Rwanda Introduces VAT Exemptions for Financial and Insurance Services

Introduction

On April 17th, 2025, the Rwandan Ministry of Finance and Economic Planning (MINECOFIN) issued the long-awaited Ministerial Order nº 001/25/10/TC of 16/04/2025 determining financial and insurance services exempted from value added tax (the "Ministerial Order on VAT-Exempt Financial and Insurance Services"). This Ministerial Order on VAT-Exempt Financial and Insurance Services implements Article 8(g) of Law nº 049/2023 of 05/09/2023 establishing Value Added Tax (the "VAT Act"), the primary legislation governing VAT on goods and services supplied in Rwanda, as well as on imports.

The VAT Act outlines taxable, zero-rated, and exempt goods and services, with Article 8(g) specifically authorising the Minister of Finance to designate exempt financial and insurance services through a ministerial order.

Globally, VAT exemptions on financial and insurance services are typically found in mature financial markets, where the goal is to reduce the cost of capital, encourage financial innovation, and expand access to essential services. With this Ministerial Order on VAT-Exempt Financial and Insurance Services, Rwanda aligns with this trend and demonstrates its ambition to strengthen its financial sector.

For financial institutions, insurers, fintech innovators, investors, and private equity firms, this Ministerial Order on VAT-Exempt Financial and Insurance Services presents significant operational and investment opportunities.

Comprehensive Exemptions

Article One of the Ministerial Order on VAT-Exempt Financial and Insurance Services introduces a comprehensive list of financial and insurance services now exempt from VAT, potentially reducing operational costs for businesses in these sectors. Key exemptions include:

• Interest income from treasury bills, loans, overnight placements, and current accounts
• Commissions earned through mobile banking, agency banking, salary remittances, and correspondent banking
• Dividends and foreign exchange gains
• Capital markets transactions, including advisory services and securities transfers
• Life and medical insurance premiums
• Miscellaneous financial services, such as courier and postal charges tied to financial operations and penalties for early term deposit withdrawals

"The exemptions under this Ministerial Order on VAT-Exempt Financial and Insurance Services apply to core banking, digital finance, insurance, capital markets, and forex transactions — a notable shift from traditional global tax models that will position Rwanda as a competitive financial center in the region."

Industry Impact

Financial institutions may benefit from reduced VAT burdens on lending and investment instruments, while fintech and mobile money providers (PSPs) could see improved margins on digital transactions. Insurance companies may find it easier to expand coverage, particularly in underserved rural areas. Investors, meanwhile, could see higher net yields due to tax-exempt financial returns.

Sector	Impact	Opportunity
Banking	Reduced operational costs	Expanded lending capacity
Insurance	Lower premium costs	Rural market expansion
FinTech	Improved transaction margins	Digital innovation acceleration
Investors	Higher net yields	Increased capital allocation

Strategic Positioning

The Ministerial Order on VAT-Exempt Financial and Insurance Services is part of Rwanda's broader economic strategy, which includes governance reforms, digitalisation efforts, and regulatory adjustments aimed at improving the business environment. Rwanda has positioned itself as a regional hub, and the new VAT exemptions may further influence its role in financial services.

With this Ministerial Order on VAT-Exempt Financial and Insurance Services, Rwanda provides certainty for financial sector participants. For businesses and investors evaluating opportunities in Africa, these changes warrant closer attention to Rwanda's advancing financial sector.