Rwanda govt exempts import duties and VAT on textile raw materials

Rwanda government to boost Made in Rwanda campaign has announced tax exemption for importation of textile raw materials and leather, it applies to both import duties and Value Added Tax (VAT) which is effective from Friday, December 2, 2016. Although this move will see government lose billions of francs in taxes that it was getting from leather and textile imports, in the long run the government hopeful that it will boost the Made in Rwanda campaign.

This is a good news for the textile manufacturing and leather industry which has for long been relying on imported and highly taxed raw material.
Local investors have been paying between 10 and 25 percent on textile and leather raw materials imported. The high taxes pushed up the cost of production and consequently the consumers paid more for the finished products like clothes and shoes.

After the waiver, local manufacturers will be able to import more raw materials in large quantities to be able to manufacture enough textile and leather products to meet the local marke demand. It is also a feasible project in line with government’s policy to ban second-hand clothes and footwear products.

With the ban on second-hand clothes set to be effected in the next three years, local manufacturers should move fast to ensure that within the next 2 years, there is enough supply on the market.

The industry players to effectively benefit from this waiver should collaborate. Small scale manufacturers and big scale manufacturers must combine efforts to leverage on this tax waiver.

Now, the ball is in the court of manufacturers. They should produce both quality and quantity to satisfy the local market and eventually tap into the export market. Increase in production will lead to creating more jobs within the sector.

The exemption is also likely to attract more investors in the textile and leather industry