Afghan Taxes: To Pay or Not to Pay?

In recent years, there has been considerable uncertainty regarding whether or not government contractors operating in Afghanistan are required to pay income or business taxes to the local authorities. The U.S. government has adopted the stance that taxpayer funded assistance in the efforts of reconstructing Afghanistan should not be subject to local taxation, leading many U.S. agencies to enter into bilateral tax-exemption agreements with the the Afghan Ministry of Finance (MOF). Despite these agreements, the MOF has begun issuing tax assessments and imposing penalties on U.S. contractors. The good news is that the two governments are working on clarifying the tax status of contractors in Afghanistan.  The bad news is that this is not expected to be completed for at least a year. So, to pay or not to pay? To read more, please see our thought piece.

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