A double taxation avoidance treaty between Rwanda and South Korea is set to take effect on December 19, 2024, Korea Times reports. The agreement aims to prevent the double taxation of income generated from business activities, allowing the source country—where the business is conducted—to impose taxes on that income.
The treaty, signed on September 13, 2023, during the seventh Korea-Africa Economic Cooperation (KOAFEC) Ministerial Conference in Busan, South Korea, introduces key tax measures. Under the agreement, the maximum tax rate on dividends, interest, and royalties will be capped at 10 percent. Additionally, capital gains from the sale of shares will be exempt from taxation in the source country, except in certain exceptional cases.
Rwanda’s Minister of State for the National Treasury, Richard Tusabe, hailed the treaty as a significant milestone in the country’s economic cooperation with Korea. He emphasized that the agreement would help attract Korean investment to Rwanda while providing a protective framework against discriminatory tax policies, with favorable withholding tax rates and a robust dispute resolution mechanism.
The agreement aligns with Rwanda’s long-term goal of positioning itself as a financial hub in Africa. It underscores the importance of expanding Rwanda’s treaty network, which is seen as vital for the country’s economic growth and prosperity.
With this new treaty, Rwanda now has 17 double taxation avoidance agreements in place, with additional agreements under negotiation. These treaties continue to drive increased investments and trade, particularly from countries like Turkey, Qatar, UAE, Mauritius, Morocco, South Africa, Singapore, and Jersey.
Rwanda is also actively negotiating with countries that have established tax systems, seeking to avoid “treaty shopping,” a practice in which multinational companies shift profits through low-tax jurisdictions.
