Legal Documentation for Building a Startup in Rwanda

Rwanda is a booming hub for entrepreneurs, founders, and anyone looking to start a new venture or scale their current one because Rwanda’s economy is one of the fastest growing in Africa, with GDP growth projected to reach 8.0% this year.

The country currently ranks 2nd in Africa and 39th in the easiest place to do business globally; the government has put in easy policies to help small business owners and startups build and start their businesses without the need to do a lot of legal paperwork and documentation.

Also read: Rwanda Innovation Boom: Top 10 tech events to attend in 2024

Legal Documentation for Building a Startup in Rwanda 

Certificate of Incorporation

This involves registering your business with the Rwanda Development Board, and it is very easy and could also be completed within a day. By registering your business, you will get a Tax Identification Number which is issued by the Rwanda Revenue Authority (RRA) and your Certificate of Incorporation issued by the Rwanda Development Board. Business registration is done within six working hours and completed upon delivery of a certificate of incorporation, the company code on the incorporation certificate also serves as tax identification number (TIN) and social security number.

How to Register a Local Business in Rwanda

To register your business locally, and operate in Rwanda, you need to submit a couple of documents and information;

• Copy of your ID/Passport
• Email address
• Physical address of your business
• Telephone number
• 3 Preferred names of the Business
• Complete two copies of Memorandum of Association Art 14 (they can be accessed here)

Cost of registering your business if free and you can easily submit the documents for registration online; here

Categories of Local Business Registration in Rwanda

• Domestic Company (not VAT liable)

A domestic company is a company incorporated in Rwanda. This company can take the form of company limited by shares, company limited by guarantee, company limited by both shares and guarantee or unlimited company.

The registration steps for these types of companies is the same but the required documents might differ. Companies are not required to register for VAT if their turnover remains below Rwf 20 million within a 12-month period or Rwf 5 million over three consecutive months in the preceding quarter. Once either of these thresholds is surpassed, registration must occur within seven days after the end of that year or quarter.

Small and medium enterprises meeting two out of three conditions—net capital investment up to Rwf 70 million, annual turnover up to Rwf 50 million, and up to 100 employees—are exempt from trading license tax for the initial two years post-establishment. Following this exemption period, they must register at the district level and commence paying trading license tax by January 31st annually, starting from the third year after incorporation.

• Domestic Company (VAT liable)

A domestic company is a company incorporated in Rwanda. This company can take the form of company limited by shares, company limited by guarantee, company limited by both shares and guarantee or unlimited company.

Companies must register for VAT if their turnover surpasses Rwf 20 million within any 12-month period or Rwf 5 million in three consecutive months within the previous quarter. 

Small and medium enterprises meeting at least two of the following criteria: net capital investment up to Rwf 70 million, annual turnover up to Rwf 50 million, and up to 100 employees, are exempt from trading license tax for the initial two years post-establishment. Upon expiration of this exemption, they are required to register at the district level and commence payment of trading license tax no later than January 31st annually, beginning from the third year after incorporation.

• Domestic Company (large company)

A domestic company is a company incorporated in Rwanda. This company can take the form of company limited by shares, company limited by guarantee, company limited by both shares and guarantee or unlimited company.

Companies must register for VAT if their turnover exceeds Rwf 20 million within a 12-month period or Rwf 5 million in three consecutive months in the previous quarter. Large companies, meeting at least two of the following criteria: net capital investment exceeding Rwf 70 million, annual turnover surpassing Rwf 50 million, or employing more than 100 individuals, are obligated to register at the sector level. This registration should occur promptly to facilitate payment of trading license tax by January 31st annually.

Also read: 5 Best Online Legal Services for Startups in 2024

How to Register a Branch of a Foreign Business in Rwanda

To register a branch your business headquartered in another country, you need to submit a couple of documents and information;

• Power of attorney to present the company in Rwanda.(Notarised)
• A duly authenticated copy of the memorandum Articles of Association. (Notarised)
• Certificate of Registration/Incorporation issued by the registration authority in the country of incorporation. (Notarised)
• Notarised resolution from the authorized agency authorizing to open a branch.
• Passport copies of the shareholders/directors.
• List of directors residing in Rwanda (atleast One)

Cost of regsitering your business if free and you can easily submit the documents for registration online; here

Categories of Foreign Business Registration in Rwanda

• A Foreign Company (not VAT liable)

A foreign company is a company which is registered in a foreign country and which is carrying on business in Rwanda by:

1. Establishing a share transfer office or a share registration office in Rwanda
2. Administering, managing or dealing with property in Rwanda as an agent, personal representative or trustee, whether through its employees or an agent or in any other manner.

Companies are not required to register for VAT if their turnover remains below Rwf 20 million within a 12-month period or Rwf 5 million over 3 consecutive months in the preceding quarter. However, once either of these thresholds is surpassed, registration must be completed within 7 days from the end of that year or quarter.

Small and medium enterprises that meet at least two of the following criteria—net capital investment up to Rwf 70 million, annual turnover up to Rwf 50 million, and up to 100 employees—are exempt from trading license tax for the initial 2 years post-establishment. Following this exemption period, they must register at the district level and commence paying trading license tax by January 31st annually, starting from the third year after incorporation.

• Foreign Company (VAT liable)

A foreign company is a company which is registered in a foreign country and which is carrying on business in Rwanda by:

1. Establishing a share transfer office or a share registration office in Rwanda
2. Administering, managing or dealing with property in Rwanda as an agent, personal representative or trustee, whether through its employees or an agent or in any other manner.

Companies must register for VAT if their turnover exceeds Rwf 20 million over 12 months or Rwf 5 million within 3 consecutive months in the previous quarter.

Small and medium enterprises, meeting two of the following criteria: net capital investment up to Rwf 70 million, annual turnover up to Rwf 50 million, or up to 100 employees, are exempt from trading license tax for the initial 2 years post-establishment. After this period, they must register at the District level and commence paying trading license tax by January 31st annually, starting from the third year after incorporation.

• Foreign Company (large company)

A foreign company is a company which is registered in a foreign country and which is carrying on business in Rwanda by:

1. Establishing a share transfer office or a share registration office in Rwanda
2. Administering, managing or dealing with property in Rwanda as an agent, personal representative or trustee, whether through its employees or an agent or in any other manner.

Companies must register for VAT if their turnover exceeds Rwf 20 million within any 12-month period or Rwf 5 million within three consecutive months in the previous quarter. 

Large companies, defined as those meeting at least two of the following criteria: net capital investment above Rwf 70 million, annual turnover exceeding Rwf 50 million, or employing more than 100 individuals, must register at the sector level earliest to ensure payment of trading license tax no later than January 31st each year.

Also read: How to find your next Co-Founder

How to Register a Business as an Enterprise in Rwanda

Starting and running a business in Rwanda is straightforward with the Enterprise (or Individual trader) designation, which is also the most effortless to manage. An Enterprise (or Individual trader) pertains to a business earning less than ten thousand Rwandan francs (Rwf 10.000) per day; surpassing this threshold necessitates registering a company.

How to Apply for 2nd Amendments in Rwanda

This is an option for amending company details after registration, this might be change of company name, address, business activity or even director.

Opening a local branch

Requirements:

• Notarised Resolution to open branch
• Complete the application form
• Payment of 5,000 rwf at RDB

Additional activities for individual businesses

Requirements:

• Completed application forms provided for changing of particulars
• Original registration certificate
• Payments slip (Receipt) 2,000 Rwf

Additional activities for companies

Requirements:

• One (1) notarized minutes of the Board meeting authorizing the filing of additional activities.
• Original Registration certificate.
• Payment of 7,000 RWF at RDB

Cessation of trading activities

This is for companies registered in Rwanda wishing to close their businesses. 

Cost: Cessation fee RWF 5,000

Requirements:

• Letter addressed to the Registrar General, stamped by the Rwanda Revenue Authority (RRA). A copy to RRA
• Tax clearance certificate from RRA
• Original Registration certificate
• Minutes of Association notarized
• Payment Slip