This was due to registered businesses that never operated or ceased operations for various reasons. The closure of these accounts led to a reduction of nearly 100,000 small taxable businesses.
Jean Paulin Uwitonze, the Deputy Commissioner for Taxpayer Services and Communications at RRA, told the national broadcaster (RBA) that the decrease resulted from technological reforms that enabled the identification of registered businesses and taxpayers that were not actually operational.
"With the adoption of digital systems, RRA was able to access information that was previously unavailable, allowing us to make informed decisions. For instance, some young graduates eager to become entrepreneurs would register businesses and receive TINs, but later, many found formal employment, leaving their TINs unused with no tax payments, no imported goods, and no business transactions within the country," he explained.
Previously, RRA's digital system imposed penalties on these inactive accounts as non-compliant taxpayers. However, after thorough investigations confirmed that these businesses never operated, the authority opted to close the TINs instead.
Additionally, some TINs were either closed or suspended due to businesses that had been active but later ceased operations.
"There were TINs that were once used for tax payments but later became dormant. After a period of inactivity with no indication of ongoing business operations, some owners even approached us to explain that they had secured employment and stopped running their businesses. Should we continue treating them as taxable businesses? In such cases, we closed or suspended their TINs," Uwitonze added.
He emphasized that this move was aimed at ensuring that only those required to pay taxes are taxed, clarifying that it does not indicate a decline in the number of taxpayers.
The decision also relieved individuals who had inactive TINs from penalties for non-compliance, despite no longer engaging in business.
In the past fiscal year, RRA closed over 40,000 tax accounts and suspended more than 130,000 others. As a result, the number of taxable small businesses dropped from 465,378 to 382,318, while the number of taxable medium-sized businesses declined from 842 to 786.
IGIHE
Source : https://en.igihe.com/business/article/why-rra-shut-down-more-than-40-000-taxpayer-accounts
