This comes ahead of the pending publishing of the new lease law that seeks to streamline and ease access to lease loans, especially by small borrowers.
Ghislain Cyizihiro, Umutangaha Finance Marketing manager, said selected microfinance institutions (MFIs) were receiving technical support from AMIR and
Cyizihiro said the experts are training MFIs officials on how to develop micro-leasing products, documentation, equipment evaluation and other necessary procedures involved in lease loans.
According to the
Gatete said when the new law is published in the national gazette, it will enable small-and-medium enterprises (SMEs) and farmers access equipment to improve production processes. "Once the law is in place, SMEs will be able to acquire equipment and machinery at subsidised rates," Gatete noted.
About the new law
Under the proposed lease model, leasing firms will sale equipment to banks and only charge VAT on the leaseholder when they are paying for the machinery.
The bank will then lease the equipment VAT free (on lease payments) since the tax will have been paid earlier. Banks will only pay VAT on behalf of the lessee if they cannot afford it at the time they are buying the equipment.
A look at old lease law
The old law considers leasing as a service. As such, every lease operation is subjected to 18 per cent VAT. It subjected clients to double taxation; withholding tax of 18 per cent and 18 per cent VAT on lease loan repayments.
Bankers and AMIR said this was making lease products expensive compared to other loans, forcing them to lobby for review of the law.
He however said lease products must be competitive, sustainable and profitable to attract customers.
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 30, 2014
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