Afghanistan Compliance Advisory – Issue #27
30 July 2018
Notice from the Special Inspector General for Afghanistan Reconstruction
In order to gain a sense of how pervasive Afghan tax issues are, SIGAR would appreciate your organization’s response to the short survey. Without your input, it will be much more difficult to quantify the taxes or fees being paid, and more challenging to find relief for firms facing tax assessments. [Available at https://ahg.af/aca/] are two documents to provide greater context of SIGAR’s work: 1) SIGAR Audit Notification letter sent to the Department of Defense, the State Department, and the U.S. Agency for International Development and 2) the letter from U.S. Senator Inhofe requesting SIGAR conduct this audit. SIGAR would appreciate you completing the survey by 9 August 2018 so they may perform their work in a timely manner. Survey Link: https://www.surveymonkey.com/
If you would like AHG to complete this survey on your behalf, please email firstname.lastname@example.org.
Notice from the U.S. Deputy Economic Counselor
After recent U.S. Embassy engagement with the Afghan Minister of Finance, the Ministry has requested the Embassy share a list of U.S. companies and contractors who are experiencing a delay in business license renewals due to ongoing tax audits/disputes. If your company is experiencing this issue, please send the following information no later than close of business 1 August 2018
- Name of Company
- Point of Contact with contact information (can be your tax representative)
- Date of expiration of current business license
After collecting the information, the Embassy will pass company names only to the Ministry of Finance, but we are requesting the POCs to facilitate communication in case follow-up by the U.S. Embassy is required. The Embassy also wants to reiterate that inclusion on this list does not abrogate U.S. companies and contractors from any duty or responsibility to resolve tax liabilities with the Afghanistan revenue authorities. The Embassy is engaging on this important issue to underscore the Embassy’s belief that Afghanistan should follow common worldwide best practice of separating business license renewals from ongoing tax audits. The Embassy expects U.S. companies and contractors to continue to follow Afghanistan tax filing and appeals processes in parallel to this process. The Embassy also cannot guarantee inclusion on the list will resolve all business licensing issues, but is encouraged that the Ministry has indicated willingness to look at the list.
If you would like AHG to submit on your behalf, please email email@example.com.
Notice from the Ministry of Finance
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 before 27 October 2018, they will only have to remit 5% of the total associated tax penalties. The MOF strongly encourages all entities with un-filed tax forms to take advantage of this opportunity to save 95%.
A gentle reminder from AHG that many companies incorrectly assume that they can wait until a business license is expired to renew it, without realizing there are monthly, quarterly and annual tax filing requirements along the way. These mandatory filings are required even if all of your contracts are tax exempt, or even if you have no activity in Afghanistan at all. A tax clearance letter from the MOF is required for business license renewal, changes or closure. This process can take several months to complete, so please plan well ahead of your license expiry date. Obtaining new visas or renewing visas requires an active business license, as do certain pre-deployment training programs, base access requests, and even bid proposals.
If you would like AHG to provide tax assistance, please email firstname.lastname@example.org.
Tax Exemption Confirmation Updates
There has been a new US-Afghan Assistance Exemption Agreement approved by the Cabinet and signed on 28 July 2018. It covers U.S. assistance not otherwise covered by BSA (U.S. DOD and NATO), USAID and INL assistance agreements. The Agreement is currently pending ratification by Parliament. Potentially, this may assist with the tax exemption confirmation of contracts awarded by U.S. Department of State (other than INL which already is exempt), U.S. Department of Commerce and others.
In addition, the MOF has published the new process for confirming tax exemptions for U.S. DOD and NATO contracts. Previously, a Request Letter was required from the Contracting Officer, along with a complete or redacted copy of the contract for which a TEC was being requested. The new process only requires the ARD NATO/US Contractor Supplementary Form in place of both the previous Contracting Officer Request Letter (HCA Bulletin 15-06) and a copy of the contract.
The new process and the form template is available for download at https://ahg.af/aca/
New Minister of Finance Appointed
His Excellency Dr. Mohammad Humayon Qayoumi is the Chief Adviser for President Ghani in the areas of infrastructure, human capital, and technology as well as President Emeritus of San Jose State University. Prior to this he served as 28th President and a Professor of Electrical Engineering at San José State University in the heart of Silicon Valley, in California. Before that he was the President of California State University East Bay. He holds a bachelor’s in electrical engineering from the American University of Beirut and four graduate degrees from the University of Cincinnati: a master’s in nuclear engineering, a master’s in electrical and computer engineering, an MBA in Finance, and a doctorate in electrical engineering. He has also published eight books and more than 100 articles, as well as several chapters in various books. He is a licensed professional engineer and a certified management accountant.
Dr. Qayoumi has over 40 years of engineering and administrative experience in several universities. He served as an engineer on a variety of projects in the United Arab Emirates and Saudi Arabia including two years as the project electrical engineer in building the Umm Al Nar Power Plant in 1970’s. He has made presentations at numerous conferences across the United States and in 12 other countries.
A senior member of the Institute of Electrical and Electronic Engineers (IEEE), Dr. Qayoumi served as a Malcolm Baldrige National Quality Award examiner and senior examiner from 2000 to 2003. He also was senior examiner for the Missouri Quality Program from 1997 to 2000. Dr. Qayoumi is an APPA Fellow and the recipient of two APPA Meritorious Awards, APPA President Award in addition to NACUBO’s Distinguished Business Officer Award. He served in several board of directors including KQED, Silicon Valley Leadership Group, The Bay Area Council, The Bay Area Council Economic Institute, and Joint Venture Silicon Valley. In addition, he serves chair of cybersecurity for the U.S Department of Homeland Security Academic Advisory Council. A senior fellow with California Council on Science and Technology (CCST), he was inducted to Silicon Valley Engineering Hall of Fame in 2015.
New Director of the Large Taxpayers Office Appointed
Neak Mohammad Mohibi has extensive experience in Public Financial Management, Budgeting, Project Management and Planning, Financing, Procurement and Management of the Infrastructure Programs and Donor Coordination.
Mr. Mohibi obtained his Master Degree in Business Administration (MBA) from the American University of Afghanistan (AUAF). He has worked as a Senior Project Officer in Afghanistan Resident Mission (AFRM) of Asian Development Bank for almost three years. Prior to that, he was managing the Infrastructure and Natural Resource Sector of Budget Department of Ministry of Finance. Mr. Mohibi has had numerous engagements with both national and international organizations. Mr. Mohibi has a key and active role in the development of the Infrastructure Sector Plan such as the Energy and Transport Sector Master Plan as well as in the development of Central Asia and South Asia (CASA-1000) Regional Energy Project.
Mr. Mohibi has participated in several key workshops such as Fiscal Policy and Macroeconomic Management training in IMF, Project Design and Management in ADB, Procurement of the WB and ADB funded projects. Besides, he has got accreditation in Procurement of ADB funded Projects.
U.S. and Afghan Licensed Attorneys
AHG is honored to be able to introduce a team of highly experienced attorneys licensed by the Afghanistan Independent Bar Association. They possess excellent legal knowledge and outstanding professional skills that have been enhanced by involvement in a variety of legal matters in national and international venues. The attorneys hold degrees from leading Afghan and U.S. law schools. The opportunity for their lawyers to study abroad and to participate in international proceedings has afforded to the institution a deeper appreciation of the law as a profession and the special nature of the attorney-client relationship. They are dedicated to providing professional services consistent with experiences and expectations of sophisticated domestic and international clients. The unique qualifications and experiences of their team places them among the most trusted names in the legal services industry in Afghanistan and around the region.
If you would like AHG to introduce attorneys for any legal assistance in Afghanistan, please email email@example.com.
For those new to Afghan compliance, previous issues of this advisory and relevant documents are available at https://ahg.af/aca/.
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