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 the NGO shall be exempt from tax:

1. The organization must be established under the laws of Afghanistan.
2. The non-profit organization must be established and operated exclusively for educational, cultural, literary, scientific, or charitable purposes.
3. Contributors, shareholders, members, or employees, either during the operation or upon dissolution of the organization mentioned in points 1 and 2 of this section must not benefit from the organization.

To obtain a tax exemption confirmation letter from the Afghanistan Revenue Department of the Ministry of Finance, the following procedure must be followed and related required documents are necessary to provide.

Step 1: Submit application

The organization that meets the required criteria for the tax exemption mentioned above should download the checklist and application form by clicking here. The organizations that applied and collected their tax exemption confirmation during the year 1402 (2022) or later, they can apply online via their SIGTAS users. And they can complete steps 2 and 3 of this procedure through online portal.  

Step 2: Submission of Supporting Documents

The application form should be filled in and signed by the NGO’s country director or the deputy country director. The application form along with the supporting documents (listed in the application form) should be submitted to the Tax Exemption Department of the Directorate of Legal Services and Policy which is working under Afghanistan Revenue Department of the Afghanistan’s Ministry of Finance.

Step 3: Submission of other documents if needed

The Directorate of Legal Services and Policy reviews all the documents before tax exemption confirmation issuance and asks for additional documents if needed.

Step 4: Issuance of Tax Exemption Confirmation

The Directorate of Legal and Policy Services issues the tax exemption confirmation within 21 days from the date it receives the application exemption confirmation letter will be value for a duration of one to three years depending on the decision of the Directorate of Legal and Policy Services. It should be noted that if the NGO fails to provide all the supporting documents in 21 days, then the NGO needs to reapply and respond to the letter issued by the Tax Exemption Department expressing that the organization could not provide all the required documents during the mentioned period.

Note: The application should be in the format provided by the Directorate of Legal and Policy Services and it should be in one of the official languages of Afghanistan (Dari or Pashto). The supporting documents which are in English do not need translation in Dari or Pashto. If the supporting documents are in any other languages, they need to be translated into Dari or Pashto.

Step 5: Collection of Tax Exemption Confirmation

The final step is to collect the tax exemption confirmation letter. The Tax Exemption Department sends the tax exemption confirmation letter to the Archive Department. In order to be able to collect the tax exemption confirmation letter, one should provide the following documents to the Archive Department:

1. A copy of the organization’s badge ID.
2. A copy of National ID (Tazkira).
3. An introduction letter from the organization.