Content Group 5 of Afghanistan

Country Content

Value Added Tax: 10% (by 2021)
Corporate Income Tax: 20%

Source: Ministry of Finance 1398 National Budget

Important Updates to Taxation Information

Afghanistan is committed to introducing policies and making administrative improvements that will increase domestic revenue. The WTO Agreement requires the government to eliminate fixed taxes on imports and implement value added tax (VAT) before January 1, 2021. A VAT rate of 10% is expected to yield an additional 1.9% of GDP.

Business Taxes

Type of Tax	Tax Rate and Base
Corporate Income Tax	20% Corporate Income Tax under Article 4 of the income tax law in Afghanistan
Capital Gains Tax	- Capital gains are treated as, and included in, taxable income at a rate of 20% - Goodwill is also taxable under the capital gains tax
Business Receipt Tax	VAT will replace the business receipt tax levied on some items and services (such as hotel and restaurant services). Currently, there is no separate comprehensive regulation for VAT. The government plans to levy VAT on various services and goods by January 2021. Different categories of goods currently have different applicable business receipt tax rates, e.g.: - Automobiles and their spare parts: 4% or 7% - Travel agents: 4% - Revenue from public entertainment, exhibitions and support events: 4% - Sale of merchandise and services: 4% - Restaurant earning less than AFN 750,000 per quarter: 4% - Guest house, restaurant and hotel earning AFN 750,000 per quarter: 5% - Club hall (without any threshold): 5%
Branch Income/Profits Tax	20% of income after allowing certain deductible expenses
Withholding Tax	20% on dividend income/ royalties/ interest

Sources: Ministry of Finance, Islamic Republic of Afghanistan, Afghanistan Revenue Department
Date last reviewed: June 7, 2020

Country Title

Taxation – 2020