S5: Taxation

Key unit competence: Prepare Taxes declaration and Payment

INEZA has opened a business oriented enterprise in NYAMATA deals with
solar distribution in rural areas of Rwanda her business generates a good
income, INEZA has registered her business at RDB only and INEZA also
hired a junior accountant to perform all accounting responsibilities it is his
first time to perform accounting responsibilities and in his job descriptions
he is supposed to comply with tax law in Rwanda. Ineza has opened the
bank account for the Enterprise in KCB, Unfortunately KCB has closed its
branch in NYAMATA and it became challenges to accountant to take Cheque

payments to bank.

INEZA’ business enterprise being registered in RDB is not enough, she is
supposed to register her Enterprise in tax administration.
8.1: Taxes Declarations
Learning Activity 8.1

INEZA Trading LTD was acquired by a French registered business enterprise
INEZA deals in solar distribution in rural areas of Rwanda and the tax
administration has informed them that INEZA is a large taxpayer.
Which mandatory documents should INEZA Trading Ltd attach when filing

the tax return?

8.1.1: Definition of Taxes declaration and Requirement for the

taxes declaration

1. Definition of Taxes declaration

Tax declaration is made by completing a form prepared by the Fiscal
Administration.

The determination of the payable tax is made in the 1st degree by the taxpayer
by way of declaration.

In the 2nd degree, the declaration filed by the taxpayer is verified by the Fiscal
Administration.

The taxpayer is obliged to file a declaration even when no profit was made
during the taxable period.

Are only allowed not to file a declaration those who are “exempted” by the
Fiscal Law.

A registered taxpayer must prepare an annual tax declaration and submit
it to the tax administration, along with the relevant accompanying
documents(annexures), no later than 31st March of the following tax period.
The taxpayer must choose the relevant declaration from the tax administration
web side in order not to confuse it with other types of tax declarations. If there
are no activities during the tax period, a nil return is submitted to the tax
administration.
2. Requirements for the tax’s declaration
According to Article 9 of the Law Nº 027/2022 of 20/10/2022 establishing
taxes on income , an individual who carries out taxable income generating
activities prepares an annual tax declaration in accordance with procedures 
specified by the tax administration and he or she submits the declaration with
annexes comprising the balance sheet, profit, and loss account for that tax
period and other annexes thereto drawn according to the requirements of the
generally recognized accounting principles and any other relevant document
required by the tax administration not later than 31st March of the following
tax period, unless otherwise provided by this Law.

However, a person who meets the required annual turnover declares the annual
tax and financial statements certified by a qualified professional and approved
by the tax Administration.

A Ministerial order determines the annual turnover required for certification
of financial
Statements.

A person is not required to file his or her annual tax declaration if the person:
An individual resident in Rwanda who receives employment income from more
than one employer or who receives incidental employment income may file an
annual declaration as mentioned above in order to claim a tax refund for excess
income tax paid.
1. Tax types, Declaration and Payment deadlines


8.1.2: Mandatory information on declaration and the deadline
to declare, pay the RSSB contribution and PAYE

A. Mandatory information on declaration
Declaration of tax and remittance of RSSB contributions can be made on
monthly basis or quarterly basis 
Declaration of tax and remittance of contributions are made on monthly basis;
not later than the 15th day of the month following the month to which the
contributions relate.
Declaration of tax and remittance of RSSB contributions are made on quarterly
basis as follow:
The Commissioner General has issued an instruction to make the first quarter
starting with January ending March. Accordingly, the deadline to submit tax
return and payment besides other related remittance will be 15th April and so
on…
Application activity 8.1

8.2: Methods, Process of taxes and RSSB Contribution
 declarations
Learning Activity 8.2
Kevin has just accepted a job working for Alphonse as a shop assistant for
Alphonse retail business, which has a turnover of FRW 30,000,000 per year.
Alphonse has never previously employed anyone, and this is Kevin first job
since leaving school.

With research List process that will be followed by Kevin in PIT tax
declaration by using e-tax

8.2.1. Methods of Taxes and RSSB Contribution declaration
1. Methods of tax declaration
a) M-declaration
M-Declaration is a system designed to allow certain types of taxpayers to
declare Income Tax through their mobile phones. This is particularly focused at
lower-income taxpayers, declaring Flat Tax or Lump Sum regimes, or taxpayers
declaring Motor Vehicle Income Tax.
The first time a taxpayer uses M-Declaration from that specific mobile phone,

the taxpayer must first register. 

The M-Declaration system for both registering and declaring is accessed by
dialing *800#. The M-Declaration system has a series of screens, with number
options, that are navigated by entering and sending the relevant number.
The first screen requests the taxpayer to select a language, either English or
Kinyarwanda.

The next screen requests to select which M-Declaration service is required.
To declare Flat Tax, Lump Sum and IQP Income Tax select ‘2. Other Business
Activities’.
The next screen shows the ‘Welcome to Domestic Taxes’ menu.
This menu offers three options:
• Register for M-Declaration
From the ‘Welcome to Domestic Taxes’ menu, select ‘1. Registration’ to begin
the registration process.
The details required for registration are:
Rwanda National ID number is required.
It is not currently possible to use passports to declare PIT using M-Declaration,
E-Tax must be used instead. For CIT registered taxpayers (of any nationality),
the Rwanda National ID number can be entered as ‘9999999999999999’
(sixteen ‘9’s). Submit the required details in the relevant screens to register for
M-Declaration of Flat Tax, Lump Sum and IQP Income Tax.

• M-Declaration of Income Tax
From the ‘Welcome to Domestic Taxes’ menu, select ‘2. Declaration’ to begin
the declaration process.
The taxpayer must have already registered the TIN with mobile phone that
they are declaring from. In addition, they must select:
• For example, for annual declarations that are due by 31st March 2017
are for the year of ‘2016’ and quarter ‘annual’.
• For example, for IQP declarations that are due by 30th June 2017 for
the preceding quarter are for the year of ‘2017’ and quarter ‘1’.
Based on this turnover, the system calculates the tax to be paid, and generates
the RRA Reference Number required for paying taxes.
E-Tax is an online portal through which all domestic tax types can be declared.
This can be done online or with the help of staff at RRA offices. RRA has
developed the E-Tax system to make it easier for taxpayers to declare and pay
domestic taxes.
Access the E-Tax website at https://etax.rra.gov.rw or through the RRA website
http://www.rra.gov.rw and click ‘Pay Domestic taxes here’ on the right of the
screen.
Taxpayers are automatically registered for E-Tax when their business is
registered with RDB. Taxpayers are informed of their unique Taxpayer
Identification Number (TIN) and E-Tax password by SMS and email using the
contact details given when they registered.
Once logged in, the E-Tax password can be changed by the taxpayer by clicking
‘Change Password’ on the left of the E-Tax home screen.
 If a taxpayer does not know his/her TIN, they can visit RRA offices or call the
RRA call center toll-free on 3004.

In addition, if an individual taxpayer (i.e. not a company) does not know the
TIN, still you can visit the RRA website at http://www.rra.gov.rw and click

‘Search for TIN using National ID’ under the ‘Other online services’ heading.

The benefits of declaring online using E-Tax or on mobile phones using
M Declaration
Although the process is the same, there are many advantages to declaring
online or on mobile phones rather than with the help of staff at RRA offices.
The advantages of declaring online or on mobile phones include being able to:

1. RSS Contributions declarations

Who pays RSSB contributions? RSSB contributions are based on employees’
income. These are withheld, declared and (jointly) paid on their behalf by
their employers. Who must register for RSSB Contributions? All employers
must register for the Pension Scheme, Occupational Hazards and Maternity
Leave. Public institutions must also register for the Medical Scheme. What are
the rates of RSSB contributions? Pension Scheme totals a rate of 8%, made up
of: - 3% withheld from the employee and 5% paid by the employer, including
Occupational Hazards. Maternity Leave scheme totals a rate of 0.6%, made up
of: - 0.3% withheld from the employee and 0.3% paid by the employer. Medical
Scheme totals a rate of 15%, made up of: - 7.5% withheld from employees and
7.5% paid by the employer. When is the deadline to declare and pay RSSB?
All RSSB contributions must be paid on a monthly basis, by the 15th of the
following month, regardless of PAYE
8.2.2. Process of Taxes and RSSB Contribution declarations
Declaring PAYE and RSSB Contributions to facilitate taxpayers, RRA and
Rwanda Social Security Board (RSSB) have introduced a unified declaration,
where PAYE and all RSSB contributions (except for voluntary Pension Scheme)
can be declared together.

The original method of declaring PAYE and each of the RSSB contributions
separately is still available. However, RRA is encouraging the use of the unified
declaration, and recommends that any newly declaring taxpayers should use
the unified declaration.

The declaration process for the Unified PAYE and RSSB declaration.
The process for the original method is very similar, but must be repeated for
each of the separate tax types and RSSB contributions. However, when selecting
the declaration, instead click ‘Tax

Declaration’ for PAYE and ‘RSSSB Contributions’ for RSSB Contributions. This is
also the case when declaring voluntary Pension Scheme contributions.


As with other tax types, taxpayers must first register to declare the Unified
PAYE and RSSB declaration by calling the RRA call centre on 3004 or visiting
RRA offices. The declaration process for Unified PAYE and RSSB is similar to

other domestic taxes,

a) Declaring Domestic Taxes
Step-by-Step guide to declaring domestic taxes using E-Tax
Step 1: Log-in to E-Tax
Access the E-Tax website at https://etax.rra.gov.rw or through the RRA website
http://www.rra.gov.rw and clicking on ‘Pay Domestic taxes here’ on the right of
the screen. This loads the following login screen:

Login using the TIN and E-Tax password.
Note: If a taxpayer does not know their password, it can be reset by clicking
‘Forgot Password’ on the E-Tax system login and receiving a new password by
email to the address used when registering.
Step 2: Download, complete, validate and save annexures

After logging in, the E-Tax home page is loaded as shown below.

The first step of declaring domestic taxes is to download, complete and save the
annexures of that tax type.

To download annexures, hover the mouse over ‘Annexure Downloads’ on the
top-right hand side of the E-Tax homepage, and click on the applicable tax type

to download the annexures.

This will start a download of a spreadsheet file which can be opened in Microsoft
Excel or other spreadsheet software.
The annexures differ depending upon the tax type. For details on a specific tax
type,

Annexures have an ‘Instructions’ tab and at least one other tab to be completed.
Only the tabs that are relevant to the taxpayer in that tax period need to be
completed. Each relevant tab must be completed, validated and saved separately.

For example:
For VAT, the annexure is titled ‘VatAnnexure_1.1.xlsm’. The VAT annexure has six
tabs: Instructions, Sales, Purchases, VAT Importation, Deductible VAT Reverse
and VAT Retained.

There are five important things to note when completing the annexures of all
domestic taxes. This concern:

Enabling Content

The first thing that must always be done after opening the spreadsheet is to
enable the active content. Without enabling content, it is not possible to validate
or save the annexures. The process of enabling content varies depending upon
the spreadsheet software.

Example
To enable content using Microsoft Excel 2007, when the document opens click
‘Options’ on the ‘Security Warning’ at the top of the screen. In the resulting
‘Security Alert – Macros & ActiveX’ box that opens, click to ‘Enable this content’
then ‘OK’. These steps are shown below

Date Format

In order to validate the annexure, all dates must be entered in the required
format of dd/mm/yyyy. However, it is also important to note that the annexures
will not validate if the date settings of the computer are also not in the format
of dd/mm/yyyy. This may show the following error message, even if the dates

entered in the cells are in the correct format.

The process of changing the date format of the computer varies depending on
the computer operating system. Date formats are often linked to the language
settings of the operating system;
Example
To change the date settings on Windows 7,
• Click: Control Panel
• Clock, Language and Region
• Region and Language
• Change the date, time or number format
• Format: English (United Kingdom)
• Short Date: dd/MM/yyyy.
Blank Cells If any data is entered in a row, then that row must be completed
before validating. In addition, the majority of columns cannot be left empty.
This may show the following error message.

Example
Rukundo is completing the Sales tab of the VAT Annexure. In one particular
transaction, there are no Exempt Sales. In order to validate and save correctly,
Rukundo must enter ‘0’ in the ‘Exempted Sales Amount’ column instead of
leaving it empty.
Mac computers
The E-Tax system is not yet fully compatible with Apple Mac computers. If the
taxpayer is using a Mac computer and the annexure is failing to validate and
save, despite enabling the content, using the correct date format and avoiding
blank cells, there may be an issue with compatibility. Try again using a Windows
computer.
Validating and Saving
Annexures are saved in a different way to other spreadsheets. For each tab,
once all data is entered for the tax period, click the validate button within the
excel spreadsheet

VALIDATE

This will check that all data is entered in the required formats. If this is the case,
it will automatically save a text file under the folder C:/RRA in the user’s local
machine.

If any of the format rules are violated, it will alert an error message and the file
will not be created. The error message explains what needs to be corrected.
Even after the file is created, any changes can still be made. Clicking validate,
this will save over and replace the previous file.

Step 3: Select and complete the declaration form

After all the relevant annexures have been downloaded, completed, validated
and saved, the declaration form can be completed. This requires logging back

into E-Tax and accessing the homepage.

The ‘Document Details’ page lists all un-submitted tax declarations. The
status column is set to ‘In progress’ if any declaration details have been
entered, or ‘pending’ if no details have yet been entered. Once a declaration
has been submitted, it is no longer accessible on this screen.

To enter a tax declaration, click on the document number of the relevant tax
type and tax period. Ensure the correct tax type and tax period is chosen.

If a taxpayer wishes to declare for a particular tax type, or tax period, and this
is not available on the ‘Document Details’ screen, the taxpayer can request
for it to be added by visiting RRA offices or calling the RRA Call Centre tollfree on 3004.

Having clicked on the document number of the relevant tax type and tax period,
the screen now focuses on that particular declaration, as seen below. The first
step is to click on ‘Enter Declaration’.

This opens the declaration form. The white boxes are entry fields where
numbers must be entered (or left as zero). After all the necessary fields are
entered, click to ‘save’ and automatically calculate the grey calculation boxes,
including the tax due.

Many of the rows in the declaration form are similar to the columns of the
annexures that have previously been completed. The important distinction is
that in the declaration form, the total combined values for all rows during that
tax period must be entered.

Example
Amahoro enters the details of her monthly VAT declaration, shown below. After
entering the details in the white boxes, she clicks ‘save’ and the VAT due for

Amahoro this tax period is calculated automatically.

After saving the declaration form and checking that the fields entered were
correct, click ‘Continue with Upload Annexures’.

Step 4: Upload annexures, compare with the declaration form and
submit the declaration

To support the declaration form, the previously validated and saved
annexures must also be uploaded as evidence. The annexures that can be
uploaded depend upon the tax type that is being declared. Each annexures
tab is uploaded separately.

Example

Amahoro continues her VAT declaration as saved above. She uploads ‘Sales’,
‘Local Purchase’, ‘VAT Importation’ and ‘VAT Retained’ annexures as required.
She has no ‘Deductible VAT Reverse’ to declare in this tax period, so this
annexure is not uploaded.

After annexures have been uploaded, they can be checked by clicking on ‘view’,
and changed by clicking on ‘delete’ and then re-uploading. Once all relevant
annexures are uploaded and correct, click on ‘Compare with Declaration’.

This allows comparison between the declaration and the annexures. If these
are equal, then certify that the entries on this declaration are true and correct
and confirm understanding that a false declaration may result in prosecution
by clicking on ‘I accept’. Then submit the declaration by clicking ‘Submit’.

If the declaration and annexures are not equal, it is not possible to submit the

declaration. Either the declaration or the annexures must then be changed 

until they are equal and accurate. To change the declaration form, click ‘Modify
Declaration’. To change the annexures, click ‘Delete’ on the relevant annexure,
make necessary changes in the annexures spreadsheet, validate and save as
before, and then re-upload the revised annexures. Then follow the same steps
as before to certify and submit the declaration.

Example

Amahoro checks that the values of the declaration form and annexures are
equal, certifies that the values are true and correct, then submits the VAT

declaration.

There may be a slight delay as the declaration is submitted. If the declaration is

submitted successfully, the following screen is loaded.

Acknowledgement Receipts

After submitting a declaration, for all types of taxes and fees, there is an option
to download and view the acknowledgement receipt.

Acknowledgement receipts confirm the details of the taxpayer, contain details
of the taxes and fees that must be paid, and provide the RRA Reference Number
for the account the tax must be paid into. This RRA Reference Number is also
known as the ‘Doc ID’, ‘Doc No’ or ‘Assessment Number’.

The RRA Reference Number is very important to ensure that the taxes are paid
into the correct RRA tax account, and that the payment is attributed to the
correct taxpayer. The RRA Reference Number and total tax due is highlighted in
the examples for each broad tax type below

Alternatively, from the E-Tax homepage, hover the mouse on ‘Tax Declaration’
and click on ‘Submitted Declarations’. Choose the year of the tax period, and
optionally the tax type, then click submit. Find the relevant submitted tax
declaration, click on the Document Number, and the following options appear.

Again, click on ‘View Acknowledgement Receipt’.

An example acknowledgement receipt for domestic tax declarations is displayed
below. The associated RRA Reference Number and total tax due are highlighted.

a) Customs Duties

In the case of customs duties, the acknowledgement receipt is more commonly
referred as the ‘Assessment Notice’. This can be accessed by Clearing Agents
through the Rwanda electronic Single Window (ReSW) system. The Clearing
Agent then provides the taxpayer with the assessment notice in order to pay
the taxes and fees due.

Different types of customs duties can be required to be paid to different accounts.
Therefore, each assessment notice may have multiple RRA Reference Numbers
with different amounts of tax due. The associated RRA Reference Numbers and

amounts of tax due are highlighted in different colours in the example below.

a) Local Government Taxes and Fees

In the case of Local Government Taxes (LGT) and Fees on the LGT system,
this can vary slightly for the type of tax or fee. Typically, acknowledgement
receipts can be viewed by clicking ‘Get Acknowledgement’ immediately after

submitting the declaration, as seen below.

The taxpayer can also enter their email address or phone number to receive
the RRA Reference Number and tax due. An example acknowledgement
receipt for LGT and fees declarations is displayed below. The associated RRA

Reference Number and total tax due are highlighted.

Application activity 8.2

Q1. Discuss the methods of tax declaration

Q2. What is E-Tax? 

8.3: Print out of a Tax declaration (Acknowledgment receipt)

and Methods of Tax payment

Learning Activity 8.3

Follow the picture above and answer the following question.
1. Which things are you seeing at the above pictures?

2. What kind of paper print out after making tax declaration?

8.3.1. Print out a tax declaration form and Methods of Tax payment

1. Print out a tax declaration form
Before for making payment of taxes and filling document for physical filing you
must print out a tax declaration form using a printer.
2. Methods of Paying Taxes
Taxpayers should submit tax declarations before paying taxes. Tax declarations

provide the necessary information to calculate the correct amount of tax due.

The process of submitting the relevant tax declarations is different for each tax
type

However, after declaring, the methods of paying taxes are the same for all types
of domestic taxes, customs duties and local government taxes and fees. There
are four possible methods of paying all types of taxes and fees:
It is important to note that it is not possible to pay taxes in cash at RRA offices.

The details needed each method of paying taxes are the same? However, there
are many advantages for taxpayers to paying taxes online, on mobile phones or
through licensed agents.

For all methods of paying taxes, it is important to save any receipts confirming

the payment.

a) Paying Taxes online using Internet Banking and E-Payment

Option 1: Using the banks’ internet banking systems

All commercial banks in Rwanda now offer internet banking services. However,
the process of using these internet banking systems varies depending on the
bank. It is not possible to cover each system in this Tax Handbook, but bank
staff will be able to assist with registering and using internet banking, including
explaining how to pay taxes.
Option 2: Using the Domestic Taxes E-Payment system

In the case of domestic taxes, after submitting the declaration it is possible to

directly access the domestic taxes E-Payment system, by clicking ‘Epayment’.

This shows the following screen. Clicking on the ‘Select Bank to Pay’ drop-down

menu lists the banks that are linked with the domestic taxes E-Payment system.

It is important to note that taxpayers may need to register for internet banking

directly with their bank before paying taxes on the E-Payment system.

After the taxpayer has selected their bank from the dropdown menu and clicked
‘submit’, they will be directed to the online banking system of their bank. Follow
the bank instructions to complete the payment. The exact steps may vary by
bank.
b) Paying taxes on mobile phones using MTN Mobile Money
Paying taxes through mobile money is currently only available on MTN Mobile
Money. This can be done individually, or through an MTN Mobile Money agent.

To pay taxes individually, register on MTN Mobile Money requires an MTN SIMcard,
 and registering an account at any MTN Mobile Money agent. The taxpayer
does not need to register with MTN to pay taxes through an agent
It is important to note that there are small additional transaction fees payable
to MTN that vary depending upon the amount of tax being paid.

Once registered, and with sufficient funds in the account to cover the amount
payable, including transaction fees, follow these steps to pay taxes individually:

To pay through an MTN Mobile Money agent, provide the agent with the RRA
Reference Number from the Acknowledgement Receipt and sufficient funds to

cover the amount payable, including transaction fees.

a) Paying taxes through agents with Mobicash
Paying taxes with Mobicash is currently only available through Mobicash
agents. The taxpayer does not need to register with Mobicash to pay taxes
through an agent.

It is important to note that there are small additional transaction fees payable
to Mobicash that vary depending upon the amount of tax being paid.

To pay through a Mobicash agent, provide the agent with the RRA Reference
Number from the Acknowledgement Receipt and sufficient funds to cover the
amount payable, including transaction fees.

b) Paying taxes at a Bank

Taxes can be paid at all registered commercial banks in Rwanda. This can
be done using a cash deposit slip or by bank cheque. Any payments of FRW
500,000 (five hundred thousand Rwandan francs) or more must be paid by
bank cheque only.

When writing a bank cheque, make it out to ‘Rwanda Revenue Authority’,
making sure to include the RRA Reference Number, total tax due and tax type.
On the Cash Deposit Slip, enter the following details:

- Beneficiary:
• Account Number – Write the RRA Reference Number from the
Acknowledgement Receipt.
• Of – Write ‘Rwanda Revenue Authority’.
– Amount – write the “Total Tax Due”.
– Paid in by:
• Name – Write the Taxpayer Name.
• Address – Write the address of the business or the PO Box number if
applicable.
– Comment: Write the tax type, e.g. “VAT”.

The advantages of paying taxes using Internet Banking, E-Payment, MTN
Mobile Money or Mobicash

The benefits of paying online, on mobile phones or through licensed agents
are:
Application activity 8.3
Discuss the modes of payment for taxes
8.4: Filing system
Learning Activity 8.4
Baptiste is an Accountant of XYZ Tea factory, on 25th March 2022 has declared
CIT for 2021 after declaration process he printed out the Acknowledgement
receipt/ invoice and he went to Bank of Kigali Gisenyi Branch to pay that

tax and he came back in the office with proofs of payments.

Questions
1. What should be the next step to be done by accountant with those
proofs of Payment?

2. What do you know about filing?

8.4.1: Definition of filing system and The purpose of filing
system
A. Definition of filing system
It is the process of classifying, arranging and storing record so that they can be
located when
Required. It is also the process of collecting and arranging records or their
copies in such a way
that whenever it is needed it could be found very easily.
B. Purposes:
1. It helps to keep all records together so the history of office can be
understood.
2. It helps to provide safety place for storage of necessary documents in
order to use and locate them when required.
3. To make records readily and easily available.
4. It can be used as evidence in case of dispute
5. It helps in some legal formalities.
6. It is shown as profit or legal evidence.
7. It can be presented as a legal document in court.
8. It helps to make future plans. Past records are the base of future records

8.4.2: Methods of filing system,Advantages and disadvantages
methods of filing system

Different filing methods are:
• Alphabetical.
• Numerical,
• Geographical,
• Chronological and
• Subject wise
1. Alphabetical classification
The filing method under which files and folders are arranged in order of
alphabets of the names
of person or institution concerned with such file is alphabetical classification.
In case name of
more than one person starts with same letter then second letter of name is
taken into
consideration. It is flexible method. It is used in both small and large organization.
 Advantages:
• simple and easy to understand
• Doesn’t need separate index
• It is flexible
Disadvantages:
• Time consuming
• Difficult to arrange files
• Difficult to locate in case of common names
2. Numerical classification
The filing method under which files and folders are arranged in order of
number is called
Numerical classification. All files and folders are given separate numbers. It
is indirect method of classification of filing. In this filing alphabetical index
is required. It includes name, address, phone number, subject and other
information along with file number.
 Advantages:
• Suitable for large offices having large number of files and folders
• Accurate method of filing
• It is flexible
• Separate index can be easily developed using numbers.
Disadvantages:
• It is expensive
• It is time consuming
• Not suitable for small organization
• It is not easy to operate
• Separate alphabetical index is required.
3. Subjective classification
In this filing method, records are classified according to their subject; letters
and documents are classified and arranged in files and folders into subject or
sub-subject wise.
In this filing, subject must be arranged alphabetically. It is widely used in
those cases where subject is more important than the name of the person or
organization. All documents relating to same subject.
Advantages:
• Simple to operate
• Flexible
• Convenient
• Easy to locate
Disadvantages:
• Not applicable for filing miscellaneous subject
• Time consuming

• Difficult to locate when subject matter is not properly understood

4. Geographic classification
In this method, files are grouped according to the geographical location of
firm, organization or person. Under this method name of places are written
in file and are arranged in drawer either in alphabetical or numerical order
whichever is suitable for organization. It used in multinational companies or
those organizations whose business and branches are located in many places
of the nation or the world.
Advantages:
• Easy to understand and use
• Can be arranged in alphabetical and numerical order
• It used in those organizations whose business is engaged in
correspondence with the businesses all over the globe or the nation.
 Disadvantages:
• Expensive
• Not suitable for small scale organization are filed together in one file.
• Time consuming
• No use of card or index
5. Chronological classification
In this method, files and folders of documents are arranged in an order of their
date, day, and time. In an office, several letters and documents may be received
and dispatched.
They all are arranged according to time and date when they were received and
dispatched
Advantages:
• Simple to understand and easy to operate
• Quickly located if their dates are known
• Less expensive
Disadvantages:
• Not suitable for large offices

• When clear dates are not mentioned then there can be difficulty. 

8.4.3: Essentials (or) Characteristics of Good filing system

1. Compactness:
The compact filing system should be adopted by every business office. It means
that the filing system should not require any unnecessary space.
2. Simplicity:
The filing system should be simple and not too elaborate. At the same time, the
usefulness of the filing system cannot be sacrificed for the sack of simplicity.
3. Accessibility:
A good filing system should be arranged in such a way that the records are
easily available whenever required. The filing system should allow the insertion
of additional documents without disturbing the existing order of files.
4. Economy:
The filing system should be economical in time, space, money and operations.
The cost of installation and operation of filling system should be as low as
possible. The selected filing equipment should occupy minimum space but can
accommodate maximum number of files.
The cost of filing equipment should be very low. The filing equipment save the
time of operation i.e. locating, inserting and placing of documents and papers
in a file. The unwanted records may be disposed of in order to economies space.
5. Flexibility:
The filing system can be expanded if the volume of business transactions
increased. An inflexible system is not useful after crossing a certain limit.
6. Classification:
The filing system should be supported by a proper system of classification.
Proper classification reduces the number of files to be maintained and helps in
inserting as well as locating the documents in the files.
7. Safety:
The filed documents and records should be in safe condition and available
whenever required. The documents and records should be protected from
insects, rain, dust, or mishandling.
8. Cross Reference:
A cross reference should be given wherever a document can be filed more than
one head to avoid confusion and facilitates easy location of files. It saves time
and human resources.
9. Easy Location:
Documents and records should be kept in such a way that they can be easily
located whenever required with the minimum delay possible. At the same time,
it does not require heavy expenditure to achieve this purpose.
10. Indexing:
A well-designed index is also used to supplement the filing system. It will hel to
locate the file quickly when it is required.
11. Retention:
All documents and records are maintained for a minimum period of time.
Then, the dead records and documents can be discarded without too much
disturbance. The remaining documents and records are retained even after a
storage period.
12. Out guides:
A reference is to be maintained in the files that the list of documents or records
are withdrawn by the office staff or department and returned the documents
with date. Rules and procedures can be framed and followed to prevent

misfiling. 

Application activity 8.4

Q1. Identify and explain brief two (2) methods of filing system.

Q2. Outline the advantages of alphabetical classification system.

Skills Lab Activity 8

In group discussion, invite a resource person from RSSB to share with
students on the tax declaration and filing system then ask students to

share the findings

End of unit assessment 8

Q1. Discuss the period that taxpayers start declaring and paying taxes
Q2. Define the term filing
Q3. Discuss the quality of goods filings
Q4. Identify any three (3) methods of good filing
Q5. Jean Baptiste is a taxpayer who had total sales of FRW 10,000,000 for
the first quarter of January through March 2020 and his total reported
revenues/sales for fiscal year 2019 were FRW 50,000,000. The annual tax
calculated in 2019 was FRW 80,000.