Rwanda Scraps VAT on Maize Flour, Rice to Tame Food Price Inflation

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The Rwandan Ministry of Trade and Industry (MINICOM) on Wednesday announced a waiver of value-added tax (VAT) on maize flour and rice in a move aimed at taming skyrocketing food prices in the country.

The directive, which took immediate effect, comes at a time when the government plans various interventions designed to further address soaring food prices on the market.

Food prices increased by an average of 13.9 percent between January and December 2022. Price hikes have largely been attributed to unpredictable weather conditions, the COVID-19 pandemic, and the war in Ukraine.

According to the trade and industry ministry, an inspection conducted in different markets across the country revealed that some traders had significantly and unreasonably increased food prices.

“After analyzing different reasons that have affected current food price increases and following discussions that the trade ministry held with several public institutions and private sector partners, Minicom (the ministry) would like to inform the public that the value added tax has been removed from maize flour and rice,” said Dr Jean-Chrysostome Ngabitsinze in a statement by Trade and Industry Minister.

The ministry also announced maximum prices for maize, maize flour, rice, and Irish potatoes. These foodstuffs are among Rwanda’s staple foods. Increases in commodity prices have one overall implication: rising costs of living.

The maximum retail price for Irish potatoes, a common dish for average Rwandans, was set at 460 Rwandan francs per kg.

Until Wednesday, a kg of maize flour cost 1,200 Rwandan francs, a kg of rice cost 2,000 Rwandan francs, while Irish potatoes cost 700 Rwandan francs.

The Rwandan government is optimistic that food prices will eventually stabilize.

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