DOING BUSINESS IN RWANDA IN 2023
Rwanda is one of the safest investment locations in sub-Saharan Africa, with lower corruption, higher growth and easier company formation than the majority of countries in the region. The only weaknesses Rwanda has, as an investment location is its unfavorable corporate tax rate and some general limitations on limited companies. Rwanda can be the perfect choice for any entrepreneur looking for a secure entrance to the African markets.
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Rwanda. Our services include i) Rwanda company registration ii) Government license registration iii) Business bank account opening iv) Employee recruitment v) Visa strategies and vi) Office rental solutions.
|Compare different Rwanda entities||Tax resident LLC||Turnkey solution||Free zone LLC||Representative office||Branch office|
|Also known as||Private company||Shelf company||EPZ company||RO||Branch|
|Best use of company?||All products and services||Close a customer deal now||Manufacturing and export||Marketing & research||Specific projects|
|How soon can you invoice Clients/sign sales contracts?||6 weeks||2 weeks||3 months||Cannot trade||6 weeks|
|How soon can you hire staff?||6 weeks||2 weeks||6 weeks||6 weeks||6 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||2 weeks||1 week||1 week|
|How long to supply corporate bank account numbers?||6 weeks||4 weeks||6 weeks||6 weeks||6 weeks|
|How long to supply company registration/tax numbers?||6 weeks||3 weeks||6 weeks||6 weeks||6 weeks|
|Corporate tax rate on annual net profits?||30%||30%||15%||Cannot trade||30%|
|Limited liability entity?||Yes||Yes||Yes||No||No|
|Government grants available?||Yes||Yes||Yes||No||Yes|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/legal representative required?||No||No||No||Yes||Yes|
|Minimum paid up share capital?||US$1||US$1||US$50,000||US$1||US$1|
|Can bid for Government contracts?||Yes||Yes||Yes||No||Yes|
|Corporate bank account location?||BPR Atlasmara||Bank of Kigali||Cogebanque||I&M Bank||Ecobank|
|Can secure trade finance?||Yes||Yes||Yes||No||Yes|
|VAT payable on sales to local customers?||18%||18%||18%||Cannot trade||18%|
|Average total business set up engagement costs?||US$16,240||US$16,240||US$21,140||US$16,390||US$17,240|
|Average total engagement period?||4 months||3 months||4 months||4 months||4 months|
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Advantages and disadvantages
Advantages of Rwanda company registration
- Rwanda has been a member of the World Trade Organization since 1996, and thus, enjoys all the benefits provided by membership;
- The Rwandan economy has a strong agricultural sector, which is responsible for the majority of economic activity in the country. Rwanda also has a growing mining and manufacturing industry, which has seen rapid expansion in the wake of investment friendly policies implemented by the government;
- Rwanda has an abundance of lakes and streams that make it an ideal climate for hydroelectric power. This industry is relatively untapped, leaving plenty of opportunity for future investment;
- Rwanda has grown steadily over the past decade, avoiding a recession during the global downturn in 2008. Since the downturn, growth has increased rapidly, with the economy growing to 8.6% in 2019;
- A Rwanda limited liability company (LLC) requires only 1 shareholder and 1 director. A Rwanda LLC can be entirely foreign owned with no restrictions place on foreign owners;
- Thanks to recent reforms, a Rwanda LLC requires no minimum share capital;
- Registering a company in Rwanda is relatively easy. With the assistance of a global services specialist, incorporation can be completed in an average of just 3 days;
- Rwanda is positively ranked as the 34th least corrupt country in the world, according to the 2018 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians. Rwanda is the 3rd least corrupt country in sub-Saharan Africa;
- Rwanda is positively ranked as the 38th easiest country to do business in. The International Finance Corporation study also ranks Rwanda as one of the easiest countries to start a business in, with ease of getting credit and paying taxes also listed as strengths;
- The government of Rwanda has implemented an ambitious development plan called the “Rwanda Vision 2020”. This economic strategy program would benefit all the businesses in Rwanda by:
- Bringing agricultural transformation in the economy through increasing openness and integration with the private sector;
- Making Rwanda a knowledge-based economy by educating the population in science and technology and ICT skills as well;
- Improving the infrastructural facilities of the country by i) land use management; ii) urban development; iii) developing alternate low-cost modes of transport; iv) increased internet access and v) sustainable waste management.
The computer literacy rate in Rwanda is 60%, one of the highest rates in Africa, thus more productive and efficient employees.
Cost of living
Rwanda is much cheaper than many African and developing countries. The average rent of three bedroom house is US$800 per month and average monthly salary for skilled labour is US$500.
Recently Rwanda Development Board passed a new regulation; this new law in Rwanda allows a broader definition of what can be used as collateral in loan transactions. This can include inventories, vehicles, agricultural produce and accounts receivable. Thus, it will allow easy access to credit.
Disadvantages of Rwanda company registration
Rwanda corporate tax
- A Rwanda LLC is liable for a corporate tax rate of 30%, and may also be liable to pay a VAT rate of 18%;
- Rwanda is negatively ranked as the 100th most competitive economy in the world in the Global Competitiveness Report 2019;
- The Rwandan government has placed limitations on the industries which a limited company may do business in. Banking, insurance, finance and leasing all require the formation of a public company;
- It can be difficult to open global corporate bank accounts to support company registration in Rwanda. Healy Consultants works with internationally recognized banks to provide corporate bank account services.
- The high cost of doing business is cited by SME owners as one of the biggest challenges. This is in terms of high energy and transport costs. According to the World Bank data, the price of gasoline in Rwanda is 1.53 EUR per litre and the price of diesel is 1.52 EUR per litre which is which is 35% and 50% respectively higher than the average world price;
- Due to low incomes and a large portion of the population being in poverty, the biggest factors holding its economy back are the poverty cycle, the lack of infrastructure and social/cultural factors.
The English literacy rate in Rwanda is under 30%. Consequently, it is difficult for foreign entrepreneurs to efficiently grow their business in Rwanda as business communication must always be translated into French or Kinyarwanda, the native language.
Rwanda is completely landlocked and has significantly high cost of transportation to the ocean ports of Kenya and Tanzania. Therefore, it is expensive for manufacturing and export-oriented companies to incorporate in Rwanda.
Best uses for a Rwanda company
- Industrial hub: Rwanda boasts an export processing zone, which offers duty free imports of machinery, plants, equipment and raw materials and tax free export operations. An additional benefit if operating in these zones is that the company enjoys a reduced income tax rate of 10% for ten years.
Frequently asked questions
Do I need a resident director to register a new company in Rwanda?No. For registration of a Rwandan company our Clients do not require a resident director. Only 1 shareholder and 1 director of any nationality and residency, are needed to start a company in Rwanda.
How long does it take to complete Rwanda LLC registration?It takes on average 2.5 months to register a Rwanda company and open the corporate bank account.
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Useful links for Rwanda
Government and public authority websites:
- Rwanda Revenue Authority
- Central Bank of Rwanda
- Rwanda Stock Exchange
- Ministry of Trade and Industry