Afghanistan Compliance Advisory – Issue #25
10 February 2018
The Senior Economic Advisor to the President, His Excellency Ajmal Ahmady has been successfully implementing a long list of reforms in many areas to facilitate investment. We took the opportunity to highlight some of them below. His office also prepares some of the best research and data outlining opportunities to invest in Afghanistan, available here: http://afghaneconomics.com/
Tax Penalty Amnesty. Although the official ruling text hasn’t yet been released, the Minister of Finance, His Excellency Eklil Hakimi gave a press conference announcing a partial amnesty of tax penalties. For taxpayers who have not yet filed their monthly, quarterly and annual income tax forms for any of the years 2002-2017, if they file and pay in full any overdue principal tax liabilities within the next 9 months, they will only have to remit 5% of the total associated tax penalties. AHG strongly encourages all entities with unfiled tax forms to take advantage of this opportunity to save 95%. Please note Afghan tax filings are mandatory even if a company is fully tax exempt, or if they have no activity. Please email firstname.lastname@example.org for assistance.
Visas on Arrival. AHG is currently attempting trial runs of the new visa on arrival process (currently for investors only) and will shortly be ready to assist clients with preparing all of the requirements accordingly. The government fees for a 3-year visa on arrival is currently announced as $300 (only 10% of what several Afghan Consulates charge abroad). AHG strongly encourages all companies to take advantage of this opportunity to save 90%, not to mention significant time and resources previously required for repeatedly submitting visa applications prior to travel to Afghanistan every 6 months or 1 year. Please email email@example.com for assistance
Company Law and Insolvency Law. The Afghan Government is drafting a new Company Law in 2018 to replace the 1957 Corporations and LLC Law. In addition, for the first time in its history, Afghanistan is drafting an Insolvency Law. Both of these documents are critical to minimizing disputes and establishing good governance rules across the private sector. Drafts of both laws are available under “For Non-Military Contractors” section here: https://ahg.af/aca/
Kabul Ring Road. The Afghan Government is working on numerous plans to tackle Kabul’s infamous traffic. The Kabul Ring Road is considered one of the most important infrastructure projects to reduce bottlenecks by drawing traffic around the city instead of through its center. Construction has already begun, with $74m funded by the Islamic Development Bank.
Open Access Policy and Fiber Licenses. The Afghan Government has established an Open Access Policy to increase investment in the national fiber optic grid. It has awarded 6 fiber licenses so far and is open to additional applications. For a 15 year national license, the requirements include a non-refundable application fee of AFN 500,000, a bid security of $200,000, a license fee of $100,000, and an annual fee of 1.5% of gross income.
Energy Deals. Four Public Private Partnerships (PPPs) have been signed by the Afghan Government, including the Shebarghan Gas Power Plant Project ($38.8m) by Bayat Power Company and the Mazar-e Sharif Power Plant Project ($75m) by Ghazanfar Group and WB/IFC.
Gas Pipeline Status. The Turkmenistan-Afghanistan-Pakis
Mining License Framework. The Afghan Government has completed the development of a new Mining License Framework whereby all mining permits will be reviewed by the National Procurement Authority (NPA) and the High Economic Commission (HEC).
National Identification Cards. Only about 30% of Afghan citizens currently hold valid National Identification Papers (Tazkira) which can easily be forged and are not easily verified. The Afghan Government is expected to shortly roll out electronic National Identification Cards (eTazkiras) which would dramatically improve administration, credit, security and record keeping across all sectors of the economy.
State Owned Enterprise Financial Systems. The Afghan Government is working to install for the first time computerized financial management systems across all State Owned Enterprises to increase their financial transparency, efficiency and accountability. The systems would reduce Afghan taxpayer fund waste, fraud and abuse while increasing productivity and sustainability, thereby supporting possibilities for SOE privatization.
One Stop Shop for Exports. To assist exporters to utilize air corridors (so far with India and Indonesia), the Afghan Government has reduced outbound customs clearance steps from 29 to 14. The new One Stop Shop office at Hamid Karzai International Airport assists to reduce delays and costs for exporting from the country by bringing 7 government entities under one roof.
One Stop Shop for Licensing. The Afghan Government has started assembling licensing representatives from applicable line ministries into the Afghanistan Central Business Registry (ACBR). The goal is to be able to obtain any type of private sector license at a singular location by bringing 17 government entities under one roof.
Document Authentications. The Afghan Government will start directly accepting documents issued by the foreign country’s Ministry of Commerce, licensing authority or Chamber of Commerce, without having to have the Afghan Embassy, Ministry of Foreign Affairs (MOFA) Consular Section in Kabul and MOFA Economic Section further process, or receive an additional letter of introduction from foreign country’s Embassy in Afghanistan.