Accounting and tax
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Corporate tax regime
- The standard corporate tax rate for Afghan companies is 20%.
- Income tax returns must be submitted, along with a balance sheet, annually.
- Should a company incur a loss, the loss can be deducted from the taxable income over the following three years.
- Afghanistan mandates that all companies conform to the same tax year, which runs from 21 December to 20 December the following year.
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Withholding taxes
- Withholding tax is 20% for dividends, interest and royalties.
- Capital gains is taxed at a flat 20%. Additionally, 1% capital gains tax must be paid for any income gained from the sale of movable or immovable property.
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Other tax considerations
- Healy Consultants Group can assist our Client meet their accounting and tax obligations in Afghanistan for an average monthly fee of US$960.
- Audited financials are mandatory each year and must be submitted to the Afghanistan Revenue Department.
- Afghanistan conforms to global IFRS accounting standards.
Legal and compliance
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Company regulation
- An Afghanistan LLC can be incorporated with a minimum of 1 director and 2 shareholders of any nationality.
- An Afghanistan LLC additionally requires that a locally-domiciled company agent and board of supervisors are appointed.
- Afghanistan’s primary business entity types, LLC, Corporation or Partnership do not require a minimum paid up share capital.
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Other business regulations
- Afghanistan is an Islamic country, which means the country conforms to sharia law.
- Foreign investors will need to confirm that they do not hold any previous criminal record.
- Afghanistan has an underdeveloped legal system which increases bureaucracy challenges, leading to officials requesting bribes to get things completed in a timely manner.
- The underdeveloped legal system raises further challenges when individuals requires the judiciary system to settle disputes, more so when the plaintiff/defendant are foreigners.
- Intellectual property protection is a new field in Afghanistan. Despite this, the country is a member of the World Intellectual Property Organization (WIPO).
