no doubt some of the contractors feel they are already paying a tax by being forced to ‘work’ with the local ministries. nevertheless, the line between what is aid and what is mindless spending has to confuse the Afghans as it does everyone else … thus, it’s no wonder they’d like some of this cash for themselves.
In a move that could spark tension with the U.S. government, Afghanistan is looking to tax U.S. contractors operating in the Islamic nation, threatening some U.S. firms with arrest, loss of licenses and the confiscation of aid goods for noncompliance.
“I don’t need any new plan [to require a] foreign company to pay tax,” Afghan Finance Minister Omar Zakhilwal said in a text message to The Washington Post. “Whatever is not exempted by law and treaties will not be exempted.”
Taxation of U.S. government assistance is prohibited by U.S. law, and several bilateral accords between the U.S. and Afghanistan. The two governments, however, disagree on what “tax-exempt” means.
Non-Afghan contractors working under U.S.-backed programs, which have recently received tax bills, have already appealed to the U.S. Defense and State departments, but were told to ignore the bills and “stand up for our rights,” according to one official of a U.S. firm working under multiple U.S defense contracts in Afghanistan.