The Government of the United States of America, its military and civilian personnel, contractors, and contractor personnel shall not be liable to pay any tax or similar charge assessed within Afghanistan…. Acquisition of articles and services in the republic of Afghanistan by or on behalf of the Government of the United States of America in implementing this agreement shall not be subject to any taxes, customs duties or similar charges in Afghanistan. -From the US/Afghan SOFA
Below I have posted both fact sheets that detail exactly what parts of the SOFA agreements we signed with Iraq and Afghanistan that details these exemptions. So this is the battle line that the US government has drawn, and these are the agreements between the US and these countries. So if you think you or your company is being wrongly taxed or charged by government folks in these countries, you need to let your company know and remind all parties of what the position of the US government is on this matter. If you give these folks an inch, they will take a mile. –Matt
DoD General Counsel Issues Guidance on Tax Exemptions for Contractors and Contractor Personnel in Iraq and Afghanistan
April 20, 2011
The United States is bound by two distinct international agreements which contain specific provisions regarding the tax exemptions afforded to U.S. contractors and U.S. contractor employees in Iraq and Afghanistan. In Afghanistan, the Status of Forces Agreement (SOFA) was entered into force on May 28, 2003. In Iraq, the U.S.-Iraq Security Agreement was entered into force on January 1, 2009. Both agreements provide broad tax exemptions for U.S. government personnel, including contractors and contractor employees doing business on behalf of the U.S. government. The terms of the agreements generally do not provide tax exemptions for persons or legal entities normally resident in Iraq or Afghanistan.
On March 28, 2011, DoD/OGC issued two fact sheets—one for Iraq and one for Afghanistan—addressing the tax exemptions for U.S. federal government contractors and contractor employees conducting business in these countries:
DoD/OGC fact sheet on Tax Exemptions for United States Contractors and United States Contract Personnel-Iraq
DoD/OGC fact sheet on Tax Exemptions for United States Contractors and United States Contract Personnel-Afghanistan