This paper discusses the imposition of the VAT on agricultural products under Rwandan law. The main issue is the exemption of unprocessed products vis-a-vis imposition of processed products. Throughout the time, the Rwandan VAT law has been explicit on that. However, from time to time, disputes arise between taxpayers and the tax administration, especially over the dimensions of “processed products”. This paper critically analyses the legal dimensions of processed agricultural products as compared to unprocessed agricultural products. The main issue addressed here is the distinction between processed agricultural products and unprocessed agricultural products, in order to decide whether or not to grant a VAT exemption. With reference to court decisions and practices in other jurisdictions, this paper considers that all preparation processes that make an agricultural product fit for consumption are not and should not be equated with “processing” as long as the product’s form and value have not changed cumulatively. This paper, thus, proposes a new paragraph to be introduced in the Rwandan VAT law to shed clarification on the matter.

Legal instruments

1.1. Rwandan laws and regulations

1.      Law No. 02/2015 of 25/02/2015 modifying and complementing the law No. 37/2012 of 09/11/2012 establishing Value Added, O.G.  No.11 bis of 16/03/2015.

2.      Law N°37/2012 of 09/11/2012 establishing value added tax, O.G. No. Special of 05/02/2013.

3.      Ministerial Order No. 010/16/10/TC of 01/11/2016 on processed foodstuffs and credit and debit notes details, O.G.  No.45 of 07/11/2016.

4.      Ministerial Order No. 001 of 13/01/2003 providing for value added tax rules and taxation procedure.

 1.2.  Foreigner domestic laws and regulations

1.       Mauritius VAT Act, consolidated version to Finance Act 2020, Schedule 11, available at https://www.mra.mu/download/VATAct.pdf accessed on 12 October 2021. 
2.     Annex I Regulation (EU) No 510/2014 of the European Parliament and of the Council of 16 April 2014 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products and repealing Council Regulations (EC) No 1216/2009 and (EC) No 614/2009.
3. Decree No. 538, the Interim Regulation of the People’s Republic of China on the Value Added Tax, January 1, 2009.
4. China, Decree No. 113, of August 1, 2001, Notice of Ministry of Finance and the State Administration of Taxation on the VAT Exemption on Some Agricultural Means.
5. China, Notice No. 52 of the State Council on December of June 15, 1995.
6. UK, Value Added Tax Act 1994

2. Cases

1.           No. RCOMAA 00034/2020/CA, Rwanda Revenue Authority v. SODAR Ltd, Court of Appeal, 19 February 2021.
2.           No. RCOMA 00753/2019/HCC Rwanda Revenue Authority v. SODAR Ltd, , High Commercial Court, 01 January 2019.
3.           No. RCOM 00070/2018/TC, SODAR Ltd v. Rwanda Revenue Authority, Commercial Court, 26 October 2018