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Hiring in Rwanda
Rwanda, officially known as the Republic of Rwanda, is a country in the Great Rift Valley of East Africa. Kigali is the capital and the largest city of Rwanda. Kinyarwanda, French and English are the official languages of Rwanda. Rwanda’s economy is largely dependent upon subsistence agriculture, whereby it employs most of the country’s workforce and makes major contributions to Rwanda’s GDP. Rwanda’s main trading partners are Democratic Republic of Congo, UAE, Pakistan, and Switzerland. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Rwanda’s legal and tax regulations. Labor Code stipulates that employees are entitled to 18 days of annual leave. Residents are taxed on their worldwide income. Non-residents are taxed on their Rwandan-sourced income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Rwanda’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- Probation periods of up to six months are permitted.
Annual Leave
- In general, employees are entitled to 18 days of paid annual leave.
- An additional day of leave is given for every three years of continuous service, up to a maximum of 21 days.
Public Holidays
- New Year's Day (1st to 2nd January)
- National Heroes' Day (in Rwanda) (3rd February)
- Tutsi Genocide Memorial Day (7th April)
- Good Friday (10th April)
- Labor Day (1st May)
- Eid al-Fitr
- Rwanda Independence Day (1st June)
- Liberation Day (of Rwanda) (6th July)
- Eid al-Adha
- Umuganura (7th August)
- Assumption of Mary (17th August)
- Christmas Day (25th December)
- Boxing Day (28th December)
Maternity Leave
- Female employees are generally entitled to 12 weeks of paid maternity leave.
- Leave may be taken up to two weeks before the due date.
Paternity Leave
- Fathers are entitled to four consecutive days of paternity leave
Sick Leave
- Employees are generally entitled to sick leave of up to six months, with medical certification.
- The first three months are paid and the last three months are unpaid.
Work Hours
- In general, the Rwandan work week is 45 hours.
Overtime
- Overtime is calculated as hours exceeding the weekly legal working hours (45 hours) or contractual working hours (if agreed as less than 45 hours per week).
- Overtime premium pay is calculated on the basis of basic salary, excluding allowances and other benefits.
- The modalities for extra hours and the rate of remuneration of overtime are determined under a collective labor convention. It must be revised annually.
Notice Period
- Indefinite term contracts may be terminated for just cause, and written notice should be given to the employee except if dismissal is due to serious misconduct.
- The notice requirements are as follows:
-
- Less than one year of service: 15 days’ notice
- Greater than one year of service: one-month notice
Severance
- Employees are generally entitled to severance pay after one year of service.
- Severance pay is given as follows:
-
- Less than five years of service: one month’s salary
- Five to 10 years of service: two months’ salary
- 10-15 years’ service: three months’ salary
- 15-20 years’ service: four months’ salary
- 20-25 years’ service: five months’ salary
- 25+ years’ service: six months’ salary
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or 14th month salary.
- Employees receive annual leave at the standard rate.
- Curiously a bonus scheme was introduced in the health sector.
- Pay for Performance and it is paid out regardless of seniority to health professionals that contribute in improving health.
income tax
- Rwandan resident individuals are taxed on their worldwide income.
- Non-residents are taxed on their Rwandan-sourced income.
- The same rates of tax are applicable to both residents and non-residents.
- The taxable income of a person for any year is the total of that person's income for the year less the total amount of deductions allowed to that person.
- Taxable income comprises the following:
-
- employment income
- business profits
- investment income
- The current monthly personal income tax (PIT) rates are as follows:
|
Bands of income (RWF) |
Taxable income (RWF) |
PIT rate (%) |
|
|
From |
To |
||
|
0 |
30,000 |
30,000 |
0 |
|
30,001 |
100,000 |
70,000 |
20 |
|
100,001 |
and above |
30 |
|
deductible expenses
- An individual may claim a deduction for any expense incurred wholly and exclusively in the production of employment income.
- There are no tax allowable personal deductions provided for in the law.
- There are no standard deductions provided for in Rwanda.
- There are no specific personal allowances provided for in the Rwandan law.
immigration
- All foreign visitors must obtain valid entry visas to enter Rwanda, with the exception of nationals of member countries of the East African Community (EAC) and nationals of a few other countries.
- Visitors’ passes are issued to citizens of EAC member countries at the border post.
- They are valid for 72 hours and renewable once.
- Foreign nationals must obtain a work permit before undertaking employment in Rwanda.
- The application for a work permit is made to the Director General of Immigration and Emigration and consists of:
-
- An application letter from the employer
- Notified diploma or degree
- Original police clearance from the country in which the applicant has lived for the last six months
- The applicant’s curriculum vitae (CV) and a copy of his or her passport
- Completed application form
- One color passport-size photo with white background
- An employment contract signed by the applicant and employer
- Payment of RWF100,000 (approximately USD113) to the government treasury
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Work Permit |
|
1 year |
|
value added tax
- The tax is designed to be paid mainly by the ultimate consumer or purchaser in Rwanda.
- Goods and services are either exempt from VAT, or are levied at two rates, namely a standard 18% rate and a zero rate.
|
VAT |
|
|
Standard Rate |
18% |
|
Zero Rate |
0% |
withholding tax
The WHT rates on various types of payments are as follows (the tax is a final tax for non-residents and the rate may be reduced under an applicable tax treaty):
|
Payment |
Residents |
Non-residents |
|
Dividends |
0%/5%/15% |
5%/15% |
|
Interest |
15% |
15% |
|
Royalties |
15% |
15% |
|
Management/technical service fees |
15% |
15% |
|
Payments made to an artist, a musician or a sportsperson |
15% |
15% |
|
Lottery and other gambling proceeds |
15% |
15% |
|
Payments to persons without a taxpayer identification |
15% |
15% |
termination
- Indefinite term contracts may be terminated for just cause, and written notice should be given to the employee except if dismissal is due to serious misconduct.
- The notice requirements are as follows:
-
- Less than one year of service: 15 days’ notice
- Greater than one year of service: one-month notice
- Employees are generally entitled to severance pay after one year of service.
- Severance pay is given as follows:
-
- Less than five years of service: one month’s salary
- Five to 10 years of service: two months’ salary
- 10-15 years’ service: three months’ salary
- 15-20 years’ service: four months’ salary
- 20-25 years’ service: five months’ salary
- 25+ years’ service: six months’ salary
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The tax period for individuals is January to December of each year.
- Annual tax returns/declarations for individuals are due by 31 March of the following year after the tax period.
- However, the following individuals are exempted from filing of annual tax returns:
-
- Resident employees whose only income is employment income.
- Resident individuals who receive investment income that is subject to WHT.
- Non-resident individuals who suffer WHT on income sourced from Rwanda.
- Tax on employment income is withheld by the employer under the pay-as-you-earn (PAYE) system and remitted to the RRA on a monthly basis together with PAYE returns by the 15th day of the following month.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Rwanda ranked 38th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
0% |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary) |
| Vacations % | Employees are entitled to 18 days of annual leave (4.94% of annual salary) |
| Notice % |
Employees are entitled to a 1 month of notice period for one year of service or more (8.33%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 21.6% |
employer accruals
Additional information (Country Accruals)
| Social security | 5.00% |
| Maternity | 12 weeks |
| Vacations | 7.12% |
| Description | Rwanda has a national social security fund known as the Rwanda Social Security Fund (commonly known as Caisse Social du Rwanda or CSR). All salaried workers, both nationals and foreigners, working in Rwanda are required to contribute to the scheme. The employer is required to contribute 5% of the employee's gross salary to the scheme, while the employee's contribution is 3%. The employer is mandated to deduct social security contributions from employees every month. However, the employer is required to remit total contributions on a quarterly basis, during the month following the end of the quarter. The mandate of collecting social security contribution is with the Rwanda Revenue Authority (RRA). |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | In general, employees are entitled to 18 days of paid annual leave. | This equals 4.9% (18/365 days) of annual income |
| Maternity Leave | Female employees are generally entitled to 12 weeks of paid maternity leave. | This equals 23% (12/52 weeks) of annual income |
| Paternity Leave | Fathers are entitled to four consecutive days of paternity leave. | This equals 1.09% (4/365 days) of annual income |
| Sick Leave | Employees are generally entitled to sick leave of up to six months, with medical certification. The first three months are paid and the last three months are unpaid. |
This equals 25% (3/12 months) of annual income |
| Overtime | Overtime is calculated as hours exceeding the weekly legal working hours (45 hours) or contractual working hours (if agreed as less than 45 hours per week). | Depends on the number of overtime hours worked |
| Severance | Severance pay is given as follows: • Less than five years of service: one month’s salary • Five to 10 years of service: two months’ salary • 10-15 years’ service: three months’ salary • 15-20 years’ service: four months’ salary • 20-25 years’ service: five months’ salary • 25+ years’ service: six months’ salary |
This equals 8.33% (1/12 months) of annual income |
| Social Security | Rwanda has a national social security fund known as the Rwanda Social Security Fund (commonly known as Caisse Social du Rwanda or CSR). The employer is required to contribute 5% of the employee's gross salary to the scheme |
This equals 5% of annual income |
