Walking in the Dark: informal Cross-border trade ... - International Alert

32 International Alert
At border points in Burundi, the so-called Rouge-Rouge are causing problems. These are individuals
who know state officials and who are aware of the taxation rates and whom traders pay to have
their goods transported across the border. Rouge-Rouge are also involved in smuggling. Although
they provide useful services to traders, they are also particularly dangerous. Traders who decide
not to use these transport agents risk these agents informing on them to the authorities, or being
harassed by them. There are even reported cases of goods being stolen by the Rouge-Rouge.
As in DRC, border officials in Burundi use civilians to assist them, which adds to existing confusion.
The way in which taxes are collected from traders is often just as brutal and degrading. Levels of
taxation are quite high at the Burundian border: 83 percent of products are taxed in Gatumba and
76 percent in Cibitoke. In Cibitoke, formal taxation stands at 74 percent (compared to 20 percent
informally), whereas in Gatumba the figure for informal taxation is 64 percent, compared to 47
percent for formal taxation. In Gatumba, the average amount of taxation is USD1.04 for each instance
of formal taxation and USD1.19 in the case of informal taxes. Import taxes are higher (USD1.57
and USD1.69 respectively) than export taxes (USD0.77 and USD0.90). Taxes are lower in Cibitoke:
USD1.08 for each instance of formal taxation and USD1.17 in the case of informal taxation.
Informal taxation is therefore widespread in Burundi: in Gatumba, informal taxes are higher than
formal taxes, and the value of informal taxes is higher on both sites (Cibitoke and Gatumba).
According to our recorded data, it is mainly PAFE which collects informal taxes (42 percent) in
Gatumba, followed by OBR (20 percent), 101 the municipality (14 percent), the hygiene department
(9 percent) and military personnel (8 percent). The main agency which collects informal taxes in
Cibitoke is also PAFE (19 percent).
At the Burundian border locations covered by this research, OBR strictly enforces the country’s
taxation regimes, but rates are high and the system is poorly understood by small traders. This
encourages many of them to turn to informal taxation. There is also a range of state actors
involved in fraudulent fiscal practices and the use of barriers to trade; this creates a particularly
difficult and confusing situation for small traders.
Congolese traders particularly complained that they had to pay very high immigration taxes in
Burundi, where a “token” to cross the border cost USD2 (valid for one day only). The justification
given for this was that the border was close to the capital; however, this was considered grossly
unfair by traders and constituted a real challenge for cross-border trade.
5.4 Rwandan taxes
In Rwanda, the Rwanda Revenue Authority (RRA) is the only department responsible for
centralising state revenue and combating fraud. Centralisation has the advantage of facilitating
commercial transactions and taxation control. At the Rwandan border, nearly half (45 percent
in Bukavu-Cyangugu) or a third of traders (34 percent in Cibitoke-Bugarama) paid import taxes.
However, very few paid export taxes in Cyangugu (2 percent) or Bugarama (27 percent), as
foodstuffs exported from Rwanda are not generally taxed. Most of the taxes paid in Bugarama
are not export taxes (just 6 percent), but rather market taxes (20 percent) 102 and to a lesser extent
municipal taxes (2 percent). There are virtually no informal taxes paid in Rwanda (1 percent in
Cyangugu and 4 percent in Bugarama). 103
The traders we interviewed felt that one of the reasons for the near lack of informal taxation was
101 In Cibitoke, informal taxation imposed by OBR stands at just 2 percent.
102 As street vending is prohibited in Rwanda, small traders are forced to sell their products to stall holders at the market and pay taxes at
the entrance. These taxes do not correspond to the costs incurred by stall holders, which are in fact very high, and are included in the
calculation of taxes declared by small cross-border traders.
103 Informal taxes are paid on charcoal, for example.