Afghanistan makes progress on VAT implementation

Sat 31st May 2014

The long running proposal to introduce an Afghan Value Added Tax regime has made significant progress under the supervision of the International Monetary Fund.

The last plans to introduce a Goods & Services Tax in 2007 to replace the Business Receipts Tax of between 2% and 10% failed. The BRT is essentially a turnover tax on companies which is inefficient to manage and is prone to fraud.

The latest effort comes as Afghanistan needs to underpin its volatile state revenues. At present, the main standard rate will be 10%, with some exemptions for basic foodstuffs and exports.

The Bill to introduce VAT is now in Parliament.  Other countries in Central Asia have now introduced full VAT systems – Kazhakstand 12%; Kyrgyzstan 12%.