Whenever goods are imported into Afghanistan, three different types of tax payments are required to be made. These include the followings:
- Customs duty
- Advance BRT on imports
- Two percent tax on imports
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 controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country. The Customs Act was enacted pursuant to Article 42 of the Constitution of the Islamic Republic of Afghanistan in order to ensure the collection of the revenues by the national customs authorities, to provide for the organization of customs and supervision and control of export and import of goods in Afghanistan. The customs duty rate is a percentage. This percentage is determined by the total purchased value of the article(s) paid in a foreign country and it depends on various factors which will be determined by the national customs authorities. Article 12 of the 2009 Income Tax Law, stipulates that any payments made for the customs duty are deductible from the income for taxation purposes on the annual income tax return.
2. Advance BRT on Imports:
Article 64(3) of the 2009 Income Tax Law states that: “Persons who import goods shall be subject to four percent business receipts tax on the cost price of the imported goods including custom duty. The business receipts tax will be treated as an advance payment for business receipts tax payable.” Article 67(3) States That: The tax imposed under Article 64 (3) of this Law is allowable as a credit in calculation of business receipts tax liabilities. If the amount paid is more than the business receipts tax payable for that year, the excess amount is not allowable as a credit in subsequent periods. In addition, the Business Receipt Tax (BRT) is paid quarterly by filling out the assessment form of the BRT. It is important to note that the BRT tax is a deductible expense when computing taxable income for the relevant year.
3. Fixed Tax on Imports:
According to Tax Guide 19 which explains the Article 70 of the 2009 Income Tax Law: ” Persons who import goods are subject to a fixed tax on the cost, including customs duties, of the imported goods. Persons with a current business license are subject to 2% fixed tax which will be taken as a credit on the income tax return in the year in which it is paid. Persons without a current license or with an interim license are subject to a 3% fixed tax which is payable instead of annual income tax. Income from the sale of the imported goods is reported in the year in which it is received for cash basis taxpayers, or in the year the transaction takes place for accrual basis taxpayers. The fixed tax on imports is paid when and where the customs duties on the imported goods are paid”. The percentage will be applied on the gross value of the imported goods inclusive of the customs duties already applied.