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Wednesday, May 9, 2012

Industry Talk: Congress Takes Important Step To Stop Afghan Taxation Of US Aid Dollars

Filed under: Afghanistan,Industry Talk,Legal News — Tags: Afghanistan, aid dollars, congress, Doug Brooks, ISOA, permits, taxes — Matt @ 11:24 AM

This is good news and I sincerely hope that Congress has taken care of this. I know Doug Brooks and the ISOA have been working hard to overturn this practice, and it is amazing to me that we have allowed Afghanistan to do this. How much money has been lost to this corrupt practice? And what an insult?

Here is a quote from ISOA’s website on what exactly the Afghan government has been doing all of these years.

The Afghanistan Ministry of Finance (MoF) has adopted the practice of taxing foreign organizations hired by the U.S. government to support reconstruction and development in Afghanistan. Despite tax exemptions negotiated by the U.S. Department of State (DoS) and the U.S. Department of Defense (DoD) that are applicable to U.S. government (USG) contracts, “tax exempt” companies and organizations continue to receive tax bills from the Afghan government. Given that the Afghan government can withhold necessary work permits in the absence of tax payments, companies and organizations have little recourse but to attempt direct negotiations with Afghan officials or to pay the tax bills.

Yeah, so that is one of the methods used to harass companies and it is pathetic. If you don’t pay the tax, you don’t get the permit. And really what is being requested by the ISOA and others, is to have Afghanistan live up to their agreements. I mean it is US taxpayer dollars that are going towards aid to help stabilize this country–and this is how Afghanistan honors that? Here is the ISOA position on this deal.

This tax situation undermines international efforts to stabilize Afghanistan, creates barriers to effective implementation of much-needed aid programs, creates significant new opportunities for corruption within the host government and among companies, and unnecessarily penalizes American taxpayers – costing them millions of dollars – for offering assistance to a foreign nation.

USG contractors in Afghanistan are caught between USG regulations that require valid business licenses and the demands of the Afghan MoF that disputed taxes be paid in order to receive these permits. Because DoS discourages companies and organizations from negotiating the tax issue with the Afghan government directly, USG assistance is critical. There is an urgent need for clear direction from the U.S. Congress in opposing this unacceptable tax situation.

So after all of this pressure, finally Congress does the right thing. We will see if it works. A big thanks to the ISOA for bringing attention to this matter and keeping up the pressure over the years. –Matt

Congress Takes Important Step to Stop?? Afghan Taxation of U.S. Aid Dollars
07 May 2012
The International Stability Operations Association is pleased to note that the House Armed Services Committee Chairman’s Mark for the Fiscal Year 2013 National Defense Authorization Act contains a provision that aims to end unlawful taxation of U.S. foreign assistance by the Afghan Ministry of Finance (MOF). The provision requires the Secretary of Defense to determine that the MOF is not violating bilateral agreements with the U.S. before the Department may use a contracting preference for Afghan goods and services, as required under the “Afghan First” policy. ISOA has worked the Afghan Tax issue as an advocacy priority and is committed to ending this inappropriate taxation.

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