Tax Residency in Rwanda
1. Criteria for Determining Tax Residency in Rwanda
According to Article 2 of the Income Tax Law of Rwanda, an individual is considered a tax resident if they meet any of the following criteria:
- Physical presence in Rwanda for more than 183 days in a calendar year.
- Domicile in Rwanda, as determined by the individual's permanent home or principal place of abode.
- Employment or business activities in Rwanda that generate income subject to Rwandan income tax.
For companies and other legal entities, tax residency is determined based on their place of incorporation or management and control. Entities incorporated in Rwanda or having their management and control exercised in Rwanda are considered tax residents.
2. Impact of International Tax Treaties on Tax Residency Criteria
Rwanda has entered into several double taxation agreements (DTAs) with other countries to prevent double taxation and promote cross-border trade and investment. These DTAs may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, the DTA between Rwanda and the United Kingdom provides that an individual is considered a resident of Rwanda if they have a permanent home in Rwanda or if their habitual abode is in Rwanda. However, if an individual is considered a resident of both Rwanda and the United Kingdom under their respective domestic laws, the DTA provides tie-breaker rules to determine their tax residency.
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