Moore Afghanistan

DOING BUSINESS
IN AFGHANISTAN

DOING BUSINESS IN AFGHANISTAN 1

© Photo by Ahmadzia Atayee

 Moore Afghanistan

INTRODUCTION
Afghanistan has a fast growing economy acting as Investment promotion includes marketing
a bridge, connecting south Asia-central Asia with activities such as branding, providing website
the Middle East & Europe ultimately. As a World and mobile apps to make all relevant data and
Trade Organization (WTO) member, the country information available online, investment guide,
is committed to enable business environment for releasing investment opportunities and updates
domestic as well as foreign investors. In line with through direct mailing channels, investment
its commitments, business licensing one-stop- seminars, participation in trade shows and
shop, industrial parks, and investment friendly laws exhibitions, one to one direct marketing efforts, and
and regulations motivate investors to take the full matching prospective investors with local partners.
advantage of the investment opportunities in the
This investment guide has been prepared to offer
country. The investment incentives vary from low
information to prospective foreign and domestic
number of competitors to rich natural resources
investors on how to invest in Afghanistan’s fast-
and availability of inexpensive labor force.
growing economy. The guide includes seven
The Covid-19 pandemic has deteriorated chapters covering an overview of the country, why
investment rates globally. In response, the invest in Afghanistan, success stories, investment
nations have put extra endeavors to promote opportunities, guide to investing, licensing, and
and facilitate investment better than before. taxation. The first three chapters will provide
Likewise, Afghanistan has launched the campaign a vision on investment affairs of the country,
of “Invest in Afghanistan” (IIA) brand. The main motivating investors to invest in Afghanistan for a
objective of IIA campaign is to attract foreign direct higher profit. Meanwhile, the fourth chapter will
investment (FDI), promote domestic investment provide plenty of investment opportunities to the
in import substitute products, and promote & prospective investors. Finally, the fifth, sixth, and
present Afghanistan as a potential and favorable seventh chapters will guide investors through their
destination for investment in the region. journey of investment in Afghanistan.

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CONTENTS
ABOUT AFGHANISTAN........................................................... 4 BUSINESS & LICENSE TYPES................................................. 17
4.1 Investment Licensing and Business Registration...............18
1.1 Geography.....................................................................................4
4.2 Sector Licenses...........................................................................18
1.2 Demographics..............................................................................4
4.3 Industrial Parks Land Allotment Procedure........................20
1.3 Economy.........................................................................................5
4.4 Procedure for Allotment of Industrial Land........................20
1.3.1 Economic impacts of COVID-19............................................ 6
1.4 Infrastructure................................................................................6 TAXATION IN AFGHANISTAN.............................................. 21
5.1 Obtaining a Tax Identification Number (TIN).......................21
WHY INVEST IN AFGHANISTAN?........................................... 7 5.2 When to File Taxes?...................................................................21
5.3 Method of Accounting..............................................................21
2.1 Pro-Investment Government....................................................7
5.4 Taxation Year..............................................................................21
2.2 WTO Membership........................................................................8
5.5 Personal Taxes............................................................................21
2.3 Lower Costs of Doing Business................................................9
5.6 Withholding Tax on Rental Services......................................22
2.4 Untapped Market.........................................................................9
5.7 Business Receipts Tax (BRT)....................................................22
2.5 Global Market Access through...............................................10
5.8 Fixed Taxes..................................................................................22
2.6 Rich in Natural Resources........................................................10
2.7 Bilateral & Multilateral Trade Agreements..........................11 5.8.1 Electronic Funds Transfer (ETF)...............................22
2.8 Dispute Resolution Center......................................................12 5.9 Corporate Tax Reform..............................................................22
2.9 Young & Inexpensive Labor Force.........................................12 5.10 Afghanistan Customs and Duties........................................23
5.11 Required Documents for Land Acquisition ......................23
GUIDE TO INVESTING........................................................... 13 5.12 Required Documents for Business License......................23
3.1 Complaint Management Initiative by ACBR-IP....................15
3.2 Coming to Afghanistan.............................................................15 USEFUL LINKS....................................................................... 24
3.2.1 Applying for Visas........................................................15
3.2.1.1 Outside Afghanistan........................................15
3.2.1.2 Inside Afghanistan...........................................15
3.2.1.3 Visa upon Arrival..............................................15
3.2.1.4 Working Entry Visa...........................................16

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ABOUT AFGHANISTAN
1.1 Geography Area
652,000 Km2 (252,000 sq.mi)
Afghanistan is a landlocked country situated 41st largest country in the world
between South Asia and Central Asia. In fact, it is
considered a land-bridge to South & Central Asia and Climate
Europe due to its strategic location. It is bordered Afghanistan has the perfect four seasons all year
by Tajikistan, Uzbekistan, and Turkmenistan to the round. It is known for cold winters and hot & dry
north, Iran to the west, Pakistan to the south and summers. It gets most of its sunniest and longest
east, and China to North East. days between mid April to late October making
it ideal for any kind of business activity including
Official Name farming, tourism, sports, construction, and many
Islamic Republic of Afghanistan more.
Capital
Kabul 1.2 Demographics
Provinces Total Population
Afghanistan is home to 34 provinces. From its 32.9 Million
sweeping valleys, snow-capped mountain peaks, Afghanistan’s total estimated population in 2020-2021
and a mosaic of cultures and peoples, Afghanistan
Projected Population for 2025
has one of the unparalleled natural beauties on
40 Million
earth.
Projected Population for 2050
Major Commercial Cities
56 Million
Kabul, Herat, Nangarhar, Balkh, Kandahar,
Helmand, and Kunduz.

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1.3 Economy 3.9% in 2019 due to strong agricultural growth by

government’s emphasis on agriculture production.
During the last two decades, Afghanistan’s
economy has steadily increased year by year. Agriculture remains Afghanistan’s most important
There has been growth in every economic sector. source of employment for over 75% of Afghanistan’s
Data from the World Bank, as highlighted in the population and accounts for close to a quarter
following chart, shows that Afghanistan’s Gross of its GDP. According to Afghanistan’s National
Domestic Product (GDP) increased from $4 billion Infrastructure Plan (NIP), 2017-2021, the growth
in 2002 to $19 billion in 2019 – showing an increase prospects for the economy are predominantly in
of a whopping 38% over 18 years which translates agriculture and mining which will require large
to an average GDP of 2.1% per year. The same private sector investment.
source states that Afghanistan’s economy grew by

GDP (official exchange rate) $19.10 billion

GDP - Real growth rate 3.9%
GDP - per capita $502
Main Agricultural products Wheat, rice, barley, fruits, nuts, wool, mutton, sheepskins, lambskins, saffron
Small to medium-scale production of steel, carpets, bricks, textiles, soap, furni-
Main Industries ture, shoes, fertilizer, apparel, food products, non-alcoholic beverages, mineral
water, cement, handwoven carpets, natural gas, coal, copper
Labor Force 14.4 million
Unemployment Rate 23.9%
Exports $1.48 billion
Fruits and nuts, handwoven carpets, wool, saffron, cotton, hides and pelts, pre-
Main Export Commodities
cious and semi-precious gems, and medicinal herbs
Imports $7.23 billion
Machinery and other capital goods, food, textiles, petroleum products, cooking
Main Import Commodities
oil, sugar, tea
Table 1: Afghanistan Economic Snapshot

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1.4 Economic impacts of COVID-19 as domestic revenues were immediately and

abruptly affected by the crisis in the second
The government of Afghanistan started its efforts quarter of the 2020. Hence the government
to contain the spread of the virus early on during started reviewing its development portfolio, by
the month of January by controlling travelers re-locating resources across the development
at airports and other international entry points. projects, restructuring some of the existing
Despite this, the first COVID-19 case in Afghanistan projects, and introducing new projects that
was identified on 22 February 2020 in Herat. It are better targeted to the poor and the sectors
should be borne in mind that at the time of writing that increase resilience at times of crisis such as
of this report, Afghanistan already passed the initial agriculture sector.
surge phase of the COVID-19 pandemic and is now
entering the second phase. As of end-November,
based on the worldometer database, the officially
1.5 Infrastructure
recorded cases in Afghanistan are 45,966 and the Infrastructure remains a critical component for
total deaths are 1,752 with actual cases and fatalities long-term economic growth and development
expected to be far higher. in Afghanistan. Since 2002, the government of
Afghanistan has taken great strides to improve
This situation significantly impacted the MSMEs in
country’s infrastructure. It has enacted laws, rules
Afghanistan, declining job opportunities for many
and regulations to create an enabling environment
across the country. In 2017 the unemployment and
for both public and private sector investments.
under-employment was 39.5%. Experts claim that it
Afghanistan has rebuilt existing infrastructure and
is expected that both unemployment and poverty
developed new ones. Key progress include building
rates could rise a record breaking number if the
of roads, airports, railway lines, optical fiber network,
situations stay the same.
dams, schools, and much more. Still the country is
The COVID-19 pandemic has plunged the Afghan faced with huge infrastructure challenges.
economy into a deep recession. According to
Investment opportunities are at an all-time
the Biruni Institute, the economy is projected to
high and require long-term commitments from
contract by 8.2 % in 2020, driven by a fall in output
investors. Afghanistan’s NIP with tremendous
as a result of disruptions to supply chains and
investment opportunities include hydropower
exports, and a drop in consumption due to an
dams, renewable solar energy plants, Kabul ring
income shock borne by the households.
road, urban transport, civil aviation and trade
The government of Islamic Republic of facilitation, dry ports and transport logistics,
Afghanistan had no choice in introducing an rehabilitation of existing and new irrigation
expansionary fiscal policies as the COVID-19 schemes, irrigation intake canals, water storage
triggered recession has further reduced the reservoirs for rainfed agriculture and irrigated
available policy options for the government agriculture, and housing.

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WHY INVEST IN AFGHANISTAN?

1 2 3
PRO-INVESTMENT WTO LOWER COSTS OF
GOVERNMENT DOING BUSINESS

4 5 6
UNTAPPED MARKET GLOBAL MARKET RICH IN
(LOW NUMBER OF ACCESS THROUGH NATURAL
COMPETITORS) REGIONAL RESOURCES
CONNECTIVITY

7 8 9
BILATERAL & DISPUTE RESOLUTION YOUNG &
MULTILATERAL CENTER INEXPENSIVE
TRADE AGREEMENTS LABOR FORCE

2.1 Pro-Investment Government a business, getting credit, protecting minority

investors, revenue collection, and a new insolvency
The government of the Islamic Republic of law.
Afghanistan (GoIRA) is fully committed to
supporting and promoting investments by Incentive Packages
foreigners and Afghans. The government has undertaken several other
important reforms to attract Afghan private-sector
Free Market Economy and foreign investment, by offering incentive
The government has a vision for developing the packages to investors, including visa on arrival,
country based on the principles of free market benefiting from Afghanistan’s preferential tariffs
economy supported by private sector development. treatment both on imports and exports, granting
of industrial land at favorable terms, promotion
Afghan Constitution
of public-private partnerships and streamlining
Article 10 of the Afghan constitution encourages
of the business license registration process. Also,
and protects private capital investments and
the international community remains committed
enterprises based on the market economy and
to Afghanistan’s development, pledging over $97
guarantees their protection in accordance with the
billion at eleven donors conferences between 2003
provisions of law.
and 2020 with future commitments to continue.
Ease of Doing Business Indicators Most recently, the November 2020 Geneva
The government has considerably implemented Conference had produced pledges of 12 to 13 billion
pro-business laws and efficient regulations to US dollars for the period between 2021 to 2024.
remove obstacles in line with the requirements of
Liberal Investment Laws
doing business indicators set by the World Bank.
Afghanistan has one of the most liberal investment
According to the World Bank’s Ease of Doing
laws based on the principles of free market
Business, Afghanistan’s ranking has increased
economy and supported by the government’s
considerably.
vision of fostering private sector development
It has implemented reforms in the ease of starting and increasing domestic and foreign investment.

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To-date, the country has created an enabling investments, and ensure protection of investors.
regulatory environment by developing and Below is a list of key laws enacted by the
passing several laws to promote private sector government of Afghanistan that serve different
development, attract domestic and foreign purposes and are important for investors.

Name Enforcement Date Gazette Number

Private Investment Law December 06, 2005 869, 985,1230
Public Private Partnership (PPP) Law September 05, 2018 1322
Insurance Law July 22, 2008 954
Law on Limited Liability Companies March 03, 2019 1292
Commercial Mediation and Arbitration Law January 18, 2007 913
Law on Commercial Contracts and Selling Property October 20, 2014 1150
Income Tax Law March 18, 2009 976, 1181, 1103, 1115, 1118, 1206, 1251
Value Added Tax Law December 21, 2016 1209, 1244
Customs Act July 28, 2016 1235
Law on Banking of Afghanistan August 17, 2015 1197
Da Afghanistan Bank Law November 11, 2003 1197
Mineral Law September 05, 2018 1315
Law on Oil and Gas (Hydrocarbons) September 05, 2017 1277

Labor Law November 25, 2008 966, 1230

Table 2: Important Laws to Know in Afghanistan

Source: Kakar Advocates - https://www.kakaradvocates.com

Attractive Tax Regime Afghanistan eligible to enjoy special treatment

Afghanistan has one of the most attractive tax from the WTO member states in the global trading
regimes in the region. Some of the key highlights of system. Apart from the regular benefits enjoyed
what taxes mean to investors in Afghanistan. by the WTO members, Afghanistan is eligible
to receive duty-free entry or reduced tariff rates
■ Investor can own 100% of the company.
under Preferential Trade Arrangements (PTA) for its
Investors can lease real estate for up to 90 years
products exported to the following countries shown
for arable land and longer for non-arable land.
in table 3.
■ 20% flat corporate tax rate

■ Zero restrictions on repatriation of capital and

profits

■ Indefinite carry forward of losses and use of

accelerated capital depreciation

■ No import duties on machinery. Only 1% duty

on raw materials

■ Availability of state-of-the-art dispute resolution

center for all investors

2.2 WTO Membership

Afghanistan became an official member of the
World Trade Organization (WTO) on 29 July 2016.
Afghanistan, being a landlocked country is also
considered a Least-Developed Country (LDC) by
the United Nations (UN). This situation makes

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Provider Type of Scheme Note
Armenia Generalized System of Preferences
Australia Generalized System of Preferences
Also enjoys Most-favored nation (MFN)
Canada Generalized System of Preferences
treatment from Canada
Duty-free quota-free access to all products,
European Union Generalized System of Preferences
except for arms and ammunitions
Iceland Generalized System of Preferences
Japan Generalized System of Preferences
Kazakhstan Generalized System of Preferences
New Zealand Generalized System of Preferences
Norway Generalized System of Preferences
Switzerland Generalized System of Preferences
Turkey Generalized System of Preferences
Duty-free scheme for approx. 5,000
United States of America Generalized System of Preferences
products
India Duty-Free Tariff Preference Scheme for LDCs
Chile Duty-free treatment for LDCs
Duty-free and Quota-free scheme for 4,000
China Duty-free treatment for LDCs
products
Kyrgyz Republic Duty-free treatment for LDCs
Montenegro Duty-free treatment for LDCs
Tajikistan Duty-free treatment for LDCs
Thailand Duty-free treatment for LDCs
Korea, Republic of Preferential Tariff for LDCs

Table 3: Afghanistan’s Preferential Trade Arrangements Country List

Source: WTO

2.3 Lower Costs of Doing Business 2.4 Untapped Market

(Low Number of Competitors)
Establishing a business does not cost a lot in
Afghanistan. Registering a business and obtaining Although Afghanistan is a war-torn country, many
a business license does not take more than 8 international investors enjoy a less competitive
hours and costs only 1.4 US Dollars all under one- environment. Afghanistan has come a long way in
stop-shop, which is equipped with modern data a short time in terms of the rules and regulations
center and biometric system of licensing. The same pertaining to the entry and operations of foreign
one-stop-shops are available in 25 provinces in investors, providing the same opportunities for both
Afghanistan. national and international investors, the functioning
and efficiency of local markets, facilitating and
The government offers industrial land equipped
simplification of tax and compliance procedures,
with necessary infrastructure for just 14.5 US
and many other aspects that facilitate foreign
Dollars per square meter to investors. Investors
direct investments (FDI).
can set up their businesses all over Afghanistan
in the designated industrial parks established by Although many companies are doing business
the government and thus avoid unnecessary set- in Afghanistan, the majority of these businesses
up costs. All industrial parks are managed by the are donor-dependent. In other words, the Afghan
Ministry of Industry and Commerce (MoIC). market is relatively untouched. According to
a UNCTAD report, the total FDI inflow for 2019

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was 39 million US dollars (UNCTAD’s 2019 World speed telecommunications. These projects will
Investment Report). Another factor that makes create tens of thousands of jobs, provide energy
Afghanistan an attractive FDI destination is the to Pakistan and India, bring development, reduce
labor force availability and low cost. poverty, and increase regional cooperation between
Afghanistan, Pakistan and India.
Last but not least, Afghanistan’s location makes
it more attractive for international investments. In addition, Afghanistan has signed a trilateral
Afghanistan is located in the heart of Asia, transit arrangement on Cross-Border Transport of
strategically connecting the region. Afghanistan Persons, Vehicles and Goods (CBTA) with Tajikistan
can act as a corridor connecting all countries in the and Kyrgyzstan, within the framework of the
region. Central Asian Regional Economic Cooperation
(CAREC). Afghanistan is a member of CAREC. The
2.5 Global Market Access through CAREC program will expand trade and improve
Regional Connectivity competitiveness in the region. In this connection,
Afghanistan will benefit from Corridor 5 and 6 of
Due to its unique strategic location, Afghanistan CAREC that aims to connect East Asia with the
offers many benefits to prospective investors. Middle East and South Asia; running through
By creating an investment base in Afghanistan, China, Kyrgyzstan, and Afghanistan and also to
investors can target not only local Afghan markets, connect Europe and Russia to the Middle East
they can also access international markets and South Asia, with three routes to the Arabian
in Central Asian, South Asian, Middle Eastern Sea port of Karachi and Gwadar or Bandar Abbas
countries and beyond. Economic giants such as in the Persian Gulf. Afghanistan will also benefit
China and India and the fast-growing markets of from other key corridors such as APTTA (Chaman-
Pakistan are just miles away from Afghanistan. Karachi-Gwadar-Wagah border in India), Lapis-
Over 2 billion consumers can be targeted right lazuli which will give easy access to Chabahar and
from Afghanistan, which offers unlimited earning Bandar Abbas seaports of Iran.
potential to investors.

Similarly, Afghanistan is considered the future hub 2.6 Rich in Natural Resources
of trade, transit, culture and energy production
Afghanistan offers untapped investment potential
and transmission. Afghanistan’s NIP highlights the
in its one of a kind natural resource known for
importance of mega energy projects related to
quality, abundance and purity. As per the official
movement of natural energy through Afghanistan,
government figures,
which will serve as the utility corridor connecting
the energy-rich Central Asian nations to energy-
poor South Asia. There are three projects that are
currently in the pipeline:

■ TAP 500 kV transmission line that would initially

move 2000 MW from Turkmenistan to Pakistan
via western Afghanistan and could eventually
carry up to 4000 MW.

■ TAPI gas pipeline that will transport natural gas

from Turkmenistan to Pakistan and India via
Afghanistan.

■ CASA 1000 transmission lines that will move

over 1000 MW of electricity from Kyrgyzstan
and Tajikistan to Pakistan via Afghanistan.

These projects will enhance regional cooperation

and connectivity by offering investment
opportunities in energy supply, transport systems,
freight and logistic supply chains, and high-

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Afghanistan has over 1,400 identified mineral deposits estimated to be worth up to $88 billion.
deposits related to oil, gas, coal, gold, iron and The government of Afghanistan awarded a mining
copper. contract to China Metallurgical Group (which
was selected through an international bidding
Afghanistan is also home to abundant deposits
process) and entered into a 30-year lease for the
of precious and semi-precious stones mainly
development of a copper mine at Mes Aynak in
emerald, jade, amethyst, alabaster, beryl, lapis lazuli,
Logar Province for $3 billion. This has been the
tourmaline, ruby, quartz, and sapphire.
biggest foreign investment in Afghanistan.
Afghanistan also offers great opportunities for
investments in the hydrocarbons industry.

As an example, according to the MoIC, the Aynak

2.7 Bilateral & Multilateral Trade
copper resource (known as Mes Aynak) has been
Agreements
estimated at 240 million metric tons making it the Afghanistan has bilateral and multilateral trade
2nd largest reserve of copper ore in the world with agreements with several countries.

Afghanistan has bilateral and multilateral trade agreements with several countries.

Agreement Type Countries Coverage

Preferential Trade Agreement Bilateral Afghanistan-India Goods
Afghanistan-Pakistan Transit Bilateral/
Afghanistan-Pakistan Goods and transit
Trade Agreement (APTTA) regional
South Asian Free Trade Afghanistan, Bangladesh, Bhutan, India,
Multilateral Goods
Agreement (SAFTA) Maldives, Nepal, Pakistan, and Sri Lanka
Economic Cooperation Afghanistan, Azerbaijan, Iran, Kazakhstan,
Preferential treatment of
Organization Trade Agreement Multilateral Kyrgyzstan, Pakistan, Tajikistan, Turkey,
goods
(ECOTA) Turkmenistan, and Uzbekistan
Chabahar Agreement Trilateral Afghanistan, Iran, India Goods
International Transportation
Multilateral Afghanistan, Iran, Tajikistan, Uzbekistan Transportation
Routes
Afghanistan, Azerbaijan, Georgia, Turkey,
Lapis Lazuli Multilateral Goods
Turkmenistan
International Road Transport Membership International Transportation

Table 4: Afghanistan Trade Agreements

Source: MoIC of Afghanistan

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2.8 Dispute Resolution Center 2.9 Young & Inexpensive Labor

There is a dispute resolution center that facilitates
Force
mediation and arbitration of business issues and Afghanistan has one of the youngest populations in
disputes in Afghanistan. This center was recently South Asia. Over 40% of its total population include
established under the name of Afghanistan Centre young males and females. There is an abundant
for Dispute Resolution (ACDR) which aims to supply of quality and inexpensive labor force in the
attract and maintain domestic and international Afghan market.
commercial business interests in Afghanistan
and beyond. ACDR offers cost-effective and
timely arbitration and mediation services to
domestic and international business community
besides delivering training and education to
businesspeople.

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GUIDE TO INVESTING
This guide is designed to help foreign and domestic window solution for all sectorial ministries and
investors and businesses navigate investing investors. ACBRIP also provides trademark
opportunities and how to establish their businesses registration, patents, geographical indications (GI),
in Afghanistan. In this respect, besides its several industrial design & integrated circuit registration
other key responsibilities, the Ministry of Industry services. For more information, please visit “http://
and Commerce (MoIC) of the Islamic Republic of www.moci.gov.af” and “http://www.acbr.gov.af/en”.
Afghanistan is charged with promoting domestic
High Investment Board (HIB) was established
and foreign investments by creating a strong and
as per the instruction of the President of the
stable enabling environment that will encourage
Islamic Republic of Afghanistan in October
a competitive private sector participation
2017. HIB’s main role is to attract domestic and
and development in Afghanistan. This is also
foreign investments, recommend investment
guaranteed by the Article 10 of the Constitution
incentives in light of the applicable laws, create
of Afghanistan, which articulates a clear direction
and approve investment policy, identify and
for its economy. Article 10 states that Afghanistan
address investment related issues. HIB has its own
will be a society of hope and prosperity based on a
members composed of government ministries and
strong, private sector-led market economy, social
independent organizations. It meets on a quarterly
equity, and environmental sustainability.
basis to address investors’ problems and approve
Within MoIC, several departments work in tandem investment initiatives and proposals.
to promote investment in Afghanistan. For There are also private agencies in Afghanistan
instance, General Directorate of Industrial Parks that facilitate quick business registration, visa and
and Industrial Affairs Development (GDIPIA) is work permit processing, offer taxation, financial,
responsible to promote investments, plan, develop legal, and many other valuable services at a
and manage industrial parks. Similarly, Afghanistan fraction of cost. These companies know the Afghan
Central Business Registry & Intellectual property government processes and ensure fast turnaround.
(ACBRIP), which also operates under MoIC is mainly
in-charge of registering businesses in the country. In the following sections, more information is
provided about how investment should be made,
As per presidential decree #2943 dated December what entities are involved in facilitating and making
31, 2017, the One Stop-Shop was also reformed investment decisions, and what steps are needed
under ACBRIP to bring more simplicity to the to come to Afghanistan, and how to obtain an
process of licensing and has become a single investment license and register your business.

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Step 1- Obtaining Investment Opportunities

Figure 1: Investment Process Flow

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3.1 Complaint Management Work permit and business license.

Initiative by ACBR-IP Address of the company in the country of origin
Afghanistan Central Business Registry and and in Afghanistan, if available.
Intellectual Properties (ACBR-IP) is committed to Documents showing the type of commercial
increase transparency and prevent corruption in activities, payment of taxes and bank account
its services. Currently, there are two mechanisms details.
for addressing the complaints, and one more
3.2.1.2 Inside Afghanistan
initiative is upcoming soon. Traditionally, complaint
Business visas can be issued inside Afghanistan
and suggestion box under the monitoring of
to those applicants that have Business
MOIC Minister is available at the center. Recently,
Passports and have been introduced by
a tab of complaint and suggestion is added to
the Ministries of Commerce, Economy,
the website of the center. Customers can file
Mines, Finance, Transport, and Chambers of
complaint or insert suggestion online, just a click
Commerce and other relevant government
away. In addition, MOIC is going to introduce a
bodies to MoFA.
new complaint management tool of Interactive
Voice Response (IVR) system. The system enables Afghanistan’s missions abroad issue three
prospective investors to receive information, talk months to three-year multiple entry visas for
to relevant departments, and file complaints foreign nationals. Business visas (multiple)
against any inconveniences experienced in the are extended for up to three years inside the
process of receiving business license. The complaint country by the Ministry of Interior Affairs upon
addressing initiatives assure the investors that the request of the business visa holder and
transparency matters for Ministry of Industry and letter of recommendations from the relevant
Commerce. government institutions.

3.2.1.3 Visa upon Arrival

3.2 Coming to Afghanistan The government of Afghanistan has
3.2.1 Applying for Visas planned to issue visas upon arrival to foreign
businesspeople and investors at Hamid
3.2.1.1 Outside Afghanistan Karzai International Airport through the
All prospective investors who want to invest representatives of Border Police of Ministry of
in Afghanistan need to apply for business Interior Affairs of Afghanistan and MoFA after
visa through Afghan embassies or consulates the examination of the required documents.
located across the world or apply at the nearest
embassy or consulate serving the country Documents required for visa upon arrival
of nationality of the investor. It is strongly include:
recommended that prospective investors meet ■ Provide a notarized copy of a valid business
with the designated Commercial Attachés license with at least six-month validity.
of the MoIC based at the Afghan embassies ■ Submit a new notarized bank statement
abroad. These commercial attachés have in- showing a minimum of US $100,000
depth knowledge about Afghanistan and can deposit.
provide valuable information to the investor in ■ Complete the visa application form and
developing their business plans and guiding provide a recent photo.
them throughout the visa process. ■ Provide documentation showing the
A business applicant applying from outside physical address of the company.
Afghanistan typically needs to provide the ■ Provide an original copy of the business
following documents to the Afghan embassy or letter issued by the company.
consulate: ■ Provide Police Clearance or No-Objection
Certificate.
Introduction or permission letter from the ■ Pay required visa fees for businesspersons
Ministry of Foreign Affairs (MoFA), Chamber of and investors.
Commerce, or other related official bodies.

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3.2.1.4 Working Entry Visa trainers, experts, engineers, pilots, the staff of
For foreigners to work in Afghanistan, they need ground transportation and foreign technical
to apply for a Work Visa. They must be below workers based on need and previous invitations
the retirement age of 65 and must provide for the purpose of working at diplomatic
their educational documents along with the and consular representations, UN offices,
visa application, invitation or introduction letter international organizations, government and
from the employer company in Afghanistan. non-governmental organizations, and national
They should also have a confirmation letter and international agencies. A work visa can
from Consular Affairs Directorate-General of be extended upon the request of the inviting
MoFA of Afghanistan. departments through the Ministry of Interior
Upon payment of applicable visa fees, work (MoI) and supported by a letter from MoFA of
Visa is issued to employees, doctors, teachers, Afghanistan.

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BUSINESS & LICENSE TYPES

All foreign investors who want to establish a in accordance with the Private Investment Law
business in Afghanistan are legally required to (2003), which was amended in 2006. As per this
get an investment license from and register with Law, investors have the choice to register their
Afghanistan Central Business Registry & Intellectual businesses using any of the following legal forms
Property (ACBRIP). The granting of this license is shown in figure 2.

Limited
Partnership Liability
Company

Sole
Proprietorship Corporation

TYPES OF
BUSINESS
OWNERSHIP
Figure 2: Legal Forms of Business Ownership Allowed under the Private Investment Law in Afghanistan

ACBRIP offers many services all under one-stop- registering a new business. Registered businesses
shop for investors. It is quick, reliable and legally are legally required to inform ACBRIP in writing
compliant. ACBRIP issues investment licenses when ownership of capital increases take place in
valid for one year, which can be renewed for 3 years their companies. Additionally, a registered business
after payment of any taxes for the year or previous must file an annual update with the ACBRIP within
years to the Revenue Department of the Ministry ninety days of the end of the Afghan fiscal year
of Finance of Afghanistan. Fees for the initial and should include an update of the information
license range from $50 to $5000 – depending on originally provided. Below is the process of
the type of business and areas of activity. ACBRIP registering a foreign company and obtaining a
also processes a Tax Identification Number (TIN) business license in Afghanistan. Please visit
from the Revenue Department of the MoF when http://acbr.gov.af/en for more information.

DOING BUSINESS IN AFGHANISTAN 17

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4.1 Investment Licensing and Business Registration Process in Afghanistan

1 2 3
Applying for Visa Choosing a Business Type Registering with
ACBRIP & Applying for
a Business license

6 5 4
Receive Business License Criminal Background Check Business Name Search
and Obtaining TIN

Figure 3: Investment Licensing and Business Registration Process in Afghanistan

4.2 Sector Licenses

to invest in the mining sector, the investor needs
Sector licenses are required for doing business approval from the MoMP and a license to mine in
in specific economic sectors. These licenses are Afghanistan besides acquiring a business license
issued by different line ministries and government from ACBRIP. Here is a list of sectoral licenses that
institutions in Afghanistan. For instance, in order domestic and foreign investors need to know.

Import-Export
Licensing Department
Ministry of Industry and Commerce (MoIC)
https://moci.gov.af/en

Customs Broker
Counter Terrorism Unit - Armored Vehicles Registration
Ministry of Interior Affairs (MoI)
https://moi.gov.af/en

Armored Vehicles & Military Import

Counter Terrorism Unit - Armored Vehicles Registration
Ministry of Interior Affairs (MoI)
https://moi.gov.af/en

Ozone Depleting Substances

The Ozone Unit
National Environmental Protection Agency (NEPA)
https://www.nepa.gov.af/indexen

18 DOING BUSINESS IN AFGHANISTAN

Media Moore Afghanistan

Licensing Office of the Afghanistan NRT & NIBC

Ministry of Information and Culture (MoIC)
https://moic.gov.af/en

Tourism
Publications Division
MoIC
https://moic.gov.af/en

Telecom
Afghanistan Telecom Regulatory Authority (ATRA)
Ministry of Communications and Information Technology (MCIT)
http://atra.gov.af/en | https://mcit.gov.af/

Transport
Private Sector Transport Directorate | National Aviation Directorate
Ministry of Transport and Civil Aviation (MoT)
https://mot.gov.af/en

Banking & Finance

Financial Supervision Department – Licensing Section
Da Afghanistan Bank (DAB)
https://dab.gov.af/

Insurance
Insurance Directorate
MoF
https://mof.gov.af/en

Education
Ministry of Education (MoE)
Ministry of Higher Education (MoHE)
https://mohe.gov.af/en

Health
Directorate of Curative Medicine
Ministry of Public Health (MoPH)
https://moph.gov.af/en

Pharmaceuticals
Pharmaceutical Products Management Committee, Directorate of Pharmacy
Ministry of Public Health (MoPH)
https://moph.gov.af/en

Animal Husbandry
General Directorate of Animal Husbandry and Animals’ Health
Ministry of Agriculture, Irrigation & Livestock (MAIL)
https://mail.gov.af/en

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Pollution Control & Waste Management
National Environmental Protection Agency
NEPA
https://www.nepa.gov.af/indexen

Mining
Cadastre Directorate
Ministry of Mines & Petroleum (MoMP)
https://www.momp.gov.af

Downstream Petroleum Sector

Petroleum Regulation Department
MoIC
https:// www.moci.gov.af

4.3 Industrial Parks Land Allotment urban development, Kabul Municipality, Capital
Procedure Development Zone, De Afghanistan Breshna
Sherkat, and a member representing federation
Afghanistan has 34 industrial parks in over 14 of chambers of commerce of Afghanistan. This
provinces. Of these 34 industrial parks, 11 are committee is responsible for screening and
fully operational, 11 under construction and the selecting investor’s applications for industrial land
remaining 12 are undergoing need assessment and recommending the selected investors to
studies. Please refer to the map on page 16 for HEC for approval. After HEC approval, the investor
complete list of industrial parks. receives temporary ownership papers from MoIC. It
These industrial parks offer plots at cheaper rates is incumbent on the investor to begin construction.
to investors, including basic infrastructure and the Once construction is complete, and investor starts
ability to lease up to 90 years. The procedure for production/manufacturing, the GDIPIA of the
applying to a plot of land and building a factory MoIC recommends the investor to relevant Afghan
is managed through the General Directorate of authorities to obtain permanent legal deeds of the
Industrial Parks and Industrial Affairs (GDIPIA) of industrial land.
MoIC. Please refer to the following figure for the steps
needed to apply for industrial land in Afghanistan.
Please note that the GDIPIA of the MoIC also
For detailed information, please contact the GDIPIA
chairs a Land Distribution Committee comprised
of the MoIC.
of members of Ministries of finance, economy,

4.4 Procedure for Allotment of Industrial Land in Afghanistan

1 2 3
Public Announcement Application Submission Application Assessment

5 4
Land Titling Award of Industrial Land
Figure 4: Procedure for Allotment of Industrial Land in Afghanistan

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TAXATION IN AFGHANISTAN
The Afghanistan Revenue Department (ARD) is even if no tax is due for the period covered by
responsible for the administration and collection the return. To avoid being penalized, taxpayers,
of tax and non-tax revenue for the Government therefore, should submit returns even if no tax is
of Afghanistan. ARD has segmented its taxpayers due and state on the return that none is due.
based on their income levels and economic activity.
There are Large, Medium and Small taxpayer offices
5.3 Method of Accounting
responsible for collecting taxes. Also, at provincial
levels, ARD has its provincial representatives based Corporations and limited liability companies are
at Mustofiats who also perform tax collection required to compute their income using the
duties. ARD website (http://www.ard.gov.af) provides accrual method of accounting which recognizes
all necessary taxation related information and income and expenses when due (Article 37).
materials including the Income Tax Law 2009 and
Income Tax Manual. 5.4 Taxation Year
The taxable year starts from the 21st December
5.1 Obtaining a Tax Identification (1st of Jaddi) and lasts until the 20th of December
Number (TIN) (30th of Qaws) (Article 3). A legal person (but
A Taxpayer Identification Number is a unique not a natural person) wishing to use a different
10-digit number used to identify a specific taxpayer. taxation year may apply in writing to the Ministry of
Each taxpayer should have only one TIN. A taxpayer Finance explaining the reasons for the requested
is defined as an individual (natural person) or legal change. The Ministry of Finance may approve such
entity (legal person) who has an obligation to report an application but only where the application is
income, expenses, or business activity and/or pay justifiable.
tax. Please note that when an investor applies for a
business license at ACBRIP in Kabul or at one of its
5.5 Personal Taxes
provincial offices, the TIN number is issued at the
same time ACBRIP issues the business license. Resident natural persons are taxed on income from
all sources worldwide, including but not limited to
wages, salaries, rents, certain types of partnership
5.2 When to File Taxes?
income, royalties, etc. Non-residents are taxed on all
The Income Tax Law 2009 provides for a penalty if income with its source in Afghanistan. The annual
a taxpayer fails to submit a tax return. This applies tax rates are as follows.

Income more than Income not more than Tax

0 AFN 6,000 Zero
AFN 6,000 AFN 15,000 2 percent of amount over AFN 6,000
AFN 15,000 AFN 120,000 AFN 180 + 10 % of amount over AFN15,000
AFN 120,000 AFN 10,680 + 20 % of amount over AFN120,000

Table 5: Personal Income Tax Rates in Afghanistan

Self-employed individuals must file a tax return and are the same annual tax rates and thresholds as applies to
allowed to deduct all ordinary and necessary business other individuals (Article 4). The annual tax return for a
expenses against their income to compute net taxable sole proprietor is due and payable by the end of Jawza
income. Tax is calculated on net taxable income using (3rd month) of the next fiscal year.

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5.6 Withholding Tax on Rental For more information, please refer to Guide 03 -
Services Business Receipts Tax on Services available online
at http://www.ard.gov.af.
This is a pre-payment of landlords’ income tax.
Legal entity tenants and natural person tenants
conducting business at the rented property and
5.8 Fixed Taxes
paying more than AFN 10,000 per month in rent There are fixed taxes in lieu of income tax imposed
are required to withhold the tax (and are liable on certain business and transaction types. In some
for the tax) at the time the rent is paid. The tax cases, the fixed tax is a prepayment of income tax
withheld is 10 percent of the rent payment for but does not relieve the taxpayer from the need to
payments over AFN 10,000 per month but less than file an income and/ or business receipts tax return.
or equal to AFN 100,000 per month, and 15 percent The following fixed taxes are addressed in Chapter
of the rent payment for payments over AFN 11 of the Income Tax Law:
100,000. The landlord is responsible for reporting
■ Fixed tax on imports;
rental income on his or her annual income tax
■ Fixed tax on the transport of goods or
declaration (after deducting allowable expenses of
passengers for business purposes;
maintaining a rental property if any) and paying
■ Fixed tax of contractors;
tax annually at appropriate rates depending on
■ Fixed tax on exhibitions; and
entity type (legal person or natural person). Taxes
■ Fixed tax on small businesses.
are generally due on a monthly basis. However, if
the rental agreement specifies a different rental For more information regarding fixed taxes, see
payment schedule (e.g. bi-monthly, quarterly etc.) Guide 19 – Fixed Taxes on Commercial Activities
the tax withholding and payment should follow available at http://www.ard.gov.af.
the rental schedule. The payment is made at
5.8.1 Electronic Funds Transfer (EFT)
Da Afghanistan Bank no later than the 15th day
It is now possible to pay your taxes using electronic
following the end of the solar month in which the
funds transfer. The process is simple and should
rent payment is due.
make compliance easier, especially for those
businesses and organizations with accounting
5.7 Business Receipts Tax (BRT) and payment offices outside of Afghanistan. For
additional information on electronic funds transfers
A 2 percent business receipts tax is imposed on
please refer to Guide 06 – Paying Your Tax by
gross receipts of all types of income of corporations
Electronic Funds Transfer at http://www.ard.gov.
and limited liability companies and individuals
af. You may also visit the ARD, Taxpayer Assistance
whose income is more than AFN 750,000 per
Team at the Ministry of Finance in Kabul.
quarter, except for certain types of income
described below where the BRT rate is 5 percent or
10 percent. There is also a 2 percent BRT on imports, 5.9 Corporate Tax Reform
payable to the Customs House where and when
The Afghan government is committed to making
the customs duty is paid. This BRT is treated as an
Afghanistan attractive to investors and has
advance payment of the quarterly BRT assessment.
continued to reform corporate taxation consistent
10% BRT is payable on gross receipts from provision
with international standards and best practice.
of the following services:
The Income Tax Law 2009 includes provisions for
■ International passenger airline services. accelerated depreciation (over 4 years for buildings
■ Telecommunications services, including and 2 years for other assets) and the ability to carry
internet services. losses forward for an unlimited period until fully
■ Hotels providing superior services. recouped.
■ Restaurants providing superior services other
Other corporate tax reform measures which have
hotels and restaurants with income of AFN
been implemented include:
750,000 or more per quarter and clubs and
halls (event venues) pay 5 percent BRT. ■ Taxing branches of foreign companies on the
same basis as subsidiaries of foreign companies.

22 DOING BUSINESS IN AFGHANISTAN

 Moore Afghanistan
■ Tax incentives for extractive industries. ■ Updated business license.
■ Extending the 20 percent withholding on ■ Firms that have the required experience must
dividends to include withholding for interest, submit a tax clearance form.
royalties and other similar payments. ■ Include all of the above documents in a CD,
■ Deductions allowed on the basis of attribution particularly the Land sketch and site layout/
of actual expenses between the branch and the plan, which is very important.
non-resident person.
Note: Wether the proposal is in the standardized
■ Ensuring ‘arm’s length’ pricing between
form or not will be known after the assessment and
associated entities.
you will be notified via email and phone.
■ Implementing general anti-avoidance rules to
address tax avoidance practices.
■ Quarantining foreign losses against foreign 5.12 Required Documents for
income. Business License
■ Allowing legal persons to apply for a fiscal year Domestic enterprises applicants are required to
that is other than the solar year. submit the following document for registration to
the center or provincial offices:
5.10 Afghanistan Customs and ■ Submitting original and updated tax
Duties identification number (TIN) of each founder
Afghanistan is a member of the World Customs and shareholder of the enterprise issued by the
Organization (WCO). Afghanistan uses the MoF, indicating its absence of previous duties.
harmonized customs system. All businesses ■ Providing NSIA approved ID Card (Tazkira) in
importing goods and products must submit a the center and provinces indicating that the
customs declaration form supported by documents business founder is 18 years old.
such as original invoices, certificate of origin, ■ The directorate (ACBR) is obliged to ensure that
original bill of lading and packing list and any the enterprise is not registered and is not liable
other relevant document. Since Afghanistan is for any previous payments. This will be verified
a landlocked country, any goods transiting from by the TIN department.
Pakistan require transit permission which is offered ■ Submitting four pieces photo ( 2x3).
by the Transit Department of MoIC. Also, there are ■ Physical presence of applicant or their legal
other certificates and documents that needs to be representative with an (official attorney letter)
obtained from other government ministries prior at the time of registration in order to provide a
to imports or exports of any goods when declaring signature and fingerprint. Foreign companies
goods at customs. For instance, imports of armored who are contracting with NATO are exempt
vehicles require MoI’s certification; communication from this provision.
equipment requires approval from MoCIT; and In addition to the sub article (1) and (3) of 24 article
imports of medicines require MoPH’s certification. of limited liability law applicants are obliged to
For a full list of current customs tariffs see the present the following documents:
Afghan Customs Department website: ■ Contract form which is issued by property
https://www.customs.mof.gov.af. dealer
■ Contract from which is issued by head of the
5.11 Required Documents for Land relevant district or
Acquisition ■ Personal property document of the owners or
founders
■ Land acquisition form
■ Business plan or a realistic and comprehensive
business proposal where the parts are exact.
■ Land sketch – including a site layout/plan
showing all the features on the ground.
■ Bank statement – an updated report from the
last six months.

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USEFUL LINKS
Invest in Afghanistan National Water Affairs Regulation Authority
www.invest.af https://nwara.gov.af/en

Ministry of Industry and Commerce (MoIC) Ministry of Agriculture Irrigation & Livestock (MAIL)
www.moci.gov.af www.mail.gov.af

Afghanistan Central Business Registry & Intellectual Ministry of Mines & Petroleum (MoMP)
Property (ACBRIP) www.momp.gov.af
www.acbr.gov.af
Ministry of Public Health (MoPH)
Investment Facilitation Unit www.moph.gov.af
www.invest.gov.af
American Chamber of Commerce in Afghanistan
Ministry of Foreign Affairs (MoFA) (AmCham)
www.mfa.gov.af https://amcham.af

Ministry of Justice (MoJ) Afghanistan Chamber of Commerce and Industry (ACCI)

www.moj.gov.af www.acci.org.af

Ministry of Finance (MoF) Afghan-American Chamber of Commerce (AACC)

www.mof.gov.af www.a-acc.org

Ministry of Economy (MoEC) Afghanistan Builders Association (ABA)

www.moec.gov.af www.aba.af

Export Promotion Agency of Afghanistan (EPAA) Afghanistan Banking Association (ABA)

www.moci.gov.af http://www.aba.org.af/

Ministry of Urban Development and Lands HARAKAT Afghanistan

www.mudl.gov.af https://harakat.af/

Da Afghanistan Bank (DAB) MOORE Afghanistan

www.dab.gov.af https://www.moore.af/

Da Afghanistan Breshna Shirkat (DABS)

https://main.dabs.af

24 DOING BUSINESS IN AFGHANISTAN

 CONTACT US:
Moore Afghanistan
8th Floor, Lapis Tower
Mohib Center, Airport Road
Kabul, Afghanistan
M +93 796 000 111
E [email protected]

www.moore.af