Afghanistan Compliance Advisory
29 November 2014
Introduction. Our previous issue discussed the implications of the Bilateral Security Agreement with the U.S. and the Status of Forces Agreement with NATO. There have been a number of developments that we are now sharing in this issue.
Ratification. The BSA & SOFA were signed on 30 Sep 2014 by the new Afghan Government, approved by the Lower House of Parliament on 23 Nov 2014 (149 votes) and by the Upper House on 28 Nov 2014 (65 votes). Specific procedures and clarifications are being discussed in thrice weekly meetings of the Joint Implementation Commission in conjunction with relevant Afghan authorities.
Jurisdiction. There continues to be confusion that “outside US/NATO bases, Afghan law applies” and somehow Afghan law does not apply “within the wire”. This is incorrect. “Afghanistan maintains the right to exercise jurisdiction over NATO Contractors” (SOFA Article 11.5) meaning NATO Contractor Employees can be put on trial in Afghan courts for civil or criminal offenses, including offenses within military bases.
Registration. All foreign contractors and subcontractors providing goods or services in Afghanistan, including on military bases, are required to register with AISA. It is still unclear if after 1 Jan 2015, 1) only new licenses will be issued for 3 years, 2) existing licenses will be renewed for 3 years, 3) all licenses will be automatically extended by 2 years from the date of expiry, 4) or even if the 3 year licenses will be limited to US/NATO prime and subcontractors only. To register with AISA before 1 Jan 2015, please email firstname.lastname@example.org.
Visas. All contractor and subcontractor employees working in Afghanistan, including those limited to military bases, will be required to hold Afghan visas after 1 Jan 2015. On 12 Nov 2014, the Ministry of Foreign Affairs issued a new policy to all Counselor missions worldwide regarding visas. See list of acronyms used further below in this email. We have interpreted and summarized this policy as follows:
- Tourist visas. All Afghan Consular Missions abroad are to issue tourist visas valid for 3 months with a 2 month stay, extendable for 1 month by the MOI. More to come from the MOIC and MOI (Paragraph 11).
- Registration. MOCI/AISA is to register companies and provide list of registered companies to MOI and MFA (Paragraph 5).
- Entry visas. Invitation letters from AISA are no longer required (Paragraph 4). Entry visas (assumed to be 1 month) will be issued upon arrival at Kabul International Airport for: UN Passport holders, Afghan refugees, Citizens of USA, Canada, Australia, Europe, Japan and Russia, and Service/Diplomatic Passports (Paragraph 13).
- Work permits. Once in country, MOLSA is to issue work permits (Paragraph 6) for which they currently require educational documents, CV, employment contract, passport with latest entry stamp, and tax records (if applicable). Presidents and Vice Presidents on AISA licenses are exempt from work permits (Paragraph 7). MOLSA is to provide list of issued work permits to the MOI (Paragraph 9).
- Work visas. All Afghan Consular Missions abroad are to issue work visas after reviewing “applicants’ academic records, health conditions and retirement age” (Paragraph 8). These visas are to be:
- 3 year multiple entry for employees of large corporations and political missions (Paragraph 1)
- 1 year multiple entry for nationals of American, European, Australian, Asian and Arabic countries (Paragraph 2)
- As per bilateral agreements for nationals of neighboring countries (Paragraph 3)
- Renewals. MOI is to directly renew work visas in country after reviewing “work permits, valid company license, work experience, and other related documents” (Paragraph 4).
- Overstays. For each day in Afghanistan with an expired visa, the penalty fee will be $10/day up to 1 month, then $15/day up to 3 months, then $20/day and deportation (Paragraph 10).
For assistance with visas, please email email@example.com.
Customs. NATO Contractors are allowed to import or export goods on behalf of NATO forces’ and not for any private commercial purposes, as well as personal effects that are “reasonable and proportionate to personal use.” To clear goods through commercial customs, please email firstname.lastname@example.org.
Weapons. The Joint Commission is currently developing procedures for registering contractor and subcontractor weapons at the MOI. All weapons are required to be registered by 1 Jan 2015 unless an extension or transition period is announced.
Business taxes. International companies are those that are owned over 50% by non-Afghan nationals (with AISA license numbers starting with an “I”) while domestic companies are those that are owned over 50% by Afghan nationals (with AISA license numbers starting with a “D”). In general, here are the tax exemptions afforded:
- Rental withholding: All entities are required to withhold tax from rent payments to Afghan landlords
- Wage withholding: Non-Afghan nationals working under prime or subcontracts to NATO Forces are exempt from wage withholding; Afghan nationals taxable
- Vendor withholding: No withholding is required from international companies working under NATO contracts and subcontracts; domestic companies taxable
- Business receipts tax: Revenue from NATO contracts and subcontracts for international companies is tax exempt; domestic companies taxable
- Annual income tax: Net profit from NATO contracts and subcontracts for international companies is tax exempt; domestic companies taxable
The current position of the MOF is that historical subcontract revenue is not exempt from tax and must still be paid. To confirm tax exemptions and have your payroll managed including wage withholding, salary disbursement, tax filings and payslip generation, please email email@example.com.
For more information. The ISAF Office of Staff Judge Advocate issued these answers for Frequently Asked Questions about the BSA/SOFA. As 1 Jan 2015 approaches, we recommend companies address these compliance matters as soon as possible. Feel free to email firstname.lastname@example.org with any questions.
List of acronyms used:
- Ministry of Commerce and Industries (MOCI)
- Afghanistan Investment Support Agency (AISA)
- Ministry of Labor and Social Affairs (MOLSA)
- including Afghan Consular Missions Worldwide (http://mfa.gov.af/en/page/4183/3884)
- Ministry of Foreign Affairs (MFA)
- Ministry of Interior (MOI)
- Ministry of Information and Culture (MOIC)
- Ministry of Finance (MOF)