Depreciation of Assets Under Afghan Tax Law
To claim deductions for expenses related to buildings and other capital assets, depreciation must be applied based on the asset's useful life. The Income Tax Law provides guidelines for standard and accelerated depreciation.
Introduction
To claim deductions for expenses related to buildings and other capital assets, you must depreciate them. Depreciation involves deducting a portion of the asset's cost each year over a specified period, based on the asset's useful life or a standardized timeframe. Documentation of purchase and cost is necessary for depreciation claims.
Standard Depreciation
Businesses must follow specific percentages and standards for depreciating their assets. Depreciation is an annual allowance, and any omission or understatement of depreciation in one year cannot be corrected in another. The table below outlines the useful life and allowable depreciation percentages for various assets.
Depreciation Table
No. Asset | Useful Life (years) | Percentage Allowed Each Year 1. Brick or stone structures | 50 | 2% 2. Loam structures | 20 | 5% 3. Wooden structures | 10 | 10% 4. Machinery and equipment | 10 | 10% 5. Mining equipment | 6.5 | 15% 6. Tools | 4 | 25% 7. Printing equipment | 2 | 50% 8. Handicraft machines | 3 | 33% 9. Metallurgical machines | 10 | 10% 10. Carpets | 10 | 10% 11. Rugs and other furnishings | 4 | 25% 12. Chairs, seats, and sofas | 4 | 25% 13. Desks, tables, and cabinets | 10 | 10% 14. Office equipment | 6.5 | 15% 15. Bicycles | 5 | 20% 16. Trucks | 2 | 50% 17. Cars | 4 | 25% 18. Tires and tubes | 2 | 50% 19. Sacks | 2 | 50% 20. Impure iron stoves and pipes | 10 | 10% 21. Iron stoves | 2 | 50% 22. Carriages, animal carts, and handcarts | 3 | 33% 23. Construction machines | 5 | 20% 24. Computers and related equipment | 3 | 33% 25. Televisions, radios, cellular phones | 3 | 33% 26. Telecommunications equipment | 7 | 14%
Accelerated Depreciation
Under Article 47 of the Income Tax Law, approved enterprises can use accelerated depreciation: four years for buildings and two years for other capital assets. Depreciation should be calculated for the actual period of ownership, with remaining depreciation claimed in the following year if not fully depreciated.
Depreciation Record
A Depreciation Record helps track assets and their depreciation calculations. It allows for regular and accelerated depreciation tracking, maintaining separate records for each year, and updating records with new assets.
Depreciation Worksheet
The Depreciation Worksheet assists in calculating depreciation deductions for assets placed in service during the current tax year. It includes sections for ordinary and accelerated depreciation, with detailed instructions for each type of property.
Additional Information
Afghanistan Revenue Department provides tax guides, forms, and instructions free of charge. Visit their website for downloadable resources and information on tax assessment, collection, and enforcement.