Afghans and foreigners working in the country are soon going to have to start paying tax on their incomes as the aid-dependent government strives to increase its revenue. The wage tax is being imposed on all businesses with two or more employees from Sept. 23, finance ministry officials said at the weekend.
"This involves government employees, those who work for foreign companies and foreigners working in Afghanistan," said ministry spokesman Aziz Shams.
The aim is to boost the government budget, half of which is being paid by foreign donors, he said.
The International Monetary Fund and World Bank are advising Afghanistan how to start a tax regime after a quarter century of conflict and chaos but some business people already say they are facing a tax regime that hinders growth.
The new tax will be set at a rate of 10 percent on income over 12,500 afghanis ($250) a month. Income over 100,000 afghanis ($2,000) a month will be taxed 20 percent, said the ministry's director of revenue, Abdul Malik Rahmani.
Afghanistan gets half of its more than $600 million annual budget from donor nations and they are keen to see the government start developing sustainable revenue streams. But those business people who do pay tax say the tax base is far too narrow and they are already burdened by a list of taxes including a 20 percent corporate tax and a 12.5 percent tax on gross receipts.
The average basic salary of a government employee is 1,250 afghanis ($25) a month so the new tax is largely aimed at foreigners and Afghans working for foreign companies and aid groups.
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