Imposition of the Value Added Tax (VAT) on Agricultural Products under Rwandan Tax Law: Case of Rice

Abstract

This paper discussestheimposition of the VAT on agricultural products under Rwandan law. Themain issue is the exemption of  unprocessed productsvis-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 orderto 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 beintroduced in the Rwandan VAT law to shed clarification on the matter.