Afghanistan is looking to implement a Value Added Tax regime from 22 December 2021. The standard VAT rate will be 10%. It will replace the existing 10% Business Receipts Tax, a turnover tax which is deductible against gross profits before corporate income tax.
VAT registration requirements
There will be a registration threshold of 150m Afghanis, with an voluntary VAT registration threshold for businesses over 100m Afghanis. Non-resident businesses providing local supplies may have to VAT register, which includes appointing a local VAT agent.
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Exempt supplies:
- Health services
- Educational services.
- Financial and insurance services.
- Transfer or lease of immovable properties for residential purposes.
- Provision of religious services.
- Humanitarian aids.
- Goods and services provided to a government entity for the purposes of rehabilitation after natural disasters, industrial incidents and catastrophes;
- Sport services.
Zero-rated supplies:
- Export of goods or services for use in outside the country.
- International land transport of goods or passengers including the supply of goods and related services.
- Transfer of part or whole of a business as a going concern by a registered person to another registered person, provided by a written agreement between parties and notified the Ministry of Finance.
- Some basic foods Items (wheat, flour, rice, sugar, cooking oil, tea, onions, potatoes, salt),
- Books and educational materials,
- Basic materials used for household purposes (coal, wood, gas, soap)
The plans had been to launch in December 2022, but this has now been brought forward by a year. The country is looking to develop a long-term stable revenue source as over 50% of its current funding is from donor aid.
