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