Rwanda eyes tax cuts to promote stock market

KIGALI – Rwanda has proposed legislation to cut a range of corporate taxes aimed at encouraging companies to list on the stock market it aims to launch by the end of the year, an official said.

Oliver Kamanzi, deputy director of the Capital Markets Advisory Committee (CMAC), said in an interview with Reuters that the new law would create incentives for increased corporate disclosure and also regulate collective investment schemes.CMAC wants to reduce corporate income tax, which stands at 30 per cent, along with capital gains tax and withholding tax, which are both at 15 per cent, Kamanzi said.’We have proposed to reduce the amount, but it is now up to parliament to decide,’ he told Reuters in an interview.’We need to provide some incentives to companies to come out from the shadows … We are expecting for it to go down as much as it can; if it can be zero, that would be wonderful.’President Paul Kagame has been praised for rebuilding the tiny landlocked central African country since it was devastated by the 1994 genocide in which 800 000 people were killed.While critics accuse Kagame of authoritarian rule, Rwanda’s stable political scene, its mineral resources and ambitions to become an information and communications technology hub in the region have been attracting foreign investors.Rwanda’s economy grew 11,2 per cent in 2008 on the back of strong performance in the agricultural sector, albeit from a low base, and farming was expected to drive growth of at least 7 per cent this year.The CMAC is evaluating a range of firms in sectors such as tea, cement, communications, agriculture and mining for listing once the stock exchange is launched.The draft legal framework before parliament will establish a Capital Markets Authority and register a bill to regulate the capital markets, Kamanzi said.Rwanda’s embryonic over-the-counter bourse lists three government bonds, one corporate bond and cross-listed shares in Kenya Commercial Bank .Kamanzi said the planned bill would also harmonise Rwanda’s investment laws with the rest of the East African Community to boost foreign investment into the region. The other members of the EAC are Burundi, Kenya, Tanzania and Uganda.’This law has been drafted according to international standards … meaning that foreign investors can come to Rwanda without any restrictions, without any fear, because it is a safe place to invest,’ he said.Kamanzi also reiterated that the government is looking to privatise and list all profitable companies in which it owns shares on the new stock market. – Nampa-Reuters