AFGHANISTAN INCOME TAX LAW

MEMORANDUM
RAFAQAT BABAR & CO
x
CHARTERED ACCOUNTANTS

Web: www.rafaqatbabar.com
E mail: kabul@rafaqatbabar.com
Cell #: +93-700-081878
 Table of Contents
PREAMBLE 1
INCOME TAX 3
TAXPAYER IDENTIFICATION NUMBER (TIN) 3
TAX YEAR 3
MAINTENANCE OF BOOKS & RECORDS 3
INCOME TAX RATES 4
FOREIGN CURRENCY CONVERSION 4
RULES FOR ACCOUNTING 4
INCOME SUBJECT TO TAX 5
DEDUCTIBLE EXPENSES 5
CARRY FORWARD OF TAX LOSSES 6
TAX EXEMPT ORGANIZATIONS 6
EXEMPTION OF CERTAIN INCOME FROM INCOME TAX 6
BUSINESS RECEIPTS TAX (BRT) 7
BUSINESS RECEIPT TAX EXEMPTIONS 8
WITHHOLDING TAXES 8
Salary and Wage Withholding Tax 8
Rent Withholding Tax 9
Withholding Tax on Contractors 9
Contractors with business licenses: 9
Contractors without business licenses: 9
Other Withholding Taxes 10
FIXED TAXES 10
Fixed Tax on Imports 10
Fixed Tax on Exhibitions 10
Fixed Tax on Small Businesses 10
Fixed Tax on Sale of Movable or Immovable Property 11
INSURANCE COMPANIES TAXATION 11
ADDITIONAL TAXES (Fines and Penalties) 12
ABOUT RAFAQAT BABAR & CO 13
INTERNATIONAL AFFILIATION 13
OUR SERVICES 14

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 PREAMBLE

Afghanistan Income Tax Law has been enacted in 2009 which governs all the tax
related matters applicable to all kinds of individuals and businesses to date.
Through this memorandum an effort has been made to provide a ready on hand
reference and to help the accountants and persons related to finance in different
sectors of the economy to ensure their compliance with the aforementioned law.
This also explain the significant amendments in the law since its inception as
approved by the respective legislatures.

Tax collection and withholding guide has also been made part of this commentary
keeping in view the day to day requirements of today’s businesses.

The memorandum seeks to provide general guidance with the objective of keeping
our clients and staff abreast of the changes in the relevant fiscal laws. The users
are therefore advised to seek professional advice before exercising their judgments
with respect to interpretation of such laws and acting thereupon. The Firm accepts
no responsibility for any action taken (or not taken) as a result of the information
contained in this document.

December, 2015
Kabul, Afghanistan

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INCOME TAX

A tax is imposed on the income from Afghan sources of all persons corporations, limited
liability companies, and other entities weather in Afghanistan or abroad, and on the foreign
income of residents of Afghanistan.

A person is a resident of Afghanistan for a tax year if:

1. The person has his or her principal home in Afghanistan at any time during the year; or
2. Present in Afghanistan for a period or periods amounting to 183 days in the tax year; or
3. Is an employee or official of the Government of Afghanistan posted abroad at any time
during the tax year;
4. An entity has been established under the laws of Afghanistan or has the center of its
administrative management in Afghanistan.

TAXPAYER IDENTIFICATION NUMBER (TIN)

Every Individuals, companies and organizations that are required to pay taxes or customs
duties are also required to obtain a taxpayer identification number. Taxpayer identification
number is a unique number assigned to every tax payer by the Ministry of Finance on
application.

TAX YEAR

The taxable year is the solar year which starts from the first day of Jadi (21st December) and
ends on the last day of Qaws (20th December).

A legal person (but not a natural person) wishing to use a different taxation year may apply
in writing to the Ministry of Finance explaining the reasons for the requested change. The
Ministry of Finance may approve such an application but only where the application is
justifiable.

MAINTENANCE OF BOOKS & RECORDS

All natural or legal persons with taxable income in a tax year must keep records related to all
transactions, all movable and immovable property, and all income necessary to prepare
complete and accurate tax returns.

Records and documents must be kept for a minimum period of 5 years after the end of the tax
year to which the records and documents relate. However the tax department may in special
cases for reasons to be recorded in writing and approval call for the audit of records beyond
five years.

The Ministry of Finance requires that all corporations, limited liability companies and other
entities liable to pay annual income tax maintain the following accounting records:

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 Journals  Original supporting documents and
 Ledgers vouchers
 Income statements  Banking and financial transaction
 Balance sheets. information
 Asset register  Legal documents, including contracts
 Inventory and stock take records  Statements, invoices and receipts

INCOME TAX RATES

Legal Person (Corporate Tax)

The income tax of legal persons shall be 20 percent of taxable income for the tax year.
Corporate rate apply to legal entities such as corporations, limited liability companies, and
other legal entities.

Natural Person
Resident natural persons are taxed on income from all sources worldwide, including but not
limited to wages, salaries, rents, certain types of partnership income, royalties, etc. Non-
residents are taxed on all income with its source in Afghanistan. The annual tax rates are as
follows:

Annual Income more Annual income Tax

than less than
0 60,000 AFN 0%
60,000 AFN 150,000 AFN 2% over of amount over 60,000
150,000 AFN 1,200,000 AFN 1800 AFN + 10% of the amount over
150,000 AFN
1,200,000 AFN unlimited 106,800 + 20% of amount over 1,200,000
AFN

FOREIGN CURRENCY CONVERSION

Income in foreign currency shall be converted to afghanis for purposes of taxation. The rate of
conversion shall be the average of open (current) rates used by Da Afghanistan Bank to
purchase such foreign money at the end of each month.

RULES FOR ACCOUNTING

Accrual method of accounting: Corporations and limited liability companies shall compute
their income using the accrual method of accounting which recognizes income and expenses
when due.

Cash method of accounting: A person shall compute their taxable income using the cash
method of accounting at the time of receipt of income and payment of expense. The Ministry
of Finance may permit a taxpayer to compute their taxable income using the accrual method
of accounting. This provision shall not apply to corporations and limited liability companies.

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INCOME SUBJECT TO TAX
The following receipts are subject to income tax:
1. Salaries, wages, fees and commissions,
2. All receipts derived from business, industry, construction and other economic activities,
3. Receipts from sale of movable and immovable property,
4. Interest, dividends, rents, royalties, rewards, prizes, winning from lotteries, bakhshishis
(gratuities, bonus payments etc.),
5. Distributive shares of partnership income,
6. Any other income from labor, capital, or economic activity,
7. Income from other circumstances provided in this Law.
8. Any other income which has not been provided in this Law. (Article 13)

DEDUCTIBLE EXPENSES
Deduction of all ordinary and necessary expenses of production, collection, and preservation
of income of natural and legal persons shall be allowed in accordance with the provisions of
this Law as follows provided that these expenses have been incurred during the tax year or
one of three previous years.
1. any expense related to the cost of production or trade and business, such as insurance
and freight expenses, etc.;
2. the cost of supplies, materials, fuel, electricity, water, and other necessary expenses
incurred in the production of income, or in a trade or business;
3. wages, salaries, commission, and fees paid for services rendered by employees in trade
or business;
4. interest paid on loans utilized for business and trade ;
5. rent paid on property necessary to and used for the purposes of trade or business;
6. cost of repairs and maintenance of properties and equipment necessary to and used for
purposes of the business or trade;
7. Depreciation of movable and immovable property (except agricultural land) used in
trade or business, or held by the producer for the production of income, in accordance
with the Income Tax Manual. The total of deductions for depreciation of the property
shall not exceed its cost to the taxpayer. However, a natural or legal person will not be
entitled to claim depreciation for that part of the cost of an asset which the person does
not withhold tax from payment for that asset in accordance with Article 72 of this Law;
8. Any tax or charge that is a necessary expense of doing business, holding property and
equipment for earning income or producing income, if paid or accrued during the tax
year. Taxes imposed by this Law and taxes not qualifying as necessary business expense
shall not be deductible except as otherwise provided by this Law;

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9. Damages to movable or immovable property caused by fire, earthquake, and by disaster
of any kind, over a period of three years, to the extent that the cost is determined and
substantiated by records and the loss was not covered by insurance;
10. Losses in business or trade from bad debts according to the Income Tax Manual;
11. Dividends paid in money by a legal person established under the laws of Afghanistan;
and
12. Other expenses of doing business and of holding movable or immovable property for the
production of income under relevant legislative documents. (18)
13. No deductions shall be allowed for the following expenses:
14. Expenses incurred to provide entertainment or advertising that are not connected to
economical or commercial activities;
15. Dividends, interest, royalties, rent, commissions, wages, salaries, payments which are the
subject of Article 72 of this Law, and other similar income from which legal and natural
persons are required to withhold and pay tax under the provisions of this Law, but have
failed to do so; and
16. In the case of a branch in Afghanistan of a non-resident person, any expenses paid or
incurred to the non-resident person or any person connected to the non-resident person.
(18)

CARRY FORWARD OF TAX LOSSES

A corporation or limited liability company incurring a net operating loss in a tax year shall be
entitled to deduct the loss from its taxable income of the three succeeding years, deducting
each year one-third of the loss. The tax losses of a resident company from operation outside
Afghanistan shall be deductible from the income from such operations only and not from the
income from Afghan source income.

TAX EXEMPT ORGANIZATIONS

Contributions and income received from the necessary operations of organizations fulfilling
the following conditions shall be exempt from tax upon special application and authorization
from the Ministry of Finance:
1. The organization must be established under the laws of Afghanistan.
2. The non-profit organization must be established and operated exclusively for
educational, cultural, literary, scientific, or charitable purposes.
3. Contributors, shareholders, members or employees, either during the operation or upon
dissolution of the aforementioned organization must not benefit from the organization.

EXEMPTION OF CERTAIN INCOME FROM INCOME TAX

International contracts and agreements entered into by the Islamic Republic of Afghanistan
with foreign countries or United Nations agencies are excluded from the provisions of the
paragraph (1) of this Article. (E.g. contracts with US state agencies and agencies of UNO).

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Such exemptions are available to organization who derives income from such contracts as
prime contractor or sub-contractor on a special application in respect of each such contract.

BUSINESS RECEIPTS TAX (BRT)

Business receipts tax is a tax which is imposed on total gross income (sales) before any
deduction. . BRT is a deductible expense in computing taxable income for the same tax year.

A legal person who provides goods or services in exchange for consideration shall be required
to pay business receipts tax.

A natural person who provides goods or services in exchange for consideration and whose
revenue from such sales is AFN. 750,000/- or more per quarter of the year shall be required to
pay business receipts tax.

It is imposed at rates of 4%, 5% or 10% of the gross receipts, depending on the nature of the
business and/or category of the receipt. (66)

Business receipts tax paid shall be a deductible expense in computing taxable income for the
same tax year. (67)

The BRT must be paid on a quarterly basis within 15 days after the end of the quarter according
to the below table:

Quarter Duration Last Date of payment

First Quarter December 21 – March 20 April 5
Second Quarter March 21 – June 20 July 5
Third Quarter June 21 – September 20 October 5
Fourth Quarter September 21 – December 20 January 5

BRT @ 5%
Restaurants, hotels, and guesthouses with income more than AFN 750,000 per quarter shall be
subject to 5% percent BRT on gross receipts.

BRT @ 10 %
10% BRT is payable on gross receipts from provision of the following services:

 International passenger airline services

 Telecommunications services, including Internet services
 Hotels providing superior services
 Restaurants providing superior services

BRT @ 4%
BRT @ 4% shall be paid on gross receipts from all sources other than the sources mentioned
above.

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BUSINESS RECEIPT TAX EXEMPTIONS

The following income shall be exempt from the business receipts tax.

1. Income received from interest;

2. Fees earned from exchange of currency, operation of savings or other bank accounts,
deposits and withdrawal transactions, issuance of cheques or letters of credit, internet
banking, provision of mortgages or loans, and provision of lines of credit;
3. Issuance of cash settled futures contracts;
4. Issuance of futures contracts settled by physical delivery of the goods of the contract;
5. Premiums from the provision of any insurance or re- insurance;
6. Distributions received by a shareholder from a corporation, limited liability company or
partnership with respect to shareholder’s stocks or partnership interest;
7. Income from export of goods and services;
8. Income from provision of services specified in the Articles 17 or 46 of this Law.
9. Income received from rent or lease of residential property to a natural person provided
that the tenant uses the property for residential purposes for more than six months of the
tax year; and
10. Income from sale of property by a natural person outside the ordinary course of the
natural person’s business. A sale shall be considered to be outside the course of the
natural person’s business when such sales are not regular and continuous.

WITHHOLDING TAXES

Salary and Wage Withholding Tax

Employers (including legal and natural persons) with two or more employees in a month are
required to withhold tax from their employees' salaries and wages based on the below rates.
(Article 58).

The employer is required to remit the amount withheld to the government specified account
no later than 10 days after the end of the month in which the amounts were withheld (Article
60). The employer shall be required to submit with this remittance a Tax Withholding Report
to the relevant tax office in the format prescribed in the Income Tax Manual.

Monthly payroll calculations.

Monthly Monthly
Income from Income up to Tax
AFN 0 AFN 5000 AFN 0
AFN 5001 AFN 12,500 2% of the amount over AFN 5,000
AFN 12,501 AFN 100,000 AFN. 150 + 10% of the amount over AFN. 12,500
AFN 100,001 Unlimited AFN. 8,900 + 20% of the amount over AFN. 100,000

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Daily wages calculations

Daily Wage Daily Wage Tax

from up to
AFN 0 AFN 164 AFN 0
AFN 164 AFN 411 2% of the amount over AFN 164
AFN 411 AFN 3,288 AFN. 5 + 10% of the amount over AFN. 411
AFN 3,288 Unlimited AFN. 293 + 20% of the amount over AFN. 3,288

Rent Withholding Tax

Payments of rent for buildings and houses which are rented to legal or natural persons and
are used for business purposes or offices are subject to withholding tax as follows:
1. Where the monthly rent is from AFN 10,000 to AFN.100,000/- ten (10) percent.
2. Where the monthly rent is more than AFN. 100,000/- fifteen (15) percent.
For purposes of the above calculations, landlords may not be credited for actual
expenses for repairs and maintenance on the withholding tax. Instead, landlords will take a
deduction for the cost of repairs, renovations and improvements on their annual income tax
return.
The withheld tax under this provision must be paid within 15 days of the month in which the
rental payment is made.

Withholding Tax on Contractors

Legal and natural persons who provide supplies, materials, construction and other services
under contract are subject to withholding tax from the gross amount payable to the contractor.

Contractors with business licenses:

If the Contractor has a business license, the withholding tax rate is 2% of the gross payment
to the Contractor. Contractors with business license will take credit for the withholding tax
as an advance payment on their annual income tax returns for the tax period in which they
were paid.

Contractors without business licenses:

If the Contractor does not have a business license, the withholding rate is 7% of the
gross payment to the Contractor. Contractors without business licenses will treat the
withholding tax as a final tax.

A minimum threshold of AFN. 500,000 has been set for contract withholding tax purposes.
Payments on account of purchases or supplies made or services rendered to a legal or natural
person aggregating below AFN. 500,000 in a tax year shall not be subject to withholding tax.
However, if the aggregate of payments to one person on this account exceed this threshold in
a tax year the entire payment to that legal or natural person shall be liable to contract
withholding income tax under Article 72.

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The tax so withheld along with the specified withholding tax form shall be remitted to the
government account with in ten days of the end of the month in which the tax was withheld.

Other Withholding Taxes

Profit and non-profit legal persons organized under the Laws of Afghanistan are required to
withhold tax from the payment of dividends, interest, royalties, prizes, rewards, lotteries and
bonuses. Whenever such payments are made, the payer is required to withhold tax at the rate
of (20%) twenty percent and pay it to the State not later than 10 days after the end of the
month in which the tax was withheld. (Article 46)

FIXED TAXES

Fixed Tax on Imports

Persons who import goods are subject to a fixed tax on the value of the imported goods.
Persons with a current business license are subject to a 2% fixed tax which will be taken as a
credit on the income tax return in the year in which it is paid.

Persons without a business license or with an interim license are subject to a 3% fixed tax
which is payable instead of annual income tax.

The fixed tax on imports is paid when and where the customs duties on the imported goods
are paid.

Fixed Tax on Exhibitions

The fixed tax on exhibitions applies to natural persons who are resident of Afghanistan
and to non-resident natural and legal person who provide entertainment such as theater,
cinema, radio, television, music, or sport competition in Afghanistan. Income from these
businesses is subject to a fixed tax of 10% of receipts from sale of admission or tickets.
The fixed tax is imposed in lieu of income tax and business receipts tax. The fixed tax is
due on a monthly basis and must be paid no later than the 15th day of the next month. If the
mentioned shows are not continuous, the tax must be paid after the end of each show.

Other persons who provide entertainment services shall be subject to income tax and business
receipts tax according to the provisions of this Law.

Fixed Tax on Small Businesses

Natural persons who are engaged in business activities and meet the following conditions
shall be subject to fixed tax in accordance with Article 75.
1. Natural persons who have income which is neither exempt nor subject to withholding
tax in accordance with the provisions of this Law.
2. The total gross annual income of the natural persons is less than AFN. 3,000,000 for a tax
year.
3. On an annual basis, fixed tax applies as follows:

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 Category Gross Annual Tax Amount/Rate in Total Annual Tax
Income (AFN) Quarter
1 0 to 60,000 0 0
2 60,000 to 150,000 500 2,000
3 150,001 to 500,000 1,500+500 8,000
4 500,001 to 3% of gross income or, may 3% of gross income or, may
3,000,000 elect to pay income tax and elect to pay income tax and
business receipt tax. business receipt tax.

Fixed Tax on Sale of Movable or Immovable Property

Legal persons are required to pay (1%) one percent tax on the sale or transfer of movable and
immovable properties. The tax paid will be treated as a prepayment of tax and shall be credited
against annual income tax at the time of lodgment of the annual income tax. Article 30.

INSURANCE COMPANIES TAXATION

The Articles of the law shall apply to an insurance company provided it meets the following
conditions:
1. It has been established as a corporation under the laws of Afghanistan;
2. The company is engaged in more than one field of insurance, such as casualty-risk
insurance, life insurance, or any other type of insurance activity; and
3. 3 The company must have separate accounting and reserves for each of its fields of
insurance and other activities. (Article 48)
The following receipts of insurance companies shall be subject to income tax:
1. interest, dividends, rent, and other income from investments and property;
2. receipts from activities other than insurance;
3. premiums for insurance against fire, theft, accident, sickness, casualty, or risk, the
insurance of which is for a specified term, and the insured person has no money claim
after the term has expired; and
4. Income from capital transactions.
Exemption of certain policy holders: All insurance premiums received for written contracts
that require ultimate payment of specified benefits to the policyholder or their beneficiaries
are exempt from income tax.

Determination of taxable income of foreign insurance companies: Any foreign insurance

company or reinsurance company receiving premium income of any kind from within
Afghanistan is subject to income tax as follows:
1. the premiums received by the company from within Afghanistan in the tax year shall
be determined; (A)
2. the total premiums received world-wide by the company in the same period shall be
determined; (B)

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 3. the net income before income tax and dividend payments by the company from its
world-wide business shall be determined; (N)
4. The amount determined in sub-paragraph (1) divided by the amount determined in
sub-paragraph (2) multiplied by the amount determined in sub-paragraph (3) of this
Article shall be taxable income. (Taxable income = A/B*N)

ADDITIONAL TAXES (Fines and Penalties)

Additional Income Tax Where Tax Paid Late

Where a person has failed to pay tax due by the due date, the person is liable to pay additional
income tax of 0.10 per cent of the tax due per day. This applies to all kind of tax liabilities.

Additional Income Tax Where Records Not Maintained

A person who, without reasonable cause, fails to prepare and maintain records required by
the provisions of this Law or fails to provide the officers of the Ministry of Finance access to
the records shall pay additional income tax of AFN. 5,000 if the person is a natural person or
AFN. 20,000 if the person is a legal person. Such a person may be referred to the office of the
attorney general if the intent of not keeping records was to evade tax.

Additional Income Tax Where Tax Return Not Filed

Person who, without reasonable cause, fails to file a tax return by the due date shall pay
additional income tax of AFN. 100 for each day other than holidays that the return was
overdue if the person is a natural person or AFN. 500 for each day other than holidays that the
return is overdue if the person is a legal person. Such a person may be referred to the office of
the attorney general if the intent of not filing return was to evade tax.

Additional Income Tax Where Tax Not Withheld

A person who, without reasonable cause, fails to withhold tax from salary and wages, interest
income, dividends, rent, commissions, royalties, and similar income in accordance with the
provisions of this Law shall be subject to additional tax of ten percent (10%) of the tax that
should have been withheld.

Additional Income Tax Where Tax Not Paid

A person who fails to pay due taxes determined under the provisions of this law without
reasonable cause shall pay (10%) ten percent additional tax. This is in addition to any
additional tax that may be due for the late payment of tax under Article 100 as given above.

Additional Income Tax Related To Taxpayer Identification Numbers

A person who is required to have a Taxpayer Identification Number under Article 86 of the
Law and who, without reasonable cause, fails to apply for a Taxpayer Identification Number
shall pay additional income tax of AFN. 5,000 if the person is a natural person or AFN. 20,000
if the person is a legal person.

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ABOUT RAFAQAT BABAR & CO

Rafaqat Babar & Co established in 1986, is a pioneer chartered accountants firm in Khyber
PakhtoonKhwa (KPK) Pakistan. The firm grew in size, expertise and gained enough
confidence of its clients that in 1996 it planned for expansion to establish its offices across the
country. Within next 5 years branches in Karachi, and Islamabad were established. The firm is
being managed by four partners with over 100 professional staff.

We have been in practice in Kabul since May 2005.

The firm provides specialized services in fields of audit and assurance, management and
financial advisory, taxation advisory, project financing and corporate and secretarial works.
Vast experience has been gathered by servicing a multitude of assignments. Such experience
is drawn upon to provide services of the highest level so as to benefit all clients by providing
solution to their problems and successful exploitation of available opportunities. The firm over
the year has developed a sizeable list of clientele.

INTERNATIONAL AFFILIATION

We are members of The Leading Edge Alliance (LEA). The Leading Edge Alliance (LEA) is an
international professional association, having its headquarters at Illinois USA with over 300
special interest groups throughout the world. The alliance consists of independently-owned
accounting and consulting firms that share an entrepreneurial spirit and a drive to be the
premier providers of professional services in their chosen markets. The services offered
include accounting, tax and consulting services through a global network of firms. The leading
edge alliance offers:

 Access to extensive teams of CPAs and business advisors - a peer-to-peer connection

that provides the right solutions for clients.
 Innovative, practice proven strategies for improving performance in management,
business processes, finance, operations, information technology and marketing.
 A leading knowledge resource for multi-disciplinary information and industry-specific
expertise responsive to clients' unique needs.
 The strength and reputation to attract the highest quality team members.
 Accounting, tax and consulting services through a global alliance of firms.
 World class business advisory expertise and experience with innovation,
progressiveness and quality.

The Leading Edge Alliance enables member firms to access the resources of a multibillion
dollar global professional services organization, providing business development,
professional training and education, and peer-to-peer networking opportunities nationally
and globally, around the corner and around the world. LEA members around the world are
top quality firms who are very successful, have deep client relationships, and strong ties to the
community. The Alliance provides members with an unbeatable combination: the
comprehensive size and scope of a large multinational company while offering their clients
the continuity, consistency and quality services of a local firm.

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OUR SERVICES

Audit and Assurance Services

We provide independent, objective and rigorous financial and risk assurance of your business
and financial position that is fundamental to improving performance and good corporate
governance. Our approach is based on developing an understanding of your business or
organization and the financial, operational and governance risks that it faces.

We tailor our service to meet your unique circumstances and needs and, by agreeing
expectations and responsibilities at the outset, we ensure that our performance and service
meets your requirements. The following are the major assurance services we provide:
i. Annual financial audits
ii. Statutory audits under the corporate and tax laws of Afghanistan.
iii. Cost audits as per the agreed terms of reference.
iv. Donor/ recipient contracted audits.
v. Agreed upon procedures and reporting of factual findings
vi. Financial reviews and pre award assessments.
vii. Project audits in accordance with terms of project agreement and donor requirement
viii. Sales and income tax in order to ensure compliance and compilation of tax returns
ix. Examination of prospective financial statements.

Audit assignments are planned and performed in line with the International Standards on
Auditing (ISAs) together with the requirements of applicable local legislation. With an aim to
add value, the RBCO audit methodology concentrates on business areas significant to financial
statements.

Internal Audit
We can provide you with advice and assistance on the development of your internal audit and
risk management strategy and processes. In addition, we also function as outsourced internal
audit department. Whether your need is for an outsourced partner to support your Head of
Internal Audit and/or in-house team, or the provision of a full outsourced internal audit
service we can provide you with a solution that will be tailored to your specific needs.

Accounting Services
Our accounting services include engagements to compile financial information ranging from
bookkeeping to preparation of financial statements in accordance with identifiable financial
reporting framework (mostly IFRS) together with the presentation and disclosure
requirements of local statute or donor requirements.

Advisory Services
Whilst ensuring prompt and efficient compliance with your accounting, tax and statutory
obligations is often a significant part of our role, we aim to provide you with tailored advice
for your unique circumstances.

Our experience of complex business issues provides us with an unusually wide span of
expertise. This is available equally to our smaller and more substantial clients who value our
advice and look to us for assistance on a regular basis.
RAFAQAT BABAR & CO CHARTERED ACCOUNTANTS Page 14 of 17
We provide close support, combining knowledge of accounting, tax and business issues which
has proved invaluable to clients involved in transactions, business planning and contentious
litigation situations.

Taxation Services

Corporate tax
We have developed a strong, niche corporate tax practice. We are seen as a boutique tax
consultancy, providing advice and solutions to complex corporate tax issues. Our
international client base has enabled us to gain experience in advising on international as well
as Afghanistan’s corporate tax issues.

We offer consultancy to companies on domestic and international legislation, finding creative

solutions to corporation tax problems. We provide compliance services to Afghan companies
prepare computations for corporation tax, advice on liabilities and the timing of payments and
correspond with the tax authorities in the case of disputes. We offer,

1. Business receipt, salary, rent, suppliers and annual tax computation;

2. Filing of quarterly BRT, and annual tax returns, including filing of withholding tax on
salaries, suppliers and rent
3. Follow up with ministry of finance for annual income tax return and clearance letter;
4. Advice on liabilities and the timing of payments and correspond with the tax
authorities in the case of disputes.
5. Tax audit representation and Tax enforcement representation.
6. Proceedings for obtaining Private ruling regarding tax exemption from Ministry of
Finance for exempt projects under bilateral or multilateral agreements.
7. Any other tax related matters.

Personal tax
We advise individuals on personal tax planning with the aim of mitigating income tax, wealth
tax and capital gains tax liabilities. We continue to devote significant resources, both human
and technical, to maintaining and enhancing our personal tax services to private clients.
Legislation surrounding issues relating to private individuals, such as tax self-assessment,
capital gains tax and wealth tax is constantly changing and becoming more complex.

Our expertise within this area allows us to offer advice on the most recent developments whilst
tailoring this to each client's needs.

RAFAQAT BABAR & CO CHARTERED ACCOUNTANTS Page 15 of 17

 DISCLAIMER

The information in this document is provided in good faith with the intent to help
organizations to ensure their compliance with the Afghanistan Income Tax Law while
conducting their routine operations. This document do not constitute legal advice on any
matter. Rafaqat Babar & Co assumes no liability for any action taken on the basis of
information provided herein. The readers are therefore cautioned while relying on the
information provided in this document and are advised to refer to the original legal text of
Afghanistan income tax law 2009 or seek legal advice. These materials and information are not
a substitute for obtaining legal advice from a professional tax consultant.

RAFAQAT BABAR & CO, CHARTERED ACCOUNTANTS

House No 04, Ayana Television Street
Sherpur, Kabul, Afghanistan
Cell# 0093-0700-081878
Email: kabul@rafaqatbabar.com
Web: www.rafaqatbabar.com

ISLAMABAD Office 611, 6th Floor, ISE Tower, Jinnah Avenue, Islamabad.
Tel: # 051-2894651-53

PESHAWAR 76 E (1), Rehman Baba Road, University town, Peshawar.

Tel: 091-5703151-5703152
Fax:091-5703153

LAHORE 3rd Floor, Sharjah center, 62- Shadman market, Lahore

Tel: 042-37552728-9
Fax: 042-37552730

KARACHI Suite 113, 3rd Floor, Hafeez Centre, Plot# A/34, KCHS,
Block 7 & 8, Shahra-e-Faisal, Karachi-75350
Ph: 021-34392361-3 Fax 021-4396247