The Republic of Rwanda and the Grand Duchy of Luxembourg struck an agreement in 2021 that eliminates the double taxation on economic actors. This allows businesses and investors wishing to invest in both nations to do so without having to pay cumulated taxes.
The double tax avoidance agreement (DTAA) serves as an incentive for companies and investors in both regions since it removes the double payment of taxes on both income and capital. The DTAA also contributes to transparency by discouraging tax evasion and avoidance. This action is intended to benefit Luxembourg Funds.
The agreement, which aims to attract Luxembourg investors to Rwanda, is also consistent with Rwanda’s desire to attract international investors on the African continent through its Kigali International Financial Centre and to position itself as an ideal location for pan-African investments through the AfCTA (African Continental Free Trade Area) framework.
Rwanda has also enacted new rules regarding insolvency and arbitration in an effort to attract foreign investment. The February 2021 investment promotion bill protects the repatriation of profits and loan interest. Multinational companies with a headquarters or regional office in Rwanda pay no corporate income tax (depending on their levels of investment and employment). In addition, there is a seven-year tax vacation on business revenue for investments in industries such as manufacturing, energy, health, and technology.
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