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Tax Amnesty Program: Technical and Legal Assistance for NGOs by Citizens’ Forum Against Corruption (CFAC)

In a press conference on Sunday, January 28, 2018 the Ministry of Finance announced a tax amnesty program through which civil society organizations and private sector entities that have not cleared their taxes and have incurred penalties for the fiscal years of 1381 through 1396 (2002-2017), may pay the original tax along with 5% of the total penalties for these years. The entities that successfully complete this process will be excused from paying the remaining 95% of the tax penalties. This amnesty program will end in September 2018.

The amnesty program offers a great opportunity for NGOs and private sector entities to operate within the bounds of law and eliminate the possibility of coercion by corrupt tax officials. At the same time, NGOs and private sector entities will contribute to efforts for transparency in tax assessment, payment, and collection processes.

CFAC will provide technical and legal assistance to NGOs and private sector entities that wish to take advantage of the tax amnesty.

Interested NGOs and private sector entities are invited to attend a consultation meeting on the tax amnesty program to discuss the details of the program and address questions from the participants.

About CFAC:

Citizens’ Forum Against Corruption (CFAC) was established in 2016 to serve as a platform through which tax paying enterprises could defend themselves against corrupt tax officials. CFAC is a part of the Subcommittee on Anti-corruption of the National Advocacy Committee for Public Policy (NAC-PP). For more information on NAC-PP, see: www.nac-pp.net

For more information on the meeting venue and date please contact: Atiq Rahimi, NAC-PP Secretariat, at atiq.rahimi@appro.org.af, with the subject line “Tax Amnesty Program”.

Addressing Corruption in Tax Payments

On  May 13, 2017, the National Advocacy Committee for Public Policy (NAC-PP), released findings of a study on corruption in tax assessment, payment, and collection processes. Carried out by Afghanistan Public Policy Research Organization (APPRO), the research focuses on the interactions between taxpayers (NGOs and private sector) and tax collectors to provide an evidence base for multi-stakeholder dialogue on anti-corruption in Afghanistan.

The research finds that willingness to pay bribes by taxpayers is comparable in terms of being instituted to the predictable demand by corrupt officials for bribes to speed through a tax file or to reduce the amount of tax, or penalties, payable. Drivers of corruption in taxation include inefficient bureaucracy, general and legal illiteracy, irresponsible or opportunistic behavior of taxpayers, institutionalized bribe seeking, impunity of corrupt officials, institutional deficiency, aggressiveness and unprofessionalism of service provision, intentional bureaucratic confusion and arbitrariness, and lack of oversight.

The typical price to secure the “assistance” of a corrupt tax official is 50 percent of the taxes payable and penalties owed. Of this 50 percent, half is paid to the government while the other half is taken as the fee to fix the problem. Many of the corrupt tax officials offer their services as “consultants” to the hapless tax paying clients. It is a general belief among taxpayers that “If you don’t pay [bribes], your taxes will not get processed.”

Corruption cannot and must not be viewed as merely a technical problem that can be fixed by capacity building, equipment support, or legislation. Fighting corruption has to be a multi-prong, multi-actor intervention, adequately resourced, and long term oriented. As such, fighting corruption necessitates a sea change, driven by technical intervention, ongoing dialogue, re-education aimed at cultural change, civil society push and participation, committed and responsive state authorities and, in the case of Afghanistan, committed international donors in action as well as words.

The following recommendations emerged from discussions on findings held within the Anti-Corruption Sub-Committee of NAC-PP:

• Simplify and Standardize Tax Forms: There little or no need for a 15-page document to be filled out by the taxpayer. There is also no justification for penalties for incorrectly completed forms by taxpayers. The form should be shortened, the penalty removed, and assistance provided freely and willingly by tax collection personnel at the Ministry of Finance.
• Provide Full Access to Tax Law and Amendments: All requests for information and documentation by tax officials must be tied to the legal provisions within the Tax Law and its various amendments. In cases of disagreement the onus must be on the tax official to provide legal support for the requests for documents and information.
• Increase Tax Law Literacy: Consideration needs to be given to Ministry of Finance-supported initiatives on Tax Law literacy with a focus on the legal requirements and the rights and obligations of the taxpayers. Such initiatives would work best if carried out in close collaboration with taxpayers’ groups and business associations.
• Address Small Businesses’ Needs: Particular attention should be paid to micro and small businesses which typically lack records of their transactions, have little or no literacy or business management systems, and thus are at the mercy of predating tax officials who could request arbitrary amounts as taxes payable. Small and micro businesses falling into this category include shopkeepers, mechanics, and small restaurants.
• Make Efficient and Effective Use of Digitization: There is no reason for not allowing taxpayers to complete their tax forms online and receive confirmation as to its state of completion. Removing the human factor in this process is likely to reduce opportunities for meddling by corrupt tax officials.
• Establish a Class of Professional, Independent Tax Consultants: Since taxpayers have little time to go through the complicated process of completing forms, even in digitized form, and preparing support documentation, there is solid demand for the services of professional tax consultants who could complete forms on behalf of taxpayer for a small, competitive fee. Efforts should be made by the government and donors to create opportunities for the emergence of qualified, independent, and licensed tax consultants. This would be particularly effective if coupled with digitalized tax forms to be completed online by the taxpayers and the elimination of self appointed fixers.
• Monitor and Act on Taxpayer-Tax Collector Interactions: As a deterrent to bribery initiated by both the taxpayers and corrupt tax officials, consider installing cameras that record all interactions in STO, MTO, and LTO and keep the records for at least one month.

About NAC-PP

The National Advocacy Committee for Public Policy (NAC-PP) was established in March 2015 to serve as a policy advocacy and information-sharing platform for good governance. NAC-PP works closely with Provincial Advocacy Committees (PACs) and District Advocacy Committees (DACs) to coordinate advocacy and information sharing from district to national levels.

For more information on NAC-PP, please contact the NAC-PP Secretariat through Mr. Atiq Rahimi at atiq.rahimi@appro.org.af.

Incorporating Anti-Corruption in the Education Curricula

On April 27, 2017, the National Advocacy Committee for Public Policy (NAC-PP), released findings of a case study on Education and Anti-Corruption,  examining possibilities for incorporating anti-corruption in education curricula in Afghanistan.

This study stems from research conducted by Afghanistan Public Policy Research Organization (APPRO), a member of NAC-PP and acting as the Secretariat, to inform advocacy activities of NAC-PP’s Anti-Corruption and Education subcommittees, both civil society driven initiatives with mandates to facilitate evidence-based constructive advocacy by civil society organizations to initiate an inclusive, ongoing dialogue between state and non-state actors.

The Anti-Corruption Sub-Committee of NAC-PP considers integrating corruption awareness into Afghanistan’s education system is one essential measure to contribute to the fights against the institutionalization of corruption.

Afghanistan continues to be ranked as one of the top ten corrupt countries in the world. There have been very few attempts to integrate anti-corruption in education curricula, particularly in early and mid-level education. Anti-corruption values and attitudes introduced at an early age are likely to pay dividends in the long run with the emergence of a new generation of anti-corruption citizens who stand against corrupt social behavior based on a new set of values and principals. This argument has been put forth by the United Nation Office on Drugs and Crime (UNODC) and taken up through the Anti-Corruption on Academic Imitative (ACAD).

Islamic values are seen by many as an obvious starting point for raising awareness against corruption. However, methods of delivering Islamic teaching were strongly and consistently described as unimaginative, ineffective, and done by unqualified instructors who fail to discuss the implications of Islamic provisions against corruption in practical, every day terms.

The teaching methods were described as uninspiring, unengaging, and delivered and received by the disinterested. Many of those engaged in this research felt that with well-trained and enthusiastic teachers communicating Islamic teachings that promote integrity and humanity a wave of resistance to the endemic corruption in Afghan society could be facilitated. Islamic values denounce injustice, corruption, ignorance, poverty, discrimination, nepotism, bribery, deception and misusing public property [bait-ul-mal].

These values need to be incorporated into the education system through changes in the curriculum and appointment of knowledgeable, qualified, and experienced instructors. The question is how a new breed of teachers is to be found, trained and deployed within the education system.

The research makes the following recommendations:

• Efforts should be made to motivate community leaders to enlist and engage joint bodies drawn from educationists, religious scholars, teachers, parents, young people, and students along with cooperation from the Media to combat corruption based on Islamic principles.
• As much as possible, lessons should be drawn from the experiences of citizens in other countries on how to combat corruption.
• Parents and parents’ associations need to put pressure on the school system, particularly at the primary and secondary levels, for practical instructions against corruption based on Islamic values. Initially, these initiatives may have to find their expression in extracurricular societies, associations, conferences and other activities.
• The evident loss of confidence and trust in the government indicates that effective moves must be organic, from within the community and initiated by ordinary citizens and their organizations, rather than merely high-level political statement making and law and policy making.
• Extracurricular activities such as anti-corruption school clubs and conferences organized from within the community should be used to arouse interest, create a common voice, and mobilize actions.
• Revision of curricula by the Ministry of Education and the Ministry of Higher Education in collaboration with the Ministry of Hajj and Religious Affairs will be essential in fighting corruption based on Islamic principles.

About NAC-PP

The National Advocacy Committee for Public Policy (NAC-PP) was established in March 2015 to serve as a policy advocacy and information-sharing platform for good governance. NAC-PP works closely with Provincial Advocacy Committees (PACs) and District Advocacy Committees (DACs) to coordinate advocacy and information sharing from district to national levels.

For more information on NAC-PP, please contact the NAC-PP Secretariat through Mr. Atiq Rahimi at atiq.rahimi@appro.org.af.