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Afghanistan 10% VAT December 2021

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:

  1. Health services
  2. Educational services.
  3. Financial and insurance services.
  4. Transfer or lease of immovable properties for residential purposes.
  5. Provision of religious services.
  6. Humanitarian aids.
  7. Goods and services provided to a government entity for the purposes of rehabilitation after natural disasters, industrial incidents and catastrophes;
  8. Sport services.

Zero-rated supplies:

  1. Export of goods or services for use in outside the country.
  2. International  land transport  of goods or passengers  including the supply of goods and related services.
  3. 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.
  4. Some basic foods Items (wheat, flour, rice, sugar, cooking oil, tea, onions, potatoes, salt),
  5. Books and educational materials,
  6. 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.

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