Expenses incurred for the purpose of business are deductible unless they are specifically disallowed. Under the standard general rules, a business expense is deductible for tax purposes only if:

It was incurred for the direct interest of the business and is related to the business of the enterprise;
It corresponds to a real expense and is supported by proper documentary proof;
It results in the reduction of the net assets of the enterprise; and
It is included in the results of the tax year during which it was incurred.

In 2021, Rwanda introduced a requirement that business expenses must be supported by EBM receipts (e-invoicing system), customs declarations, withholding tax declarations, or acceptable e-payment confirmation (Mobile Money, Mobile Banking, Internet Banking, and MobiCash).

The following general expense types are not deductible or have limited deductibility for tax purposes in Rwanda:

Personal expenses are not deductible;
Interest expenses paid on loans and advances taken from related entities are not deductible under the thin-capitalization restrictions (see Sec. 13.2.) if the total amount of loans/advances exceeds 4 times the amount of equity during the tax period. Effective 28 October 2022, the thin-capitalization restriction applies to realized foreign exchange losses arising from loans and advances taken from related entities;
Effective 13 April 2018, royalties and fees for management and technical services, paid to a non-resident related person if in excess of 2% of the turnover of the taxpayer or if not in accordance with the arm's length principle are not deductible;
Effective 28 October 2022, unrealized foreign exchange losses are not deductible;
Amortization of goodwill is not deductible;
Fines and penalties are not deductible;
Income tax and recoverable VAT are not deductible;
Donations made to charitable and non-profit making organizations in excess of 1% of the turnover are not deductible;
Entertainment expenses, subject to certain exceptions, are not deductible;
20% of business overheads such as water, electricity, telephone, and fuel expenses where business and personal use cannot be bifurcated are not deductible;
For the 2022 tax year, 27% of expenses not supported by EBM receipts and customs exit notes or invoices not subjected to withholding tax, are not deductible. For the 2021 tax year, the ratio of expenses not requiring EBM receipts was capped at 27%. The ratio changes each fiscal year based on the study on expenses not requiring EBM receipts or customs exit notes or withholding for the specific tax period and
Sale value for the first RWF 5 million in case of sale of immovable property is deductible.

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