|Corporate income tax (CIT)||Flat rate of 20 percent.||Net profits of corporations and limited liability companies.1|
Most expenses incurred to derive gross income are deductible.
Firms are allowed to deduct losses incurred in previous years.
The CIT is mostly collected in the form of withholding taxes on imports and exports creditable against the income tax (see below).
|Personal income tax (PIT)||Progressive schedule comprising 21 brackets, with rates varying from 4 to 60 percent.||Income of employees (salaries and wages) and profits of noncorporate entities.|
The basis for taxation is Afghan citizenship. The tax is imposed on the worldwide income of Afghan citizens wherever they live.
The wage PIT that used to be collected on government and private sector employees (wage withholding tax) seems to have disappeared at the beginning of the 1990s. Most of the PIT is now collected in the form of fixed presumptive taxes levied on individuals (see below).
|Business receipts tax (BRT)||Two rates: |
2 percent: gross receipts of legal persons engaged in domestic business.
2½ percent: receipts of legal persons engaged in import and/or export operations.
|Gross receipts (before any deductions) of corporations and limited liability companies.|
The BRT comes in addition to the CIT on taxable profits.
The BRT must be paid within six months of the end of the fiscal year, irrespective of whether the business makes a profit or a loss.
Imports are not taxed under the BRT but exports are.
The BRT raises greater revenue than the CIT.
|Fixed withholding taxes on imports and exports (creditable against the income tax)|
Imports: 4 percent for licensed importers and 3 percent for unlicensed importers.2
Exports: 4 percent for licensed exporters and 2 percent for unlicensed exporters.3
Unincorporated exporters or importers.4
The tax is based on the duty-paid cost of imports/exports.
|Presumptive taxes in lieu of the income tax|
Retailers: Based on a 170 category classification of businesses. Taxation depends on the types of goods sold and the size and location of businesses.
Limited list of specific businesses (e.g., cinemas, theaters, mills):10 percent on estimated turnover.
Transportation businesses (e.g., taxis, buses): Lump sum depending on the type, size, and characteristics of the vehicles used.
Government contractors: From 1 to 8 percent of the price of the goods and services purchased by the government.
|Estimated gross receipts of corporations and limited liability companies (except importers and exporters).||The major reasons for using presumptive taxation in lieu of income tax are simplification, reducing compliance costs for the taxpayer and the tax administration, and combating tax evasion.5|
|Import duties||25 tariff bands with rates ranging from 7 percent to I50 percent allocated across 888 tariff headings.||C.i.f. in Afghani value, using an exchange rate of Af 4.5 per U.S. dollar.|
Customs tariffs currently in use were introduced in 2000.
Imports of petroleum, diesel, and kerosene for transportation purposes are exempt from duty.
The exchange rate used for valuation is well below the open market rate (approximately Af 38—40 per U.S. dollar).
|Fees and charges|
Chamber of Commerce license and valuation of imports/exports: 2.5 percent.
Red Crescent fee: 2.5 percent.
Ministry of Commerce’s permit fees (e.g., cars $200 to $400, cigarettes $2.5 per case).
|For the Chamber of Commerce and the Red Crescent: c.i.f. invoice value of exports or imports.||In addition to customs duties, there are numerous fees, and other taxes levied on imports and exports that add significantly to the cost of international trade.|