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IMF Reiterates Call For VAT In Afghanistan

by Lorys Charalambous, Tax-News.com, Cyprus

04 December 2015


The International Monetary Fund (IMF) has urged Afghanistan to increase its revenue by introducing new taxes, strengthening revenue administration, and improving the tax policy mix.

The IMF said that, over the medium term, the nation should look to introduce a value-added tax (VAT), additional excises, and property taxes; develop a regime to tax natural resources; and improve enforcement and compliance.

Low compliance has taken a toll on domestic revenues in recent years, a new report from the IMF said. Domestic revenues peaked at 11 percent of gross domestic product (GDP) in 2011 and subsequently declined to 8.5 percent of GDP in 2014 (covering only about one third of spending). This is significantly lower than regional and low-income country averages.

The IMF said that the introduction of a VAT and a new tax regime on the mining sector would boost the nation's tax-to-GDP ratio to 13 percent by 2020. The IMF said in May last year that the introduction of the VAT, which has faced delays, would substantially expand the tax base.

TAGS: compliance | tax | value added tax (VAT) | property tax | mining | revenue guidance | gross domestic product (GDP) | International Monetary Fund (IMF) | enforcement | Afghanistan | tax reform

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