) registration fees, and a shift in fuel levy from a fixed fee to 15 percent of cost-insurance-freight, the statement said.

Value added tax (VAT), which was previously exempted, will be reintroduced on mobile phones and select information and communication technology (ICT) equipment. The government has pledged to work with stakeholders to ensure continued growth in smartphone ownership and usage and will consult with the Ministry of ICT and Innovation on exemptions for specific ICT equipment, it added.

The tax on gross gambling revenue will rise significantly, from 13 percent to 40 percent, with a corresponding hike in withholding tax on winnings.

A new 3 percent tourism levy on accommodation costs will support investment in the tourism and hospitality sector, the statement said.

Hybrid vehicles will continue to benefit from a 25 percent import duty exemption.

To encourage the importation of newer hybrid cars with longer battery life, the new measures introduce an excise duty proportionate to the age of the vehicle -- 5 percent for those below three years old; 10 percent for four-seven years old; and 15 percent for eight years and older.

VAT and a 5 percent withholding tax will be reintroduced for all hybrid vehicles, but electric vehicles will remain fully exempt to promote green transportation. This measure will take effect in the 2025/2026 fiscal year, the statement said.

Excise taxes are also being adjusted for cigarettes, from 130 Rwandan francs (about 0.1 U.S. dollar) to 230 Rwandan francs (about 0.16 dollar) per pack; for alcoholic beer, from 60 percent to 65 percent of factory price; and for phone airtime, from 10 percent to 12 percent, with a planned increase to 15 percent, it said.

Further adjustments in sectors like financial services, transportation, and ICT are planned for the next fiscal year and beyond, including an environmental levy on single-use plastics and VAT on select fee-based financial services, fossil fuels, and road transportation of goods, the statement said.

Awareness programs will be implemented to educate taxpayers on the new provisions, and the government will support taxpayers during the transition, it said.

The new reforms are part of a medium-term strategy to ensure sustainable financing for Rwanda's ambitious development goals, the statement said. Enditem

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