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| An aspect of fiscal policy |
Taxation in Afghanistan includes corporate taxes, income taxes, customs and fees.
All companies, no matter what kind of legal form the company is, are required to pay a corporate tax at the rate of 20 percent. It can be found in the 4th article of the Afghan Income Tax law. [1]
In 2014, the parliament of Afghanistan worked closely with the International Monetary Fund to raise the domestic revenues and therefore added a value-added tax (VAT) of 10 percent. [2] [3] Although, the existing law does not include all goods and services (hotels are affected for example), the government is planning to broaden this tax. VAT affects both domestic business people and their trade partners. The domestic taxpayer is obliged to pay the VAT on the taxable supply and the importer is obliged to pay the VAT on the taxable imports. [4] [5] [6] VAT will replace the business receipts tax for all imports once implemented.
Afghanistan has many different tax rates of business receipt tax on their goods and services. The size of the business receipt tax depends on which kind of company and how large the company is. Lowest BRT has travel agents, culture, smaller restaurants and commodities with a tax rate of 4 percent. The larger restaurants, hotels and club halls have to pay 5 percent in business receipt tax. That tax rate was increased during 2015, from 2 percent to 4 percent, when the government wanted to increase the state revenues to finance the increased need for aid and foreign arms. [7]
Individuals are subject to tax at progressive rates, calculated monthly. [1]
| Income slab per month (AFN) | Applicable Rate [1] |
|---|---|
| 0 - 5,000 | 0% |
| 5001-12,500 | 2% |
| 12,501-100,000 | 10% + AFN 150 |
| 100,001 and above | 20% + AFN 8,900 |
Since the beginning of the 21st century, governmental revenues have aggregately increased. One of the reasons for this improvement is a more efficient tax system. However, revenues have been less than what they planned for due to situations such as tax evasion and the large drug market, tightening constraints on the budget. In 2015, the government made some improvements of both the tax administration and the customs and that made the revenues increase during 2015. [8]
Except from the regular taxes on income and corporations, there are a number of other different customs and fees that have increased in Afghanistan after the creation of NUG (National Unity Government), resulting in increasing revenues for the state. To begin with, there are general increases of customs fees on certain items and airspace fees. There is also a tax on fuel import and a 10 percent fee on cellphone top-up cards.
The national budget for 2018 consists of AFN 327 billion and represents a 17 percent decrease from that of the previous year (2017: AFN 429 billion). The Cabinet of Ministers and Mesherano Jirga voted for the budget in the end of November 2017, and the expected tax revenues for Afghanistan was by then AFN 157 billion. There is not a clear reason why the budget has decreased that much, but possible explanations have been that the earlier budget was false or that the government found a way to use the development budget money more efficiently.
The government spends the most money on is security, accounting for 41 percent of the national budget. 13 percent goes to education, 11 percent to infrastructure, 9 percent to agriculture and rural development, 7 percent to governance, 7 percent to social security, 5 percent to contingency codes, 4 percent to health and 2 percent to economic governance. [9]
A tax is a mandatory financial charge or levy imposed on a taxpayer by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behavior aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation occurred in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as labor equivalent.
A tax cut represents a decrease in the amount of money taken from taxpayers to go towards government revenue. Tax cuts decrease the revenue of the government and increase the disposable income of taxpayers. Tax cuts usually refer to reductions in the percentage of tax paid on income, goods and services. As they leave consumers with more disposable income, tax cuts are an example of an expansionary fiscal policy. Tax cuts also include reduction in tax in other ways, such as tax credit, deductions and loopholes.
Excise tax in the United States is an indirect tax on listed items. Excise taxes can be and are made by federal, state, and local governments and are not uniform throughout the United States. Certain goods, such as gasoline, diesel fuel, alcohol, and tobacco products, are taxed by multiple governments simultaneously. Some excise taxes are collected from the producer or retailer and not paid directly by the consumer, and as such, often remain "hidden" in the price of a product or service rather than being listed separately.
In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2023–24, total government revenue was forecast to be £1,139.1 billion, or 40.9 per cent of GDP, with income taxes and National Insurance contributions standing at around £470 billion.
The tax system of the Russian Federation is a complex of relationships between fiscal authorities and taxpayers in the field of all existing taxes and fees. It implies continuous communication of all its members and related objects: payers; legislative framework; oversight authorities; types of mandatory payments. The Russian Tax Code is the primary tax law for the Russian Federation. The Code was created, adopted and implemented in three stages.
Taxation in Iran is levied and collected by the Iranian National Tax Administration under the Ministry of Finance and Economic Affairs of the Government of Iran. In 2008, about 55% of the government's budget came from oil and natural gas revenues, the rest from taxes and fees. An estimated 50% of Iran's GDP was exempt from taxes in FY 2004. There are virtually millions of people who do not pay taxes in Iran and hence operate outside the formal economy. The fiscal year begins on March 21 and ends on March 20 of the next year.
Taxes provide the most important revenue source for the Government of the People's Republic of China. Value-added tax (VAT) produces the largest share of tax revenue in China and corporate income tax producing the next largest share.
As of 2016, taxation in the State of Palestine is subject to the Oslo Accords, notably the Protocol on Economic Relations also called the Paris Protocol, which was signed in 1994 by the Palestine Liberation Organization (PLO) and Israel. The Paris Protocol established a customs union, which essentially formalized the existing situation, where the Palestinian economy was merged into the Israeli one. Formally, the Palestinian Authority (PA) is entitled to collect taxes from the Palestinians in the Palestinian territories, but some 75% of PA's total tax revenue was as of 2014 collected by Israel on behalf of the PA and transferred to the PA on a monthly basis. Israel has occasionally withheld the taxes it owes the PA.
In Bangladesh, the principal taxes are customs duties, value added tax (VAT), supplementary duty, income tax and corporation tax.
In Zambia, the Zambia Revenue Authority, a body under the Ministry of Finance, is in charge of collecting taxes on behalf of the Zambian Government.
Taxation in Norway is levied by the central government, the county municipality and the municipality. In 2012 the total tax revenue was 42.2% of the gross domestic product (GDP). Many direct and indirect taxes exist. The most important taxes – in terms of revenue – are VAT, income tax in the petroleum sector, employers' social security contributions and tax on "ordinary income" for persons. Most direct taxes are collected by the Norwegian Tax Administration and most indirect taxes are collected by the Norwegian Customs and Excise Authorities.
Taxes in Germany are levied at various government levels: the federal government, the 16 states (Länder), and numerous municipalities (Städte/Gemeinden). The structured tax system has evolved significantly, since the reunification of Germany in 1990 and the integration within the European Union, which has influenced tax policies. Today, income tax and Value-Added Tax (VAT) are the primary sources of tax revenue. These taxes reflect Germany's commitment to a balanced approach between direct and indirect taxation, essential for funding extensive social welfare programs and public infrastructure. The modern German tax system accentuate on fairness and efficiency, adapting to global economic trends and domestic fiscal needs.
Taxation may involve payments to a minimum of two different levels of government: central government through SARS or to local government. Prior to 2001 the South African tax system was "source-based", where in income is taxed in the country where it originates. Since January 2001, the tax system was changed to "residence-based" wherein taxpayers residing in South Africa are taxed on their income irrespective of its source. Non residents are only subject to domestic taxes.
Fiscal policy are "measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures". In the Philippines, this is characterized by continuous and increasing levels of debt and budget deficits, though there were improvements in the last few years of the first decade of the 21st century.
In the United Kingdom, the value added tax (VAT) was introduced in 1973, replacing Purchase Tax, and is the third-largest source of government revenue, after income tax and National Insurance. It is administered and collected by HM Revenue and Customs, primarily through the Value Added Tax Act 1994.
Taxes in Lithuania are levied by the central and the local governments. Most important revenue sources include the value added tax, personal income tax, excise tax and corporate income tax, which are all applied on the central level. In addition, social security contributions are collected in a social security fund, outside the national budget. Taxes in Lithuania are administered by the State Tax Inspectorate, the Customs Department and the State Social Insurance Fund Board. In 2019, the total government revenue in Lithuania was 30.3% of GDP.
Taxation in Belgium consists of taxes that are collected on both state and local level. The most important taxes are collected on federal level, these taxes include an income tax, social security, corporate taxes and value added tax. At the local level, property taxes as well as communal taxes are collected. Tax revenue stood at 48% of GDP in 2012.
A value-added tax is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared with, a sales tax. VAT is an indirect tax, because the consumer who ultimately bears the burden of the tax is not the entity that pays it. Specific goods and services are typically exempted in various jurisdictions.
A destination-based cash flow tax (DBCFT) is a cashflow tax with a destination-based border-adjustment. Unlike traditional corporate income tax, firms are able to immediately expense all capital investment. This ensures that normal profit is out of the tax base and only super-normal profits are taxed. Additionally, the destination-based border-adjustment is the same as how the Value-Added Tax treat cross-border transactions—by exempting exports but taxing imports.
The 2022–23 Federal Budget of Pakistan was presented on 10 June 2022 by Finance Minister Miftah Ismail, with Rs 9.5 trillion budgeted for expenditure in financial year 2022–2023, which was nearly a trillion higher than the previous financial year. On 29 June 2022, the National Assembly of Pakistan approved the passage of the Finance Bill, 2022. In February 2023, Pakistani cabinet approved 'Finance Supplementary Bill 2023' for Mini Budget. The budget for FY2022-23 aimed to raise Rs. 7 trillion in tax revenue, raise Rs. 372 billion from Sukuk and Eurobonds, target a primary surplus of 0.2% of GDP, target a fiscal deficit of 49% of GDP and meet IMF benchmarks.
The tax calculation of Afghanistan are as below. Currency used AFN according to Afghanistan Tax law.
Salary Tax calculation of Afghanistan. From 0 to 5000 AFN Exempted. From 5001 to 12500 2% Tax will be deducted, From 12501 to 100000 10% Tax will be deducted and, From 100000 and Above 20% Tax will be deducted or imposed
