How Should Tax Forms Be Properly Reconciled With Annual Income Tax Return (AITR) Gross Amounts?
Overview Taxpayers are obligated to file a range of tax forms on a monthly and quarterly basis, depending on the nature of their activities. There are multiple monthly and quarterly tax returns, but the most common filings include wages, rent, contractor, and the quarterly Business Receipt Tax (BRT), which needs to be reconciled with the […]
Why is an expense-by-vendor report essential for tax compliance and passing a tax audit?
Introduction During the tax year, both businesses and NGOs must tag each purchase transaction with the vendor’s name whether it relates to operating expenses recorded in the Profit & Loss accounts or fixed asset purchases recorded in the Balance Sheet accounts. This practice allows the accounting system to generate a year-end report of all expenses […]
What Types of Income Are Exempt from Business Receipts Tax (BRT)?
What is BRT? Under Article 64 of the Afghanistan Income Tax Law, Business Receipts Tax (BRT) is a tax which is imposed on total gross income (sales) before any deductions, based on the rates set forth in the Income Tax Law. BRT applies to both individuals (in certain circumstances) and businesses who provide goods or […]
What Counts as Financial Records? A Quick Guide for Afghan Businesses
Maintaining proper financial records is not just good business practice, it’s a legal requirement in Afghanistan. Well-kept records help businesses monitor financial health and avoid unnecessary tax liabilities, ultimately supporting long-term growth. According to Article 36 of the Afghanistan Income Tax Law, every taxpayer with taxable income is required to keep complete records of all […]
When Are Foreign Procurements Exempt from Contractor Withholding Tax?
Overview In general, all businesses and organizations that procure goods or services are required to comply with contractor withholding tax obligations, ensuring proper tax deductions on payments made to contractors in accordance with Article 72 of the Afghanistan Income Tax Law. However, in certain cases where procurements are made outside Afghanistan, the law provides a […]
Did you know that depreciation must be claimed annually and no carryforward is allowed?
What is Depreciation? Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Why Is Depreciation Important? Depreciation accounts for the gradual loss in value of business assets such as buildings, […]
What Are the Tax Implications of Exchange Gain/Loss?
Introduction In today’s globalized economy, many organizations engage in transactions that involve foreign currencies, exposing them to the risk of fluctuating exchange rates. These fluctuations can result in either a gain or a loss when converting foreign currency transactions into the local currency. Understanding the tax implications and the associated documentation requirements is essential for […]
Do you know which kinds of receipts are non-taxable?
Overview Generally, an amount included in your income is taxable unless it is specifically exempted by law. Taxable income must be reported on your return and is subject to tax. Nontaxable income may have to be shown on your tax return but is not taxable. Non-Taxable Income According to Article 14 of the Afghanistan Income […]
How much is the taxation percentage on retained earnings when the ownership is changed?
If your business is subject to Article 45 of Afghanistan’s Income Tax Law (Dividend Tax), and you have accumulated retained earnings by not paying dividends to shareholders/partners for several years, be aware of the following: A change in ownership can trigger a tax event. Afghan tax law may consider the accumulated retained earnings as a dividend payment […]
Did you know you can delay withholding tax payments until after you have paid the amount to vendors, landlords, and employees?
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 […]