The Rwandan government has announced plans to increase taxes on alcohol, tobacco, and foreign digital services as part of its strategy to boost revenue for national development.
The decision, made during a cabinet meeting chaired by President Paul Kagame, is aimed at financing the Second National Strategy for Transformation (NST2). Minister of Finance and Economic Planning Yusuf Murangwa said the tax hikes on alcoholic beverages and cigarettes will be implemented progressively over the next five years.
“Implementing the Second National Strategy for Transformation requires resources,” Murangwa said. “Every year, these taxes will be increased progressively. We will explain it further.”
The tax increase aligns with public health efforts to curb non-communicable diseases, which have been linked to alcohol and tobacco consumption. Rwanda currently imposes three types of taxes on tobacco, including a 36% tax on the retail price of a pack of 20 cigarettes, plus an additional Rwf130 per pack. Data from the Rwanda Revenue Authority (RRA) indicates that Rwanda has the highest cigarette excise tax in the region, comprising 50% of the total retail price of a pack, compared to Burundi (39%), Kenya (35%), Uganda (25%), and Tanzania (11%).
In addition to the excise tax increases, Rwanda is introducing a tax on foreign digital services such as Netflix and Amazon. Murangwa confirmed the development, stating that Rwandans frequently use technological services from international providers, and taxing them will help generate additional revenue.
“Many Rwandans use technological services from outside the country, for example, Netflix, Amazon, and others. On such services, we have agreed to levy a tax,” he said.
Before rolling out the tax, the government conducted a comprehensive study to assess the digital economy’s role in national development. The study gathered data from institutions such as the National Bank of Rwanda (BNR) and the Rwanda Utilities Regulatory Authority (RURA) to analyze consumer trends and the impact of digital services on the economy.
Foreign digital companies that operate in Rwanda have traditionally paid value-added tax (VAT) in their home countries. However, experts say the new tax measure will help boost domestic revenue. Angello Musinguzi, a senior tax manager at KPMG East Africa, noted that while the tax would enhance government collections, Rwanda needs the right tools to enforce it effectively.
With digital services generating billions of dollars worldwide, the move reflects Rwanda’s efforts to adapt its tax system to a rapidly evolving digital economy. As of early 2025, Netflix had over 300 million paid subscribers globally, including users across Africa.
The tax policy changes signal Rwanda’s commitment to strengthening its economy through diversified revenue streams while addressing public health concerns and the growing influence of the digital sector.