Direct taxation includes a tax on industrial and commercial profits, at 35% in 2003. Taxes on dividends and a turnover (sales) tax are also levied. Indirect taxation, forming the bulk of government tax revenue, is derived largely from import and export duties.
Individual taxes are levied in accordance with a progressive schedule with five brackets: 0% for income up to about $342; 15% on the next increment of income up to $685; 25% on the next increment up to $1,142; 30% on the next increment up to $1,826; and 35% on the increment above $1,826. The tax law of 2002 provides for a number of additional deductions in calculating taxable income including pension payments, disability benefits, medical expenses, travel expenses, and on-the-job meal and training expenses. Diplomats and diplomatic staff, high ranking executives of international organizations, as well as persons and companies under special agreements ratified by law, are given special tax exemptions. Privileged persons include those dealing in exports as well as with donor-funded projects under an agreement with the government of Rwanda and the donor.
Rwanda has legislated a value-added tax (VAT) with a standard rate of 18% on all taxable goods and services.