If you make multiple purchases from one vendor and the accumulated purchase amount exceeds the contractor tax threshold. Do you need to withhold tax from all purchases?
1. Is there any threshold for withholding tax? A minimum threshold for withholding tax under Article 72 of Afghanistan income tax law is AFN 500,000. Transactions below this threshold are not subject to withholding income tax. However, if the aggregate of payments to a legal or natural person in a fiscal year exceeds or is […]
How to differentiate between employee and independent contractor?
Who is an employee? An employee is a worker hired by an employer to do a specific job. Employers control how employees are paid, when employees work, and how employees work. An employee is on a company’s payroll and receives wages and benefits in exchange for services they are providing for the employer. Who is […]
How Mismanagement of Bank Account Create More Tax Liabilities and Penalties for the Business?
Managing a company’s bank account is essential for any business. Businesses create an official company’s bank account for the day-to-day business operations but often intentionally or unintentionally some businesses mismanage their company’s bank account which faces some serious consequences. Tax Audit Risk: If you mismanage your company’s bank account, you may have difficulties keeping accurate […]
Do you know what type of building improvement expenses will be subject to rental withholding tax?
What is rent expense and rent withholding tax? Any rent expenses if used for the business purposes by the tenant is subject to either 10% or 15% rental withholding tax depending on the gross rent amount. In addition, according to sub-article 4, article 59 of Afghanistan Income Tax Law, two categories of payments from tenant […]
How to have acceptable expense document or bill for allowable deduction in annual tax return?
1. Written Agreement: Expenses that need contract such as rent, internet, vehicle,… should have clear written agreement in place. 2. Valid Receipt: All purchases must be substantiated by a valid receipt. Every receipt must contain the following to be considered valid: 3. Payment Proof: Proof of payment should be strong enough that can easily be […]
Do you know how to make acceptable rent documentation for easy prove of rent expenses in an annual tax return?
i. Written Rent Contract A written rent contract should be prepared and signed by both parties (landlord and tenant) and the followings should be considered while preparing a rent contract. a) Every rented place should have a written rent contract regardless of rent amount. b) If the rent contract is written by authorized property dealer […]
Did you know that dividend payment is an allowable deduction in annual income tax return?
What does dividend mean? Any distribution of company’s earnings to the shareholder/owner which often happens at the end of fiscal period. This theoretical definition shows overall characteristic of dividend payments; but on the other hand in practice dividend payments can be any kind of payments to or withdrawals by owner from company’s net income. In […]