10% flat rate for most entities, down from a prior 20%, effective under a reform announced July 12, 2026 by Afghanistan's Ministry of Finance under the Islamic Emirate administration. Mining extraction companies are excluded from the reduction and remain subject to a higher rate. Access to the reduced rate is reportedly conditional on formal registration in the tax system and digitalization of financial operations. Notably, the effective-date rule is based on when a return or assessment is filed or finalized (after July 11, 2026) rather than the fiscal year the underlying income relates to - meaning even a return for fiscal year 1403/1404 (2024-2025) filed after that date uses the new 10% rate.
Progressive, also reduced under the July 2026 reform: income between AFN 60,000 and AFN 120,000 annually is exempt, income from AFN 120,001 to 1,200,000 is taxed at 10%, and income above AFN 1,200,000 faces a 15% top rate (down from a prior 20% top rate). Administration is under the Afghanistan Revenue Department; a person is resident if their principal home is in Afghanistan at any point in the tax year, they are present for 183 days total, or they are a Government of Afghanistan employee posted abroad.
No formal VAT currently operates in Afghanistan. A 2014-2015 VAT initiative developed with IMF support was never fully implemented to cover all goods and services (hotels, for example, remained excluded) and appears to have been superseded rather than completed. The operative indirect tax today is a Business Receipts Tax (BRT) on gross business receipts, with no input credit mechanism: 4% general rate, 2% for restaurants, and 5% for airlines and telecom.
Confirmed via a specialist trade-portal source: a person is resident in Afghanistan for a tax year if they have their principal home in Afghanistan at any time during the year, are present for 183 days total in the tax year, or are a Government of Afghanistan employee or official posted abroad during the tax year. Non-resident persons and expatriates are subject to the same tax treatment for their Afghanistan-source income as residents.
No Controlled Foreign Company regime was identified in available sources this session. This is a genuine gap rather than a confirmed absence.
No statutory thin capitalization ratio was identified in available sources this session.
No domestic FBAR/Form 8938-equivalent requiring Afghanistan residents to self-report their own foreign accounts was identified. Institutional-level CRS/FATCA participation is significantly constrained by international sanctions and the current government's limited international recognition since 2021, and was not independently confirmed this session. Separately and independently of Afghan law, US citizens and Green Card holders with any Afghanistan-connected financial accounts remain obligated to file FinCEN Form 114 (FBAR) once aggregate foreign accounts exceed USD 10,000, and potentially Form 8938 - and should independently verify current US sanctions and OFAC restrictions before any Afghanistan-connected financial activity, given the significant and evolving sanctions landscape since 2021.
Afghanistan has a very limited tax treaty network, confirmed via TaxAtlas, further constrained by international sanctions and political instability that have restricted treaty negotiations since 2021. A comprehensive named-partner list was not compiled this session. Afghanistan operates a computerized self-assessment tax filing system requiring a Taxpayer Identification Number, confirmed via BRITACOM, with taxpayers legally obligated to voluntarily declare income and calculate their own tax liability.