How Rwanda Embedded Tax Expenditure Reporting: 7 key Lessons for Practitioners

By Israel Bikorimana, Harshil Parekh, Romal Sanjeeda | 04 October 2024

This blog was first published by the ODI

Governments spend through national budgets, but also through the tax system in the form of exemptions, deductions, credits, preferential rates, and deferrals. These provisions in the tax code are referred to as Tax Expenditures (TEs), represented by the revenue foregone from the tax that would otherwise be collected. Regularly estimating and reporting on tax expenditures increases transparency, and can help to promote discussions on whether resources are being used efficiently and equitably, as well as whether specific TEs are meeting their broader economic objectives.

Estimating TEs is a complex exercise that requires substantial data analysis and modelling. At the same time, its communication must be succinct and understandable to a non-technical audience to allow engagement from a wide range of stakeholders. TaxDev’s working paper on tax expenditure reporting in Rwanda and Uganda details challenges, practical guidance and lessons learnt relating to the technical methods of estimation and reporting.

This blog identifies seven lessons centred around the enabling factors which have contributed to the progress made by the Ministry of Finance and Economic Planning (MINECOFIN) and Rwanda Revenue Authority (RRA) in embedding TE reporting in their annual processes. It aims to offer insights for other governments and their partners looking to undertake similar exercises.

Read the full blog