Afghanistan

Profile

Afghanistan is a landlocked country located in Central Asia, covering a total area of 647,500 square kilometers. Kabul is the capital. The country has 34 provinces. The official languages are Dari and Pashto.

The Afghanistan Revenue Department (ARD) is responsible for the administration and collection of tax and non-tax revenue for the Government of Afghanistan. The revenue is used to fund public infrastructure and fund Government functions.

In addition to establishing provincial tax bureaus in each province, the Afghanistan Tax Authority has also divided taxpayers into three categories based on their size: Large Taxpayers Office, Medium Taxpayers Office, and Small Taxpayers Office.

All three offices ofthe Afghan Tax Authority have established branches in provinces.

Afghanistan has a unified national tax system, which vary by region. The main tax categories are:

1. Income Tax - Levied on individuals, corporations, and other legal entities based on their taxable income.

2. Business Receipts Tax (BRT) - Applied to gross revenues (turnover) of businesses and service providers.

3. Withholding Taxes - Collected at source on payments such as salaries, rents, contracts, dividends, and interest.

4. Capital Gain Tax - Imposed on the transfer and registration of real estate and other properties. 

5. Fixed Taxes - Applied to certain small businesses, professionals, and specific activities where simplified tax collection is required.

Afghanistan has implemented a series of tax preference policies and work on new tax preference policies to promote economic development and attract foreign investment.

Professionalization of the tax service is a key priority for the ARD. This includes reorganizing the organization structure based on simplified and improved business processes. In addition, it includes computerizing tax functions, which will support ARD’s efforts to streamline business processes and maintain accurate tax records. As part ofits computerization program, the ARD has implemented the Standard Integrated Government Tax Administration System (SIGTAS)

to automate current processes.

The ARD has implemented automation, process simplification and risk-based compliance reforms to improve taxpayer services and enhance efficiency and effectiveness.

To address the complexity and lack of transparency in the payment process, the Afghanistan Tax Authority launched a computerized system to speed up the filing process and avoid time consuming procedures previously required for filing.

 

To use the system, taxpayers must hold a Taxpayer Identification Number (TIN) to file corporate income tax, personal income tax, withholding tax, fixed tax, business Receipt tax, and other tax types. The procedure for issuing tax clearance certificates required for obtaining a business license has also been simplified, with the time required to obtain a tax clearance certificate now significantly shorter than in previous years.

Afghanistan operates under a self-assessment tax system, whereby taxpayers are legally obligated to voluntarily declare their income, expenses, and calculate their corresponding tax liabilities in accordance with income tax laws.
 
Upon registration and issuance of a business license, the ARD assigns each taxpayer a unique Taxpayer Identification Number (TIN). This number serves as a primary reference for identifying and managing taxpayer records across all tax administrations and digital platforms. Using the TIN, the taxpayer is granted access to the E-Filing system, where they are required to submit their tax return, including income and deductible expenses. Based on the return, the calculated tax liability is paid into the Ministry of Finance’s designated bank account through the nearest branch of Da Afghanistan Bank (central bank).
 
Tax administration follows a clear six-step process to promote transparency and ensure effective tax compliance.
 
1. Initial Assessment
 
2. Risk Analysis and Profiling
 
3. Tax Audit
 
4. Taxpayer Appeals and Complaint
 
5. Tax Dispute Resolution Board
 
6. Tax Court 

To encourage taxpayers to improve tax compliance and simplify the tax filing and payment process, the Afghanistan Electronic Tax Authority has also revised the following policies and promoted legislative reforms: revisions to the Tax Administration Law and the Income Tax Law, including the establishment of a Tax Dispute Resolution Committee, an independent body composed of government and private sector experts that hears taxpayers' complaints and appeals before resorting to the courts.

Afghanistan recognizes the economic value of tax treaties and builds its own Double Taxation Avoidance Agreement (DTA) in line with international standards for negotiating with partner countries. Afghanistan is currently in the final stages of concluding Double Taxation Agreements (DTAs) with countries that maintain significant economic interactions with us. Looking ahead, Afghanistan also intends to expand its (DTA) network by signing agreements with additional partner countries in the near future.

None.

Main Taxes

Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates
VAT

(1) Taxpayers: Taxes shall be paid on the sale of goods or the provision of services. (2) Importers: Taxes shall be paid on imported goods.

 

(1) Taxable Goods  

① Taxable goods include: the transfer of ownership of goods through sale, exchange, assignment, or other means; the leasing of goods with a financing lease nature. ② Services that are an integral part of the supply of goods shall be deemed as part of the supply of goods. ③ Taxpayers who use goods purchased tax-exempt for personal use or tax-exempt projects shall pay taxes in accordance with the law.  

(2) Taxable Services

① Taxable services include:  

Granting, transferring, or assigning rights (excluding goods and currency); providing facilities or conveniences; issuing any licenses, permits, certificates, or other documents by the issuing authority; other services.  

② A small portion of goods necessary for the supply of services shall be deemed part of the supply of services. ③ A small portion of services necessary for the importation of goods shall be deemed part of the imported goods.

The VAT rate for the sale of goods or provision of services and for imported goods is 10%.
Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates

Corporate Income Tax

Companies and corporate entities within Afghanistan, including resident and non - resident enterprises

Taxation targets the production and business income and other income obtained by companies and corporate entities.

A uniform corporate income tax rate of 20% applies.
Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates

Individual Income Tax

Resident taxpayers: At any time during a tax year, you have your principal residence in Afghanistan; you have accumulated 183 days of stay in Afghanistan during a tax year; you are an employee or official of the Afghan government and have been sent abroad on official business at any time during a tax year.

All taxable income, including taxable income earned outside Afghanistan; taxes paid by taxpayers on foreign income can only be used to offset the tax payable on foreign income; resident taxpayers who earn income from multiple countries abroad can calculate the proportion of income from each country and offset the tax payable in proportion to that proportion.

Personal income tax is calculated using a progressive tax rate and is collected monthly. Monthly wages below $250 are tax-exempt. Wages between $250 and $2,000 are taxed at 10%. Wages above $2,000 are taxed at a flat rate of $175 plus 20% of the amount exceeding $2,000

Non-resident taxpayers: Non-resident taxpayers are natural persons other than resident taxpayers.

Interest, dividends, rent, royalties and any other income derived by natural persons not engaged in trade or business from within Afghanistan shall be subject to income tax.
Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates

Fixed Tax

This applies to importers, contractors, transporters, and entertainers who do not hold a business licence for the supply of goods and services.

Afghanistan levies a fixed tax on specific categories of income and individuals in lieu of income tax and invoice tax. 

The tax rate varies depending on the type of income.（1.5%，2%，3%）
Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates

Import Duties

Mainly includes importers of goods and eligible suppliers of goods or services.

Mainly various goods imported into Afghanistan.

Different goods are subject to different import duties.
Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates

Surcharges

Mainly targeting taxpayers who have violated regulations or failed to fulfil their tax obligations during the tax payment process.

 

Rates range from 0.5% to 2%. 
Taxes Taxpayers Objects of Taxation ( Base of Taxation ) Tax Rates

Land Tax

 Landowner

Mainly land itself, including agricultural land, non-agricultural land, and real estate, etc.

Land tax is levied on a graded basis, with different rates applied depending on factors such as land use and location.Standards vary by region
Taxes Taxpayers  Objects of Taxation ( Base of Taxation ) Tax Rates

Municipal Tax

Businesses and commercial entities, sole traders, property owners, specific service providers

Mainly covers commercial activities within cities, specific services, and certain properties.

Levied at a rate of 1%.