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Non-resident employees are exempt from withholding if their home country provides the same exemption to residents of Afghanistan. Resident and nonresident employees of foreign governments and international organizations are subject to tax based on existing treaties or contracts with the State. Afghan-source income is defined as any income directly produced in Afghanistan or paid for services provided in Afghanistan.
Non-resident employees are exempt from withholding if their home country provides the same exemption to residents of Afghanistan. Resident and nonresident employees of foreign governments and international organizations are subject to tax based on existing treaties or contracts with the State. Afghan-source income is defined as any income directly produced in Afghanistan or paid for services provided in Afghanistan.
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Non-resident employees are exempt from withholding if their home country provides the same exemption to residents of Afghanistan. Resident and nonresident employees of foreign governments and international organizations are subject to tax based on existing treaties or contracts with the State. Afghan-source income is defined as any income directly produced in Afghanistan or paid for services provided in Afghanistan.
Copyright:
Attribution Non-Commercial (BY-NC)
Verfügbare Formate
Als PDF, TXT herunterladen oder online auf Scribd lesen
Guide 05 vices, overtime pay, cash allowances provided by
the employer to the employee (including, but not lim-
Wage Withholding ited to, food allowances and transportation allow- Tax ances), and non-cash payments for services.
Who is Subject to Withholding?
All resident and non-resident employees working in Afghanistan whose salaries and wages exceed the tax threshold of 12,500 Afghanis (or equivalent in foreign currency) per month or equivalent prorated amounts for those paid on alternate payroll periods. Non-resident employees are exempt from withhold- ing if their home country provides the same exemp- tion to residents of Afghanistan. Resident and non- resident employees of foreign governments and in- ternational organizations are subject to tax based on existing treaties or contracts with the State.
Who is a Resident? Who is a Non-Resident?
Introduction According to the income Tax Law, a natural person
is a resident of Afghanistan (Article 2) for the tax Amendments to the Income Tax Law of Afghanistan year if: have changed some of the applications of the wage withholding tax. This brochure will explain those 1) The person has his or her principal home in Af- changes and help you in complying with the ghanistan at any time during the year; or law.Note 2) The person is present in Afghanistan for a period There of one hundred eighty three (183) days in the tax are no fees or charges payable to the Ministry of year; or Finance or its Revenue Department or the Musto- fiat for any Tax Guides or Forms or at any stage 3) The person is an employee or an official of the of the tax assessment collection or enforcement Government of Afghanistan posted abroad at any processes time during the tax year. Who Must Withhold? Worldwide income is taxable in Afghanistan on all residents. Legal persons and natural persons (individuals) with two (2) or more employees during any month of the Non-residents are those people who do not meet the tax year are required to withhold tax from employees above requirements. All Afghan-source income is (Article 58 Income Tax Law) whose income exceeds taxable for non-residents. Afghan-source income is the threshold, discussed later. Legal persons include defined as any income directly produced in Afghani- partnerships, corporations, limited liability compa- stan or paid for services provided in Afghanistan. nies, organizations, agencies, ministries and other national or local government agencies and depart- Example 1: ments, enterprises of the State and municipalities, and charitable institutions. Joe Brown is a foreign national who arrived in Kabul on 12 May for a year’s assignment working for a Note regarding Natural Persons who are Em- non-profit British aid organization. There is no con- ployers: Effective September 23, 2005 (1 Mizan, tract with the State in place to exempt employees of 1384) the Income Tax Law was changed to include his organization from taxation in Afghanistan. He is natural persons in the requirement to withhold taxes paid in pounds sterling from his home office in Lon- from employees. don. The money is deposited directly into his British bank account. However, his wages are paid for ser- What Payments are Subject to the Withhold- vices provided in Afghanistan, so they are consid- ing? ered Afghan-source income and would be subject to withholding. He remained in Afghanistan for the en- Payments to employees in the form of salaries and tire year, with the exception of two trips of three wages for work provided are subject to withholding. weeks each to visit his family, who live in his princi- Salaries and wages include: regular pay for ser- Guide 05WWT407 E revise.doc pal home in the UK. He has met the requirement of For bi-weekly payrolls being present in Afghanistan for 183 days in the tax Income Income not Tax year, so he would be considered a resident for tax more more than purposes and be subject to tax on worldwide in- than come. 0 5769 0% Example 2: 10% of amount over 5769 46,154 5769 Abdul Nasri is an Afghan national who lives in Du- 46,154 4038 + 20% of the bai. He spent three months in Kabul working for the amount over 46,154 same British firm as Mr. Brown. He also owns a building in Kabul which he rents out to a foreign aid organization. Since he does not maintain his princi- For weekly payrolls pal home in Afghanistan, was not in the country for Income Income not Tax at least 183 days, and is not an employee of the Af- more more than ghan government, he is considered a non-resident. than However, both his wages for work in Afghanistan 0 2885 0% and his rental income from the building in Kabul are 10% of amount over considered Afghan-source income and subject to 2885 23,077 2885 tax. The British firm is required to withhold on his wages and pay the tax over to the Afghan govern- 23.077 2019 + 20% of the ment. In addition, Mr. Nasri should also file an in- amount over 23,077 come tax return and declare his rental income. For daily payrolls What is the rate of Withholding? Income Income not Tax more more than There is a monthly exemption of 12,500 Afghanis (or than prorated share for alternate payroll periods) per per- 0 411 0% son. Taxes are withheld at rates based on the monthly schedule established in the Income Tax 10% of amount over 411 3288 Law (Article 4). 411 3288 288 + 20% of the For monthly payrolls amount over 3288 Income Income not Tax more more than Example 1: than 0 12,500 0% ABC, Inc., a foreign firm, pays its foreign employees 10% of amount over working in Afghanistan bi-weekly. However, the firm 12,500 100,000 pays its local employees on a monthly basis. The 12,500 100,000 8750 + 20% of the firm would be required to withhold from each group amount over 100,000 of employees on each separate pay date, but file and pay the withheld tax within ten days of the end of the month. Employees paid on alternate payroll schedules (weekly, semi-monthly, etc.) are subject to withhold- Example 2: ing according to the following prorated schedules, which are based on the monthly schedule. XYZ, Inc., another foreign firm, pays its foreign em- ployees semi-monthly and its local employees For semi-monthly payrolls monthly. This firm would still have one filing re- Income Income Tax quirement per month. more not more than than How is the Wage Withholding Tax Cal- 0 6250 0% culated? 10% of amount over 6250 50,000 6250 Wage withholding tax is calculated based on the 50,000 4375 + 20% of the above tables. Determine which payroll period you amount over 50,000 use. For each employee, look at the total salary (in- cluding taxable benefits). If it is in excess of the up- per threshold (100,000 for monthly payroll, 50,000 2 for semi-monthly payroll, etc.), use the third row of the appropriate schedule. If the total salary (includ- Talking to Your Employees about the Tax ing taxable benefits) is more than the lower thresh- old (12,500 monthly, 6250, semi-monthly, etc.), but Many employees will be confused by the implemen- does not exceed the upper threshold, use the sec- tation of this tax. Although the wage withholding has ond row of the appropriate schedule. If the total sal- been in the law for many years, it has not been ef- ary is less than the lower threshold, there is no with- fectively administered, or has not been administered holding requirement. at all for a long time. It is important to explain to em- ployees that the income tax requirement has been a part of Afghan tax law for years, and that compliance with the withholding tax is a legal requirement under When Does the Tax Withheld Have to be the Income Tax Law of Afghanistan. Paid? If your employees have questions regarding the The employer is required to remit to the State the wage withholding specifically, or income tax filing in amount withheld no later than 10 days (Article 60) general, please direct them to contact the Ministry of after the end of the month in which the amounts Finance, Department of Revenue. If you would like were withheld. to have a representative of the Department of Reve- nue come to your place of business to address your employees regarding these or other tax issues, How is the Wage Withholding Tax Re- please feel free to contact the Ministry to set up a ported? convenient time. Annual salary and tax statement: The employer must give each employee an annual salary and tax Tax Forms and Information statement showing the employer’s name, address, and TIN; the employee’s name and address; and the Tax forms and guides are available at the Ministry of amount of the employee’s total salary or wage, as Finance, Revenue Department, Taxpayer Assis- well as the amount withheld. A copy of this will be tance Team. forwarded to the Ministry of Finance as well (Article 61). For more information or assistance visit the Revenue Department, Taxpayer Assistance Team, visit the Annual summary report of tax withheld: The em- “Tax Information Page” at www.mof.gov.af/tax or call ployer will file an annual summary of all wages or 075 2005 433. salaries paid to all employees during the tax year and all taxes withheld (Article 61). Note: The “Tax Information Page” website also con- tains a copy of the Income Tax Law, various public Wage withholding report and deposit form: This form rulings, forms and Questions & Answers regarding must be completed and filed within ten days of the the wage withholding tax. end of the month in which the salaries were paid, reporting total wages or salaries paid for the month Enforcement Provisions and taxes withheld. Payment is due in Afghanis at Da Afghanistan Bank with the form (Article 60). Failure to comply with the requirements of the In- come Tax Law may result in the Ministry of Finance using administrative powers within the tax law to en- What is the Employee’s Responsibility? sure compliance. These provisions are contained in Chapters XIV & XVI and include fines, penalties and If the employee has only one job they have no fur- imprisonment. ther responsibility or filing requirements. The Ministry of Finance will receive the appropriate information through the employer’s annual summary report filing. 1386 Ministry of Finance If the employee has any other income (including, but Afghanistan Revenue Department not limited to, another job, self-employment, divi- dends, rental income, etc.) he must file an individual income tax return and calculate his total tax for the year. He will be able to take credit for any tax with- held against his total tax liability (Article 63). Islamic Republic of Afghanistan