Afghanistan Compliance Advisory
20 December 2014
Introduction. Our previous two issues (http://eepurl.com/55uSr and http://eepurl.com/9lf0j) discussed the implications of the Bilateral Security Agreement (https://ahg.af/BSA.pdf) with the U.S. and the Status of Forces Agreement (https://ahg.af/SOFA.pdf) with NATO. This issue highlights the latest developments.
Transition period. As per the FAQs released by the U.S. Forces Afghanistan (https://ahg.af/USE-FAQ.pdf), from 1 Jan 2015 to 1 Jun 2015 “the US Embassy expects the Afghan Government will institute a transition period allowing for phased application of Afghan law to BSA contractors and contractor employees” regarding visas and weapons permits. Please note that a Presidential Decree has not yet been announced in this regard.
Work visas. During this 5 month transition period, procedures are expected to be developed for issuance of visas for contractor employees 1) already inside Afghanistan, 2) upon arrival at airports in Afghanistan, and 3) at Afghan consulates worldwide. Work permits may be exempted under the new rules, but a valid AISA license will be required to obtain a work visa. These visas will be at minimum one-year, multiple entry. Thus, after 1 Jan 2015 we expect commercial airport terminals to continue to require visas as always (following the current visa process), while military airport terminals may not require visas until after 1 Jun 2015 (once the specific processes have been developed in line with the new policy discussed in our last issue). Non-Afghan nationals are only authorized to be employed in Afghanistan on work visas, not tourist visas. For assistance with work visas, please email firstname.lastname@example.org.
AISA registration. All foreign contractors and subcontractors providing goods or services in Afghanistan, including on military bases, are required to register with AISA. For assistance in registering with AISA, please email email@example.com.
Weapons permits. The procedures for registering contractor weapons has now been established. “Per the BSA effective 1 January 2015, US. contractors performing security services in Afghanistan are subject to all relevant requirements of Afghan laws and regulations. During the transition period, the Ministry of Interior will accept group applications for weapons permits from BSA contractors whose contractor employees carry a weapon for self-protection in order to perform duties outside of Agreed Facilities and Areas in support of U.S.’ missions, including the provision of training, advice and assistance to Afghan National Security and Defense Forces. Applications will consist of the name of the BSA contractor, the names of the contractor employees seeking licenses, two passport sized photographs of each employee, the type and serial number of weapon each employee will carry, the dates the contractor employees will be present in Afghanistan, and a certificate indicating that U.S. Forces have authorized the contractor employees to carry weapons in furtherance of their his contractual duties. There will be a licensing fee and a licensing card will be issued by the Ministry of Interior.” For assistance with registering weapons, please email firstname.lastname@example.org.
Tax exemption applications. All tax exemptions are retroactive to the start date of the contract, regardless of the date of confirmation or AISA license application. Previously, tax exemption confirmation applications were submitted directly to the Ministry of Finance (MOF) with required 3 documents – 1) a full copy of the contract, 2) a request letter from the contracting officer, and 3) a cover letter from the contractor. A new requirement has now been established for all U.S. DOD contracts under the BSA/SOFA. This rule requires additional verification of all contracting officer request letters before submission to the MOF. First, the DOD contracting officer is to complete and physically sign Form DD557, and submit to US Embassy Kabul/SDDC to add his/her name to their database. Second, the contracting officer request letter is to be stamped and physically signed by the contracting officer and emailed to US Embassy Kabul/SDDC. Finally, the contractor (or tax representative) is to bring the same stamped and physically signed contracting officer request letter to the US Embassy Kabul/SDDC for their verification before submission to the MOF and continued processing. For assistance with tax exemption applications, please email email@example.com.
Annual income tax returns. Tomorrow is the last day of the 1393 Afghan fiscal year. All contractors, including those that are fully tax exempt, are required by law to file annual income tax returns in Afghanistan by 21 March 2015. For those entities with both tax exempt and non-exempt revenue, two returns are filed – one return of all their taxable revenue (taxed at 20%) and one return of all their non-taxable revenue for informational purposes only. Approximate fiscal years for tax purposes are:
1393 – 21 December 2013 to 20 December 2014 – due 21 March 2015
1392 – 21 December 2012 to 20 December 2013 – due 21 March 2014
1391 – 21 March 2012 to 20 December 2012 – due 21 March 2013
1390 – 21 March 2011 to 20 March 2012 – due 21 June 2012
1389 – 21 March 2010 to 20 March 2011 – due 21 June 2011
1388 – 21 March 2009 to 20 March 2010 – due 21 June 2010
For assistance with preparing, submission and clearing annual income tax returns, please email firstname.lastname@example.org.
Payroll changes. Previously, Afghan nationals working under most U.S. DOD and NATO contracts were exempt from wage withholding tax. Starting 1 Jan 2015, all Afghan nationals working for these contracts are subject to mandatory wage withholding by their employer. For payroll support services including wage withholding calculations, salary disbursement, monthly tax filings and automated payslip generation, please email email@example.com.