Tax rate by region Afghanistan

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The information provided on this page is intended for general informative purposes only. It should not be interpreted as tax advice, nor is it meant to be. For advice on your particular tax responsibilities, consult with an experienced tax expert. PayPro Global does not assume any responsibility for any action taken or not taken based on the information presented here.

Afghanistan implements a value-added tax (VAT) system for all businesses operating within its jurisdiction. This includes businesses offering Software as a Service (SaaS) solutions. The standard VAT rate currently stands at 10%, applicable to all SaaS-related transactions and digital services. This policy serves to enhance the nation’s revenue collection and modernize its tax framework, aligning with international standards.

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Afghanistan

Afghanistan adopted a VAT system in 2013 to enhance revenue collection and modernize its tax framework.

Official government link: English | Afghanistan Revenue Department

10.00%

E-products and services VAT/Sales tax rate

Reduced tax rate product categories

No specific reduced tax rate for digital goods and services

Exempted product categories

No digital goods or services categories are exempt

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Before commencing any taxable acitivity

Online registration possible

Yes

Local representative needed

Yes

List of digital and electronic services liable for tax

Softwares, Digital content and Online advertising

Penalties

Late payment and submission
Failure to register or administer VAT obligations
False or misleading statements
General Non-Compliance (e.g. failure to submit taxes documents, failure to maintain proper records, failure to withhold or pay withholding tax)

Registration threshold

AFN 150 million 

Filing interval

Quarterly

Filing deadline

Tax returns must be submitted within 15 days after the end of each quarter

E-invoicing requirements

Not mandatory

Record keeping

Type of Documents: Invoices, receipts, contracts, and other financial records

Interval to Keep Them: Records must be kept for at least five years

How-To Guides: Afghanistan SaaS VAT

Step: 1 Threshold

The VAT registration threshold is AFN 150 million for taxable supplies. However, non-resident providers of digital services may still be required to register when supplying services to Afghan customers, potentially through a local VAT representative.

Step: 2 Business Registration

Register your business with the Afghanistan Central Business Registry (ACBR) under the Ministry of Commerce and Industry.

Step: 3 TIN/VAT Number

Upon incorporation/licensing, you will be provided with a Taxpayer Identification Number (TIN) from the Afghanistan Revenue Department (ARD) (required for VAT and other taxes).

Step: 1 Standard VAT Rate

Apply the standard VAT rate, which is currently 10%.

Step: 2 VAT Formula

Calculate the tax rate using the formula:
VAT Amount = Net Price X 10%

Step: 3 Reverse Charge Mechanism

The law mentions a Reverse Charge Mechanism for B2B sales. The non-resident seller must verify if the B2B customer is VAT-registered to determine if the local customer is liable for the tax instead of the seller.

Step: 1 Selling B2C

Once you have registered for taxes, you are required to charge 10% VAT on every sale to a Afghan resident.

Step: 2 Selling B2B

If your customer is a business, offering a valid VAT number, then it is the buyer’s responsibility to handle tax, as per Afghanistan’s reverse-charge mechanism.

Step: 3 Invoice Requirements

Under the Afghan tax laws, you are required to add the following details to customer invoices:

 

  • Your business’ name and address
  • Your business’ VAT registration number
  • Invoice date
  • Invoice sequencing number
  • Buyer’s name and address
  • Buyer’s VAT registration number, if they have one.
  • VAT (amount and rate) applied to each item
  • Final amount after tax is added
  • The currency used

Step: 1 Filing Interval

File the VAT return Monthly.

Step: 2 Filing Deadline

The VAT return must be submitted to the ARD within 15 days of the following month.

Step: 3 Submission and Remittance

The appointed legal representative is responsible for submitting the VAT Return Form and remitting any collected VAT to the Afghanistan Revenue department (ARD) by the deadline.

Step: 4 Record Keeping

Maintain accurate records, including VAT invoices, receipts, and contracts, for a minimum of five years.

PayPro Global Solution: Simplified Registration & Fiscal Representation

Navigating Afghanistan VAT registration and fiscal representation can be daunting. PayPro Global acts as your Merchant of Record, handling these complexities, including VAT registration and fiscal representation where needed, so you can focus on your business.

Learn more about our MoR services.

FAQ

Overwhelmed by SaaS sales tax compliance?

Our team of SaaS tax experts is here to help. Contact us today for a free consultation. 

 

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