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6. Appropriate Regulation
6.1 Fair Tax Regime
6.2 Professional Services
6.3 Capital Markets
In-Country Assessment Information

6. Appropriate Regulation

Goal – A comprehensive regulatory regime that is transparent, efficient, simple in its implementation and that leads to accurate reporting of property values and prudent protection from market risks

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6.1 Fair Tax Regime

 

Core Question: Do market participants feel the overall tax rate is fair and participate in formal transactions? Yes – Strong, personal and corporate income taxes are moderate.

Transfer Tax

6.1.1   What is the total property transfer tax including all duties and payments?  Weak – 5.6% of Property Value

Source: Doing Business 2013– Registering Property, World Bank
http://www.doingbusiness.org/data/exploreeconomies/rwanda#registering-property

Overall Tax

6.1.2   What is the overall tax rate on entrepreneurs? 31.3% – Ranking – 25th  out of 185 – Very Strong

Source: Doing Business 2013 – Paying Taxes & Registering Property, World Bank
http://www.doingbusiness.org/data/exploreeconomies/rwanda#paying-taxes

Divestment

Survey Question

SQ 28  What is the tax on profits for foreign investors when divesting property? 30% as corporate income tax  – Strong

 

Source: Doing Business 2013 – Paying Taxes & Registering Property, World Bank
http://www.doingbusiness.org/data/exploreeconomies/rwanda#paying-taxes

 

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6.2 Professional Services

 

Core Question:  Are the professional services necessary for efficient and transparent property markets available and appropriately regulated and supervised? No – Very Weak, government committed to financial sector development.

 

Asset Valuers

Survey Questions

SQ 29  Are property valuers licensed and/or certified by the government?   Yes –  Weak – The Institute of Real Property Valuers in Rwanda (IRPV) was established by Law N 17/2012 of 12/05/2010.

Source: Institute of Real Property Valuers in Rwanda http://www.irpv.rw/

SQ 30  How effective are mechanisms in place to discipline valuers who engage in misconduct? None in place – Very Weak

See pages 25-26 for in-country assessment information regarding valuers.

Civil Society Resource: International Real Property Foundation www.irpf.org

Brokers & Agents

Survey Questions

SQ 31  Are real estate brokers and agents licensed and/or certified by the government? No – Very Weak

SQ 32  How effective are mechanisms in place to discipline brokers or agents who engage in misconduct?  None in place – Very Weak

Civil Society Resource: International Real Property Foundation www.irpf.org

Mortgage Professionals

Survey Questions

SQ 33  Are mortgage professionals licensed and/or certified by the government? No – only 4 out of 8 commercial banks offer mortgages.

SQ 34  How effective are mechanisms in place to discipline mortgage professionals who engage in misconduct? None in place – Vey Weak

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6.3 Capital Markets

 

Core Question: Are capital markets well-regulated and diversified enough to provide financial resources to private-sector entrepreneurs and innovators? Yes –  Strong– Capital Markets Advisory Council established June 2007

 

Capital Flows

6.3.1   How restricted is the flow of capital into and out of the country?  Very Strong – Ranking 18th out of 185; Score 5.3 out of 7

Security Exchanges

6.3.2   Is the regulation of securities exchanges transparent, effective and free of influence from government and industry?  Strong – Ranking 61st out of 185; Score 4.2 out of 7.

 

Source: 2012-2013 The Global Competitiveness Report, World Economic Forum
http://www.weforum.org/issues/global-competitiveness

 

Securitization

6.3.3   What is the depth of asset-backed securities, mortgage-backed securities, high-yield bonds and highly leveraged loans? Very Weak – primary market developing

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In-Country Assessment Information (as of 2007)


Taxation

 

FQ 21.  What is the overall taxation system in regards to property?
Property transfers are taxed at a flat rate.

Brokerage

FQ 22.  What is the number of practitioners in the country including full-time brokers/agents with formal training and part-time, informal brokers?  

Estimates go up to a maximum of 2,000 individuals practicing many as “scouts” or “hustlers” who will seek an apartment rental or a building for sale on the street. They have no offices but only have a cell phone and carry no business cards.

 

FQ 23.  What is the number and average size of brokerage companies? 

There are estimated to be 5 or 6 legitimate companies in Kigali. Most of these companies are relatively new and small with the most sophisticated company having 7 individuals and one company having 40 agents. They do not only brokerage but also small scale development and some rehabilitation. There doesn’t seem to be a strong enough market as yet either in western level rentals (up to $2,000 per month) or new sales to sustain the industry. The secondary market is very thin as few put their properties on the market and fewer agents act as a catalyst to create that market.

FQ 24.  Are there brokers associations active in the market? What number and what percentage of practitioners belong? No

FQ 25.  What training programs are available to enhance productivity? None

FQ 26. Is there a Code of Ethics or standards that practitioners follow? Is the Code enforced? No

FQ 27. Do civil society organizations exist to support the development of mortgage professionals? No – market not yet developed

 

Source: IRPF Assessment May 2007

 

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