Rwanda Finance Limited (RFL) is a company promoting and developing Rwanda as a leading financial destination for
international investment and cross-border transactions in Africa.

Kigali International Financial Centre is an ecosystem of financial actors that will transform Rwanda into an international
financial destination for investors seeking opportunities across the African continent.

Rwanda Finance Limited (RFL) and Rwanda Development Board (RDB) are very complementary. Rwanda Finance Limited key mandate is to promote and develop Rwanda as a leading financial destination for international investment and cross-border transactions in Africa, whereas Rwanda Development Board is contributing to making Rwanda very attractive for investments but also marketing investment opportunities in Rwanda more generally in all sectors.

What Rwanda is doing is developing an international financial centre with a clear proposition to investors: direct access to multiple African markets and a centralized, holding presence for investors to locate all their financial activities across Africa, within a safe, fully compliant, transparent environment underpinned by the rule of law and serviced by Rwanda’s fast growing, high quality financial services industry.

Under the Investment Promotion and Facilitation Law number 006/2021 dated 5 February 2021, KIFC Members have been granted tax incentives.

The common theme for KIFC incentives is that for investors to access them, they have to fulfill both minimum economic substance requirements and also demonstrate that management and control resides in Rwanda. The new positioning of Rwanda at regional and Pan African levels requires Rwanda to comply with international standards from the EU and OECD, in particular the assessments of preferential tax regimes conducted by the Forum on Harmful Tax Practices (FHTP), comprising more than 130 member jurisdictions of the Inclusive Framework.

In line with the new compliance standards on harmful tax activities, Rwanda’s new investment law has been designed with the following key principles and objectives:

• No competition on aggressive tax incentives that will be detrimental to the reputation of Rwanda,
• No (minimum) erosion of the existing tax revenue and
• Full compliance with international tax standards with the development of incentives requiring minimum economic substance.

For an investor to qualify for certain incentives under KIFC, they must demonstrate minimum economic substance and also show that the governance, management and control of the investment resides in Rwanda. Regarding management and control, for example, investors will need to demonstrate that:

• At least (minimum quorum) one director or twenty-five percent of directors reside in Rwanda,
• 50% of board members should be in Rwanda for board meetings. Virtual meetings are acceptable,
• Board meetings for strategic decisions should occur in Rwanda,
• Board resolutions should be in Rwanda for safe keeping,
• The Board must include at least two professional or qualified Rwandan residents,
• A physical office of the company in Rwanda,
• At least 30% of the professional staff are Rwandan,
• Threshold set for minimum annual expenditure in Rwanda and
• Threshold set for total assets to be consolidated in Rwanda.

KIFC is intended to position Rwanda as a preferred financial jurisdiction for investments into Africa, as well as reforming the domestic industry. KIFC is the first of its kind in Africa, in that it is not offering a building, an economic free zone or a specific category of company registration.

Instead, KIFC provides a conducive ecosystem for financial actors to operate and invest in Rwanda as a gateway to the rest of Africa. KIFC’s legal framework is intended to nurture domestic and foreign talent, support leading technologies that drive value and inspire trust amongst investors, regulators and other stakeholders.

Investors under the KIFC are granted a preferential corporate income rate and exemption from withholding tax on dividends, interest and royalty payments. Refer to the Investment Promotion and Facilitation Law for the detailed KIFC investments package. The law also details the economic substance requirements to qualify for these incentives.

1. What legal structures are available for forming funds, and do these provide for limited liability for investors?

• Funds can be formed as a company, a trust, a partnership, a foundation, or any other legal arrangement /organization recognized in Rwanda.
• Yes, they provide for limited liability of investors depending on the formation agreement (e.g., memorandum of association, charter, partnership agreement, trust deed, etc).  

2. What are the typical timings for establishment of fund vehicles (i.e., the fund, a general Partnership and/or investment manager)?

• Fund vehicles may be established in not more than two (2) days.
• The documents required to establish, or register depend on the type of entity being established.
• For vehicles requiring a licence, the timeline for acquiring such license, in addition to registration, is thirty (30) days after submission of the completed application.   
• A license or an exemption from CMA is required when the fund is a collective investment scheme. CIS refers to type of scheme where there is an arrangement for collecting and pooling funds from investors or participants for the purpose of investment in the interest of each participant or investor represented by his or her proportional ownership in the scheme.

3. Are there tax transparent vehicles available, and/or beneficial tax regimes for fund vehicles?

• Yes, a partnership is a tax- transparent vehicle.
• Funds generally pay 15% corporate income tax, but those that meet economic substance requirements under KIFC pay a preferential corporate income tax of 3%, 0% withholding tax on dividends, royalties, and interest, and are exempted from paying capital gains tax.

4. Does Rwanda have a well-established double tax agreement network with other African jurisdictions (and elsewhere)?

• Rwanda has over 13 effective double tax agreements in force of which 4 are from Africa and many others are being concluded.   

5. What are the registration and licencing requirements for a fund, and which entities will need to be regulated or licenced (e.g., general partner and/or investment manager, the fund itself)?

• Funds are registered depending on the legal structure sought. A list of requirements for the formation of companies, partnerships, foundations and trusts can be found here: https://org.rdb.rw/requirements-for-registration-of-trust-foundation-and-partnership/
• Collective investment schemes and service providers of funds regardless of their structures will always require a license in addition to being registered by the Registrar General.
• The manager of the CIS (operator) must be a licensed Investment Manager. The CIS is also required to have a licensed custodian who may also play the role of corporate trustee of a unit trust or a depositary for a partnership scheme and contractual scheme.

6. What are the typical timings for receiving any regulatory approvals/licences? What are the initial costs, and the ongoing costs of applying for, and maintaining such approvals/licences?

• Licences are provided within thirty (30) days after submission of the completed application.
• Collective investment schemes and service providers will incur different registration fees depending on the type of license
• Licensed CISs pay an annual fee of One million Rwandan Francs, while in its licensing phase, a CIS pays a prospectus approval fee of 0.05% of the offer.
• In order to maintain the license, annual fees are payable which differ depending on the license. Details can be found here: https://www.cma.rw/index.php?id=24 .

7. Are there any on-going regulatory and/or administrative filing requirements?

• Legal entities have to file their annual financial reports and changes to beneficial ownership information with the office of the Registrar General. Licenced entities are required to file annual activities report with the Capital Markets Authority (CMA).
• Licensees are required to file quarterly and annual reports set out in Art 32 of the conduct of business regulation found here: https://www.cma.rw/fileadmin/user_upload/regulation_on_conduct_of_business.pdf

8. Are there any Rwanda substance requirements for funds and/or fund managers, and how can these be met?

• For funds, the fund manager and custodian must be (i) domiciled in Rwanda; (ii) licensed by the CMA; and (iii) have a minimum of USD 1 million managed in Rwanda.
• The fund manager is required to have an Investment Manager license. The requirements are found here: https://www.cma.rw/fileadmin/user_upload/licensing_regulation.pdf
• The CIS is required to get the license or exempt when it meets the criteria set out in Art 20 of the CIS law: https://www.cma.rw/fileadmin/user_upload/Law_governing_Collective_Investment_Schemes.pdf. However, exempted CIS must comply with the Art 21 of the same law.

9. Are there capital retention requirements for any Rwandan legal entities?

• Generally, there is no capital retention requirement for legal entities.

10. Is there any requirement for the fund to appoint a custodian and/or depository?

• Regulated funds must have a custodian in Rwanda.

11. Have any international fund administrators set up in Rwanda?

• Currently the legal framework is silent about fund administrator because their functions are part of the fund managers’ responsibilities. While there are some reforms that are undergoing to provide for this license, CMA has authorized one fund administrator to operate. The fund administrator will formally apply when the licensing requirements for them are published.
• List of licensed service providers is available on the CMA website: https://www.cma.rw/index.php?id=25.

12. Are there international banks offering banking services to funds and fund managers?

• Yes, there are a number of international banks operating in Rwanda.

13. Are there currency restrictions in place, either in terms of the functional currently of the fund, or in terms of exchange control for distributions to investors?

• No

14. Is there any requirement for the fund agreements to be governed by Rwandan law?

• However for CISs, the agreements must be governed by Rwandan law unless they have been recognized in Rwanda by CMA.

15. Are any fund agreements required to be submitted to the Rwandan regulators and if yes, (i) are such documents publicly available and (ii) do amendments thereto require regulatory approval?

• Fund agreements and all relevant information for regulated funds are submitted to the regulator and made available to participants to that fund not to general public. Amendments to these agreements are also subject to approval by the CMA.

16. Can a fund manager and/or fund choose international dispute resolution (e.g., international arbitration) in the fund agreements, and if so, is a foreign arbitral award enforceable in Rwanda? Is Rwanda party to any international arbitration treaties, if so, which ones?

• Yes, funds may choose an international dispute resolution, which would be enforceable in Rwanda.
• Rwanda is a party to the New York Convention.

17. Are there private marketing rules/restrictions for the marketing of private funds in Rwanda, or to Rwanda persons?

• Private funds and CIS not licensed or exempted by CMA are not allowed to publicly market.

Disclaimer:

The information provided herein does not constitute legal advice. You should refrain from acting solely upon the information provided without first seeking legal or other professional advice.