Now wouldn’t that be funny? Every security company just packs up and leaves?….wow. But honestly, it is not funny because what Karzai is doing is having a severe impact on the quality and stability of security services in Afghanistan. If the coalition values those services, it would behoove them to apply the necessary pressure on greedy Karzai to end this ridiculous taxation plan.
The other concern here is that if Afghanistan plays this game of imposing taxes on companies providing services to diplomats and such, what about security companies operating elsewhere in the world providing such services? Tax exemption for companies providing services to the US government has been a staple of foreign relations throughout the world. To standby and allow Afghanistan to tax these companies like this, sets a horrible precedence that will surely impact operations elsewhere in the world. If you lose this fight, the costs of doing business will skyrocket and contracts will have to be re-adjusted to deal with this new reality.
This is a fight worth fighting, and Karzai needs to be put in his place. Perhaps taxing his consulates overseas, or freezing some Karzai family assets in overseas accounts would be one way to send a message that this is uncool? If greed is what fuels him, then greed is his weakness. –Matt
Security Firms Threaten to Leave Afghanistan
APRIL 6, 2011
By MARIA ABI-HABIB
KABUL—Some private security companies guarding diplomatic and aid missions and critical infrastructure facilities in Afghanistan are threatening to withdraw from the country if President Hamid Karzai’s government follows through on its plans to impose on them hundreds of millions of dollars in back taxes.
Many of the more than 30 security companies targeted by the Afghan tax authorities say they are supposed to be tax-exempt because they support diplomatic missions, such as the large U.S. Embassy in Kabul.
Executives at these companies say Western diplomats are encouraging them to hold off on paying the taxes so as not to set a precedent for U.S. and European diplomatic missions around the world. (more…)