What is Tax Exemption Procedure and Required Documents for NGO?
Introduction: NGO are exempted from income tax and business receipt tax as per the Afghanistan Income Tax Law but these exemptions do not come automatically. Every NGO needs to apply and obtain a tax exemption confirmation letter as per Article 10 of the Afghanistan Income Tax Law. If the contributions and income received meet the following conditions, then […]
Tax Implications of the Provision of Mobile Top-Up Cards to Employees in Afghanistan
Phone top-up cards are a way for organizations to provide their employees with mobile phone credit or data access.Provision of top-up cards to employees have become a source of debate for many organizations in recent years, causing tax issues with authorities. The key distinction lies in how they are treated: In short, the tax treatment […]
Are Vehicle Rentals Subject to Contractor Withholding Tax?
Introduction: Organizations that rent cars from vehicle holders often face challenges deciding whether they should withhold tax on car rental payments or not. The ARD (Afghanistan Revenue Department) has provided guidance on this issue, though the ARD notably changed its position on the matter in 2023. Article 72 of the Income Tax Law states that contractor tax […]
Contractor Tax in Afghanistan: A Guide
Author: Matt Nissley, CPA Article 72 of the Afghan Income Tax Law requires withholding of contractor tax on payments to contractors (note: “contractors” is a comprehensive term that includes all vendors, suppliers, consultants, etc.). The withholding amount is 7% of the gross contract price for unlicensed contractors and 2% for licensed contractors. The Income Tax […]
When is a Payment for Travelling Cost Taxable?
Introduction: Many organizations operate in more than one city in Afghanistan. Therefore, sometimes it is necessary for their employees to have official trips to other provinces other than their home province. For the employee’s food and accommodations, some organizations provide food and accommodation directly while some others pay cash to employees to cover their expenses […]
Do You Know Bad Debt Is Allowable Deduction?
Introduction: Bad debt is allowable deduction under the Afghanistan Income Tax Law if certain criteria are met. Here we explain the criteria for that as per the law and how it is applied in practice. Bad Debt Expense: Bad debt expense is the amount receivable from sales or receipts that is not recoverable and has […]
How and when to claim tax payments for the imports in Afghanistan?
Whenever goods are imported into Afghanistan, three different types of tax payments are required to be made. These include the followings: 1. Custom Duty: Customs duty is a tariff or tax imposed on goods when transported across international borders. The purpose of Customs duty is to protect each country’s economy, residents, jobs, environment, etc., by […]
Which kind of registration will be considered as a valid license to withhold 2% contractor withholding tax?
Contractors Withholding Tax and Rates: The Tax Guide 21 – Withholding Tax on Contractor Services defines the contractors withholding tax rates as below: 1. Contractors with business licenses:If the Contractor has a business license, the withholding rate is two percent (.02) of the gross payment to the Contractor. Contractors with business licenses will take credit […]
Which kind of benefits are part of taxable salary and wages?
Public Ruling 1384-6 published on the Ministry of Finance website gives a clear overview of the term “salary and wages” and what benefits should be considered part of taxable salary and wages. What is salary and wages? The terms “salary” and “wages” are not defined in the Income Tax Law, but Public Ruling 1384-6 of […]
If a contract amount is less than AFN 500,000 but a written contract is in place, does the contractor tax apply?
i. What is a contract? According to Tax Guide 21: “A contract is an agreement between two or more parties, which is enforceable by the law. A business transaction to buy and sell goods and services is a contract between the buyer and seller.” An offer and acceptance of business transactions or sale and supply […]