Introduction
There are some occasions where organizations are unable to make the payment for their incurred expenses on-time or even not at all; these situations can be caused by a small cashflow shortage in finance department or a fatal bankruptcy altogether in the organization.
If unpaid expenses, such as rent, salaries, and contractor payments, are subject to withholding tax, what are the organization’s corresponding tax responsibilities under Afghan tax law?
Regulatory Details
Based on the Afghanistan Income Tax Law, organizations are responsible for withholding taxes from payments made to vendors, employees, and landlords. However, they can delay paying these withheld taxes to the government until after they have actually paid them to the recipient. The reason behind this is because if the organization has not made payment to the recipient, no withholding has taken place and therefore no tax remittance is yet due to the government.
Legal sources within Afghanistan tax regulation that allows payment of withholding taxes at the time of actual cash payment, are as below:
Afghanistan Income Tax Law:
- Article# 17 about Liability to withholding tax from salary and wages
- Article# 59 about rent withholding tax on buildings and houses
- Article# 72 about withholding taxes on contractors
Private rulings:
If you wish to have official private ruling for your own organization’s case, you can apply for one at the Legal Service Department of Afghanistan Revenue Department. The mentioned department has responded positively to many organizations in this regard.