Fixed Taxes on Commercial Activities in Afghanistan
Chapter 11 of the Income Tax Law 2009 outlines various fixed taxes for businesses and transactions in Afghanistan, including import taxes, vehicle taxes, contractor taxes, exhibition taxes, and small business taxes.
Introduction
Chapter 11 of the Income Tax Law 2009 of Afghanistan outlines fixed taxes in lieu of income tax for certain types of businesses and transactions. In some cases, these fixed taxes serve as a prepayment of income tax but do not exempt taxpayers from filing income and/or business receipts tax returns.
Types of Fixed Taxes
Chapter 11 addresses several fixed taxes: Fixed tax on imports, Fixed tax on the transport of goods or passengers for business purposes, Fixed tax on contractors, Fixed tax on exhibitions, Fixed tax on small businesses.
Fixed Tax on Imports
Persons importing goods are subject to a fixed tax based on the value of the imported goods. For those with a valid business license, the fixed tax is two percent of the goods' value, which can be credited against the income tax return in the same year. For those without a valid license or holding an interim license, a fixed tax of three percent is payable in lieu of annual income tax. Income from the sale of imported goods is reported either in the year received (for cash basis taxpayers) or in the year the transaction occurs (for accrual basis taxpayers). The fixed tax on imports is paid alongside customs duties at the customs office.
Examples for Fixed Tax on Imports
Example 1: An Afghan corporation imports goods worth AFN 20,000,000 during the year 1389, which includes customs duties. The corporation must pay an additional AFN 400,000. The tax return at the end of 1389 would show: Income: AFN 100,000,000, Business Receipts Tax: (AFN 2,000,000), Operating Expenses: (AFN 40,000,000), Interest Expense: (AFN 18,000,000), Taxable Income: AFN 40,000,000, Income Tax Liability (20%): AFN 8,000,000, Advance Income Tax Payment: (AFN 400,000), Income Tax Due: AFN 7,600,000. Example 2: An Afghan corporation imports goods worth AFN 40,000,000, including customs duties. The corporation must pay an additional AFN 800,000. The tax return at the end of 1389 would show: Income: AFN 100,000,000, Business Receipts Tax: (AFN 2,000,000), Operating Expenses: (AFN 84,000,000), Interest Expense: (AFN 11,000,000), Taxable Income: AFN 3,000,000, Income Tax Liability (20%): AFN 600,000, Advance Tax Payment: (AFN 800,000), Tax Refunded: (AFN 200,000).
Fixed Tax on Transport of Goods or Passengers for Business Purposes
Businesses involved in transporting passengers or goods must pay an annual fixed tax before renewing their vehicle registration. The tax varies based on vehicle weight, seating capacity, or cylinder count.
Tax Rates Based on Weight
1 up to 2 tons: AFN 2,600, Over 2 up to 3 tons: AFN 3,400, Over 3 up to 4 tons: AFN 4,200, Over 4 up to 5 tons: AFN 5,000, Over 5 up to 6 tons: AFN 6,000, Over 6 up to 8 tons: AFN 7,500, Over 8 up to 10 tons: AFN 9,000, Over 10 up to 12 tons: AFN 10,500, Over 12 up to 14 tons: AFN 12,000, Over 14 up to 16 tons: AFN 13,500, Over 16 up to 18 tons: AFN 15,000, Over 18 up to 20 tons: AFN 16,500, Over 20 up to 25 tons: AFN 18,500, More than 25 tons: AFN 18,500 plus AFN 500 per additional ton.
Tax Rates Based on Seating Capacity
Taxi with 3 to 5 passengers: AFN 2,000, Taxi with more than 5 passengers: AFN 2,000 plus AFN 200 per additional seat, Microbus with up to 14 seats: AFN 2,600, Other buses (15 to 21 seats): AFN 4,000, Other buses (22 to 29 seats): AFN 6,000, Other buses (30 to 39 seats): AFN 7,000, Other buses (40 to 49 seats): AFN 7,500, Other buses (50 to 60 seats): AFN 8,000, Other buses with more than 60 seats: AFN 8,000 plus AFN 200 per additional seat.
Tax Rates Based on Cylinder Count
4 cylinders: AFN 1,500 per vehicle, 6 cylinders: AFN 2,000 per vehicle, 8 cylinders: AFN 3,000 per vehicle, More than 8 cylinders: AFN 3,000 plus AFN 500 per additional cylinder.
Rickshaw Tax Rates
Motorbike rickshaw: AFN 500, Rickshaw: AFN 1,000.
Examples for Fixed Tax on Transport
Example 1: A person owning two taxis pays AFN 4,000 per year as a fixed tax. Example 2: A person with a two-ton truck pays AFN 2,600 per year. Example 3: A one-ton truck used as a taxi is taxed at AFN 4,000. Example 4: An animal-drawn carriage used for transporting persons or goods is taxed at AFN 1,000. This fixed tax replaces income tax on commercial vehicle use. However, if the vehicle is used for other income sources, that income should be noted but not included in the income tax return.
Fixed Tax on Contractors
Contractors providing supplies, materials, services, or construction to various entities without a business license are subject to a seven percent fixed tax on the gross amount payable, withheld from the contractor’s payment. Contractors with a business license are subject to a two percent tax, creditable against subsequent tax liabilities.
Fixed Tax on Exhibitions
Natural persons (residents and non-residents) providing entertainment in Afghanistan are subject to a fixed tax of ten percent on receipts from sales of admission or tickets. This tax replaces income tax and business receipts tax and is due monthly, by the 15th of the following month. For non-continuous shows, the tax is due at the end of each show.
Fixed Tax on Small Businesses
Individuals (e.g., shopkeepers) with gross annual income under AFN 3,000,000 are subject to fixed tax based on income levels: Income up to AFN 60,000: Exempt from fixed tax, must file an income tax return to claim credits. Income over AFN 60,000 but up to AFN 150,000: Fixed tax of AFN 500 per quarter. Income over AFN 150,000 but up to AFN 500,000: Fixed tax of AFN 2,000 per quarter. Income over AFN 500,000 but up to AFN 3,000,000: Three percent tax on gross income, with the option to file a tax return and pay business receipts tax and income tax on net profit. This election must be made for a minimum of three years.