S5: Taxation

Key unit competence: To be able use electronic billing machine

Mukamana Charlotte is a mother of three children who all reach at the age
of having the deep thinking. So this mother with her all children went to
market to buy school materials, so, arrived there the market discussed with
the seller in order to have the common price of these price materials, she
wanted to buy for his children. Finally, both seller and the mother get the
common price of these materials that mother wanted to buy but she paid
without asking to the seller the invoice and them, the children shouted at
her and explained her that the invoice is very necessary for them even for
the different reasons such as: keeping the security of their properties bought
and for the countries, it help the country to have different infrastructures

as: hospitals, schools, roads profitable for whole the security in general. 

Children explained their mother that the information regarding to invoice

roles got it from the Radio Rwanda and RTV publicities.

Questions
Q1. Is it necessary to have the invoice once you want to buy something for
all cases?
Q2. State the roles of invoice for a buyer even the society in general.
Q3. Invoice is it negotiable for the buyer to the seller once he/she buy

something?

6.1: The electronic invoicing system (Electronic Billing Machine).

Learning Activity 6.1

Mr. Patrick with friend went to the restaurant for having dinner, they have
called the waiter and order the menu. They have enjoyed a lot and they
have shared many stories about their students live, after 2 hours around
22:00 PM the waiter came back with a beautiful handcraft small box with a

printed paper inside and place it on their table.

Peter was not aware about that paper, but his friend had information about

that as he studied principals of taxation in secondary school.

Mr. Patrick has called waiter again with anger by asking about such
disturbance of bringing papers on their table without talking anything,
but his friend calmed Patrick down and he gives him more explanation
about that paper, and the importance of the paper on Patrick side and on

Government side.

Through group discussions, students should find out the kind of that

documents brought by waiter.

And they should state the information appear on that documents.

6.1.1: Meaning of electronic billing machine, Definition of the
concepts related to Electronic Billing Machine and Purpose of

EBM.

A. Meaning of electronic billing machine

An electronic billing machine comprises of two components; there is a
certified invoicing system (CIS) and a sales data controller (SDC). Upon the
public announcement, every business registered for VAT will have to provide
a customer with special receipt issued through electronic billing machine for

every good or service.

There are two versions of EBMs: EBM 1 and EBM 2.0.

The new EBM version 2.0 (EBM 2.0) is a form of software now available for
taxpayers to install onto desktop or laptop computers. VSDC can be incorporated
with privately provided billing systems. EBM 2.0 have been extended to EBM
2.1 for more perfection in reporting and data banking. EBM 2.1 can be interface

with other systems.

B. Definition of the terms related to electronic billing machine

The following terms are defined with the same definitions got from the
Ministerial Order Nº 002/13/10/TC of 31/07/2013 on modalities of use of

Certified Electronic Billing Machine as follows:

1. “Authority”: Rwanda Revenue Authority;
2. “User”: a taxpayer who uses electronic billing machine;
3. “TIN”: taxpayer identification number;
4. “Large taxpayer”: any taxpayer who has been notified by the Authority
that he or she is registered as large taxpayers;
5. “Medium taxpayer”: any taxpayer whose turnover is more than fifty
million (50,000,000) Rwandan francs during the previous tax period
and not designed as a large taxpayer by the Authority;
6. “Small taxpayer”: any taxpayer whose turnover is between twelve
million and one (12,000,001) and fifty million (50,000,000) Rwandan
francs during the previous tax period;
7. “Micro taxpayer”: any taxpayer whose turnover is equal or less than
twelve million (12,000,000) Rwanda francs during the previous tax
period million;
8. “Commissioner General”: Commissioner General of Rwanda Revenue

Authority; 

9. “Certified Invoicing System (CIS)”: electronic system designed for use
in business for efficiency management controls, in areas of sales analysis
and stock control system which fulfill the requirements specified by the
Authority;
10. “Sales Data Controller (SDC)”: device connected to CIS used for
processing and storing receipts;
11. “Signature”: receipt data used for integrity verification by the Authority;
12. “Receipt”: certified retail receipt or wholesale receipt or receipt for the
provision of services provided to the customer, whose integrity can be
verified by the Authority;
13. “Machine Registration Code (MRC)”: CIS’s unique serial number with
designation of its certificate;
14. “SDC serial number”: Sales Data Controller’s unique serial number with
specification of its certificate;
15. “POS”: Point of Sale;
16. “Supplier”: company or physical person registered in Rwanda licensed
by the Authority for holding certificates for CIS and/or SDC, manufactured
in or outside Rwanda, and selling it to the market as a manufacturer or a
representative of the manufacturer;
17. “distributor”: company or natural person registered in Rwanda, having
a distribution agreement with Supplier, and a license by the Authority to
sell CIS or SDC in Rwanda
i. Combating tax evasion
ii. Combating corruption in the tax system
iii. Providing a market balance and make equal business opportunities for

every entrepreneur.

6.1.2: Requirement to obtain EBM and the benefits of EIS/
EBMs: RRA, Taxpayer

 List of tools and documents required for the installation of EBM software:

1. Required tools
The EBM software is installed in a computing device (Desktop, Laptop, Tablet or
POS) with windows operating system from 8 and above or Android operating
system.
Once you have a computing device, please prepare and submit the documents

listed in point (2) below:

2. Required documents
The below listed documents have to be scanned and sent to ebm2.installation@
rra.gov.rw

a) A letter requesting the installation of EBM software. 

This letter has to be stamped and signed by the Managing Director or one of
the company shareholders or the business owner in case the business is not

registered in the Rwanda Development Board (RDB).

It has to be addressed to the head of EBM Division, Rwanda Revenue Authority

b) A copy of RDB Full Registration Certificate or copy of Notice of Taxpayer
Identification Number (TIN) registration in case the business is not
registered in RDB.
c) A copy of Value Added Tax (VAT) Certificate (If registered for that
purpose)
d) A copy of Identification Number or Passport of the person who signed
the letter requesting the installation of EBM software
e) Fill, stamp and sign the acknowledgement and commitment Form1
that can be downloaded from this link: https://ebm2.rra.gov.rw/api/
ConfirmForm. This form must be signed by the person who signed the

letter requesting the installation of EBM software.

B. The benefits of EIS/EBMs: RRA, Taxpayer

There are numerous benefits of EIS/EBMs, both to compliant taxpayers and to
the tax administration. These benefits to the taxpayer, to RRA and to Rwanda
include:
6.1.3: Process used to obtain Version EBM

The way taxpayers use to obtain Version EBM

If you would like to obtain EBM bring to RRA Headquarters:
National or Passport of the Owner. Taxpayers will have EBM 2.0
installed on their machine.

The way used to buy airtime loaded into EBM V SIM cards

It is the taxpayer’s responsibility to ensure that their EBM is loaded with
sufficient airtime. Airtime for EBM 1 is available at a subsidized rate of FRW1,
000 per month. Airtime can be uploaded months in advance by purchasing
more than one FRW 1,000 vouchers. Only FRW 1,000 vouchers are allowed. 

To check the airtime status of the EBM SIM card, dial: *183*SIM Card Number#
to load airtime onto the EBM SIM card, dial: *746*Voucher Number*SIM Card

Number#

6.1.4: The components of EBM and Receipt data requirements

A. The components of EBM

The EBM 1 uses specific EBM hardware, made up of two components, a
Certified Invoicing System (CIS) and a Sales Data Controller (SDC). These can
be integrated into one item (‘All in One EBM’), or kept separate but connected

by cable.

B. Receipt data requirements

A Certified Invoicing System shall generate receipts which show,
Among others, the data enumerated in items below as minimum required

information:

Each receipt shall be formed from a combination of a receipt type and a
transaction type, determined by the Commissioner General. The receipt data
requirements referred to in the lines above shall apply to return receipts.
However, special provisions for issuing return receipts shall be determined
by the Commissioner General.

Application activity 6.1
Q1. Explain two (2) advantages of use electronic information system
 to the taxpayer.
Q2. Identify the documents required for installation of electronic billing
 machine software.
6.2: The ways used to set EBM Invoice
Learning Activity 6.2


Mr. Kamali is a trader at Kigali city tower, one day he received as customer
of one of his product, after negotiation they agreed to pay FRW100, 000
and during invoice processing in EMB, Mr. Kamali erroneously entered
FRW 1,000,000 and no further action made by Mr. Kamali as he felt that as
long as sales system showing the actual sales value. On the second day, Mr.
Kamali received several customers where they sold many products totaling
FRW5, 000,000, during the morning his EBM was working properly but no
EBM invoices issued as he was busy in receiving many customers and at
the closing of the day his EBM was not working and kept quite as he was
thinking that his technician is not around. 
Question
 From the above scenario, what do you think Mr. Kamali was supposed to do?
6.2.1: The way used to produce EBM invoices and the action
done when the taxpayer enters an EBM invoice incorrectly

A. The way used to produce EBM invoices

EBMs must be used to produce EBM invoices for every sales transaction,
whether to other businesses or to final consumers. The exact process varies
slightly for different types of EBM. The licensed suppliers are trained to help
show taxpayers how to use their EBMs.

This typical process for using original EBMs is to enter the quantity, price and
code of each item that is being sold. For sales to other businesses, the taxpayer
can enter the client’s TIN number at the beginning of the transaction. Once
all items in a transaction have been entered, the taxpayer must print the EBM
invoice and give it to the client. The taxpayer should also print a duplicate EBM
invoice of every transaction for their records. Alternatively, at the end of the
business day, the taxpayer can print a daily report of all EBM invoices.
If the taxpayer wishes to refund a consumer, or makes a mistake when entering
a transaction, they can cancel a specific item, or the whole receipt. Alternatively,
if the taxpayer wishes to enter any discount, this can be done at the end of the
transaction, before printing the invoice.
6.2.2: The action taxpayers do if the EBM is not working and
Obligations of a Certified Electronic Billing Machine User

A. The action taxpayers do if the EBM is not working

If there is any period where the EIS/EBM is not working, for whatever reason,
taxpayers must notify RRA and hand-write invoices for the consumer, and keep
a duplicate, until the EIS/EBM is working again. Further actions depend upon

the type of problem. Once the EIS/EBM is working again, enter all the handwritten invoices into the EIS/EBM.

B. Obligations of a Certified Electronic Billing Machine User
Users of certified electronic billing machines shall be subject to the following
obligations:
Application activity 6.2
Q1. Explain how the EBM invoice are produced.

Q2. Identify three obligations of a certified Electronic Billing Machine.

6.3: EIS/EBM penalties and fines

Learning Activity 6.3

Explain the judicial sanctions imposed on taxpayer who:
6.3.1: EIS/EBMs penalties and fines
The penalties and fines relating to the lack of or misuse of EIS/EBMs are
explained below. These may be applied separately, or in addition to, any
penalties and fines relating to Value Added Tax (VAT).
A taxpayer who does not have an EIS/EBM for a sales location that requires an
EIS/EBM is subject to a penalty of:

A VAT taxpayer who fails to comply with any other five EIS/EBM user obligations,
including indicating the true name of the goods, notify RRA of EIS/EBM failure
and refraining from deleting invoices inappropriately, is subject to a penalty of:
A VAT taxpayer who has an operational EIS/EBM but fails to issue an EIS/EBM
invoice when required is subject to a penalty of:

A non-VAT taxpayer who has an operational EIS/EBM bit fails to issue an EIS/
EBM invoice when required is subject to a penalty of:
A taxpayer who has an operational EIS/EBM but issues an undervalued EIS/
EBM invoice is subject to a penalty of:
A non-VAT taxpayer who has an operational EIS/EBM but fails to issue an EIS/
EBM invoice when required is subject to a penalty of:
– Two (2) times the value of the transaction.
– Four (4) times the value of the transaction for any repeat offences.
Additional penaltiesavailable to RRA for non-compliance with EIS/EBM
requirements can include:
Application activity 6.3
Lucie is a VAT registered taxpayer. Lucie is caught not issuing an EBM invoice
for a FRW 59,000, Transaction with VAT evaded of FRW 9,000. As it is her

first offence. Calculate the penalties Lucie to be paid.

Skills Lab Activity 6

Have a resource person (sole trader) or the school accountant to share
with students the way used to programmer EBM Version and produce EBM
invoices also ask students to describe them then share their findings.

End of unit assessment 6

Q1. Mukamudenge is VAT registered taxpayer. Mukamudenge is caught not
issuing an EBM invoice for a FRW 2,900,000 transaction with VAT evaded of
FRW 122,000. As it is second offence. Calculate the penalties Mukamudenge
to be paid.
Q2. Give short note on the following:
Q3. Write in full the following terms related to Electronic Billing Machine:
Q4. Explain the judicial sanctions imposed on taxpayer who has an EBM
but fail to issue an EIS/EBM invoice.
Q5. Define the following terms:
Q6.