On April 19, 2018, NAC-PP held a consulation meeting on tax amnesty for NGOs and private sector entities at APPRO’s main Office in Kabul. The meeting was organized as part of Citizen’s Forum against Corruption (CFAC ) initiative to address corruption in tax payments.
Presentations were made on the following interrelated issues:
- An overview of National Advocacy committee for Public policy (NAC-PP)
- An overview of Anti-Corruption Subcommittee and Citizen’s Forum Against Corruption (CFAC)
- Tax Amnesty Program’s Eligibility Criteria for NGOs and private sector
Sixteen civil society organizations attended this meeting: Equality for Peace and Democracy (EPD), Integrity Watch Afghanistan (IWA), Agency Coordinating Body for Afghan Relief and Development (ACBAR), Afghan Civil Society Forum-organization (ACSFo), Afghan Women’s Educational Centre (AWEC), Afghan Coordination against Corruption (AFCAC), Relief Humanitarian and Development Organization (RHDO), Hand in Hand Afghanistan, Youth Thinkers’ Society (YTS), New Message for Afghan Women (NMAO), Cordaid, Supporting Vulnerable People Organization (SVPO), Naweed Naw and Afghan Cultural Associations Joint Jerga (ACAJJ).
Overview of National Advocacy Committee for Public Policy (NAC-PP)
NAC-PP Chairperson presented the vision, mission, goal and objectives of NAC-PP as a platform to facilitate evidence based advocacy at national level with close coordination with provincial advocacy committees.
Anti-Corruption Subcommittee and Citizen’s Forum against Corruption
The objectives of the Anticorruption Subcommittee of NAC-PP were described to the participants with additional details on Citizens’ Forum against Corruption (CFAC) whose mandate is to assist civil society organizations and private sector entities in protecting themselves against corrupt practices by tax officials.
The Secretariatof NAC-PP informed the participants on how CFAC could provide support and technical assistance to those entities that wished to take advantage of the Tax Amnesty Program announced by the government. CFAC has contracted the services of a tax specialist and a legal advisor on how to go about applying for the amnesty.
Tax Amnesty Program for NGOs and Private Sector
The amnesty program is open to all taxpayers and upon successful completion of the process for this program. According to the provisions of the amnesty, a natural and legal person will be excused from the payment of 95% of penalties accrued from 2002 until the end of 2017. There are seven (7) necessary criteria for an entity to be considered eligible under the amnesty. The framework provides guidelines for taxpayers as follows:
1) If the taxpayer has submitted his financial statement, but his actual tax liability is different in initial assessment, investigation and application of tax laws from what he has reported:
- At the initial assessment step, taxpayer is obliged to pay the actual amount and the adjusted tax penalty
- While inspecting documents and tax officer finds any discrepancy between the required documents and the submitted documents, then the person can apply for this amnesty
- When applying the law and if the cases are referred for non-compliance with the tax laws
- Additional tax imposed on instances of tax evasion or concealing income
2) In case taxpayer is dissatisfied with the taxes withheld on tax forms and cases referred to courts if the tax payer gives up the dispute and settles to pay the determined tax plus any additional amounts:
- If the tax payer gives up the dispute and settles to pay the determined tax plus any additional amounts
- Following a decision by court and complaints processing unit, taxpayer is obliged to pay actual amount plus additional amounts
3) In case the taxpayer has agreed to settle taxes in instalments:
- Taxpayer can pay the actual amount with 5% of additional amount according to the amnesty
- If the penalty is left over, then the taxpayer can pay off the 5% of additional amount only
- Those taxpayers wishing to continue paying the installments, can avoid this amnesty
4) Taxpayers who did not submit financial statements from years 2002-2017:
- The taxpayer is operational and in light of the self-assessment or assessment of taxpayers offices can pay their taxes
- Inactive entities can submit their tax return forms too and proceed paying taxes according to the law
5) Taxpayers subject to penalties and/or have not fulfilled fixed tax obligations (taxes imposed on imports, contracts, exhibitions, transport of goods & customers for business purpose) based on articles specified in the tax procedures, such as failure to submit financial statements, tax forms and income disclosure can clear their taxes by using this amnesty.
6) Other situations (for example violations and non-compliance) that are mentioned in the tax law.
7) Additional taxes that are paid prior to implementation of this procedure are not subject to reimbursement.
The full guidelines of the Ministry of Finance in Dari are available here.
The following key priorities were discussed:
- The need for urgent mobilization of resources and utilizing the opportunity for obtaining tax clearance from the Ministry of Finance while the amnesty is in effect.
- Taking advantage of the opportunity to utilize technical and legal advice from CFAC for CSOs to clear their outstanding taxes.
- Contradiction between the tax system in practice and the Tax Law and how this contradiction leads to cheating by tax payers or extortion by tax collectors.
- The need for entities wishing to clear their tax penalties to coordinate their efforts with CFAC so that CFAC can provide maximum support. It was also broadly agreed the higher the number of CSOs clearing their tax penalties, the more difficult for corrupt tax officials to extort by offering to act as fixers.
- The present civil society representatives shared different problems in the tax payment and assessment. The problems ranged from submission of financial statements and annual audits to non-uniform procedures of tax clearance procedures in different provinces. Some participants raised concern about the lack of consistency and uniform legal awareness within the Ministry of Finance with its departments in the provinces. For example, an organization is excused from paying taxes, holding an official letter from MoF in Kabul but the letter is accepted in some provinces while rejected in others.
- It was collectively agreed to gather and accumulate tax issues from several organizations and organize a one day workshop on Tax Law and guidelines on the tax procedures.
- It is necessary to combine several tax problem cases and approach MoF as a group. Collective voice and critical mass would be the two necessary success conditions.
- It would be the responsibility of today’s present civil society actors especially ACBAR and ACSFo as the umbrella organizations to communicate this initiative to their members and partners. The Secretariat of NAC-PP made it clear that the CFAC initiative is not only offered to NAC-PP members but all those civil society and private sector entities that have tax issues and want to take advantage the government’s Tax Amnesty Program. .
- NAC-PP Secretariat will organize a training workshop on how to apply for the amnesty.
- It was agreed that if there were repeated complaints by taxpayers about specific tax-related issues, NAC-PP will coordinate advocacy based on consultations with members of the Anticorruption Subcommittee.