Business Receipts Tax BRT : Afghanistan Revenue Department ARD

Name of the Organization : Afghanistan Revenue Department
Type of Facility : Business Receipts Tax (BRT)
Country : Afghanistan

Website : https://ard.gov.af/

Business Receipts Tax (BRT) :

Business Receipts Tax (BRT) is a tax collected from total income (from sales or services), before any deductions, of legal persons who provide goods and services in exchange for payment (in either money or in goods and/or services).

Related : ARD Afghanistan Revenue Department Clearance Certificate TCC & Taxpayer Identification Number TIN : www.statusin.org/7855.html

BRT is also imposed on natural persons (individuals) in certain circumstances, described below.The Income Tax Act 2009 simplified Business Receipts Tax by exempting many items previously taxed (See Section Income Exempt from Business Receipts Tax) and reduced the rate on most taxable income, with some exceptions, to two percent.

Who must pay Business Receipts Tax?:
A legal person (corporation, limited liability company, partnership, etc.) must file a quarterly return and pay tax for the quarter.
A natural person having gross receipts of AFN 750,000 or more per quarter must file a quarterly return and pay tax for the quarter.
However, a natural person who owns a hotel, restaurant, or guesthouse, and whose quarterly gross receipts are less than AFN 750,000, still must file a quarterly return and pay tax for the quarter.

Method of Accounting:
BRT is based on gross receipts. The term ‘gross receipts’ means gross receipts under a cash method of accounting, that is, the receipts are taken as income when the money is received before any deductions.

Recordkeeping:
The Income Tax Law 2009 requires taxpayers to maintain adequate accounting books and records to prove paymentof correct amount of tax. (Chapter 5). The Ministry of Finance has authority to examine the books and records of the taxpayer and those of associated persons (Article 91).

Treatment of BRT for income tax purposes:
BRT paid is considered to be an ordinary and necessary expense of doing business and is therefore deductible from gross income when computing taxable income for the year.

Tax Rates & Application:
There are three rates for Business Receipts Tax: two percent, five percent, or 10 percent with rates applied on gross receipts based on business type as specified in the Income Tax Law 2009.

Gross Receipts Subject to 2% Business Receipts Tax:
All gross receipts are subject to two percent with the following exceptions:
** Hotel services
** Restaurant services
** Telecommunications services
** Airline services
** Halls and clubs services as related to events

The income of a hotel, restaurant, or guesthouse with gross receipts less than AFN 750,000 per quarter is subject to two percent BRT.

The gross value of imports (including any customs duties paid) are subject to two percent BRT. The two percent BRT paid on imports will be allowed as an advance payment for business receipt tax payable. If the amount paid at the time of import is more than the business receipt tax for that year the excess amount is not allowed as credit in the subsequent year.

Gross Receipts Subject to 5% Business Receipts Tax:
Gross receipts from halls and clubs where events are held (such as wedding halls). Gross receipts from restaurants, hotels, and guesthouses with gross receipts of AFN 750,000 or more per quarter Gross Receipts Subject to 10% Business Receipts Tax Gross receipts of restaurants and hotels considered “luxury” hotels and restaurants. Gross receipts or income for telecommunication and airline services regardless of whether the taxpayer has passed the tax onto the customer.

Services defined:
A legal person (corporation, limited liability company, partnership, etc.) or a natural person operating as a sole proprietor providing a service as defined in categories listed below must file a return and pay tax on a quarterly basis. Hotel services – means the provision of sleeping accommodation and related services, including the provision of meals, beverages, laundry and communications services, to persons who occupy such accommodation as transient guests.