Tax Exemption Ruling RSI for All Military Contractors and Subcontractors of US Defense Forces and NATO

For Release by: Ministry of Finance, Afghanistan Revenue Department 

Tax Exemption Ruling RSI – 1812 dated 8 March 2017 and amendment thereto RVPO-956 dated 26 November 2017

Parties: All military contractors and subcontractors of the United States Defense Force (US Army) and The North Atlantic Treaty Organization (NATO) to whom contracts have been awarded before 1 January 2015 under the Military Technical Agreement (4 January 2002) and the Diplomatic Note 202 (28 May 2003)

His Excellency, Minister of Finance, Eklil Ahmad Hakimi, together with his Ministerial team has implemented an impressive number of reforms during the past year with most of the reform emphasis being placed on reforms in the Afghanistan Revenue Department (ARD) and in particular regulatory reforms. What is of interest to the international community and in particular the US Army and NATO, is the ARD’s publication of Tax Exemption Ruling RSI – 1812 (the ruling) and its resultant amendment dated 26 November 2017 (the amended ruling). Its amendment in particular shows the MoF’s strong commitment to systematically removing bureaucratic ‘red tape’ being faced by taxpayers in general but in this instance, by the contractors and subcontractors of the US Army and NATO.

The ruling was initially only applicable to 31 military contractors and subcontractors to whom contracts have been awarded before 1 January 2015 under the Military Technical Agreement (4 January 2002) and the Diplomatic Note 202 (28 May 2003). The amended ruling expanded the exemption to all military contractors and subcontractors whose contracts were awarded under the same umbrella.

The ruling and its amendment refers to the military contractors and subcontractors’ ‘tax legacy issues’ as it has become known. It further provides for a simplified step-by-step process for those contractors and subcontractors in order to be issued with a tax clearance certificate (Annexure A to the amended ruling) resolving their legacy issues. It also provides for the removal of prohibitions on contractors and subcontractors’ departures from Afghanistan, freezing of bank accounts, the inability to buy, sell or transfer property and renew business licenses. These prohibitions will be removed by the ARD no later than 15 December 2017.

The International Agreements Branch (IAB) or the US Embassy in Kabul can be contacted for additional information. Their email addresses are cj4iaccsointagrops@hq.rs.nato.int and kabulecon@state.gov.af.

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