Afghanistan - Overview and Introduction

Afghanistan - Overview and Introduction

Taxation of international executives

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Taxation of international executives

Personal taxation in Afghanistan depends upon tax resident status of the individual in a tax year. While Afghan resident individuals are taxed on their worldwide income, non-residents are required to pay tax on Afghan sourced income only. As a general rule, an individual is said to be resident in Afghanistan in any tax year if he/she:

  • has his or her principal home in Afghanistan at any time during the fiscal year; or 
  • is present in Afghanistan in that tax year for a period or periods aggregating to 183 days or more or
  • is an employee or official of the Government of Afghanistan irrespective of where he/she is performing his duties of employment 

Salary for services performed within Afghansitan is considered Afghan-sourced and is taxable in Afghanistan except where a bilateral or multilateral agreement between the government of Afghanisan and another country provides otherwise.

Salaried individuals are taxed at progressive rates ranging from 2% to 20%. Basic exemption is allowed at AFN 5,000 per month (AFN 60,000 per annum). Employees having their only source of income as salary where tax has been withheld and deposited by the empoyer in accordance with the prescribed rates given in the law are not required to file annual income tax return. However, they are required to file annual statement of salary and tax deduction after end of the tax year.

Taxes are charged in local currency that is Afghanis (AFN). If the income is received in any foreign currency, it is converted on average of free rates used by the Central Bank to purchase such foreign currency at the end of each month.

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