Afghan government taxes US aid: Report

A newspaper reports that taxation of US govt assistance is barred by US law.

Last Updated: Jan 17, 2011, 14:04 PM IST

Washington: The Afghan government has imposed taxes on US contractors operating in the country, risking new confrontation with the United States, The Washington Post has reported.

Citing unnamed US and Afghan officials, the newspaper pointed out that taxation of US government assistance is barred by US law as well as by a number of bilateral accords between Afghanistan and the United States.

However, contractors have recently received tax bills for work done under US government programs, the report said.

Reconstruction is a key component in a US-led anti-insurgency effort which seeks to stabilise the volatile south and east of Afghanistan, in part by helping Afghan farmers and improving local government.

US Vice President Joe Biden, visiting Afghanistan last week, stressed that his country`s troops could stay after 2014 if Afghans want them to, on day two of a surprise visit to the war-torn nation.

There are about 97,000 United States troops serving in Afghanistan as part of an international force of some 140,000.

According to the Post, the contractors have appealed to the Defence and State Departments to clarify the matter and have been told to ignore the bills and "stand up for our rights”.

But the Afghan government has started sending overdue tax bills and has threatened some US companies with arrest, loss of licenses and confiscation of aid goods, the paper said.

"I don`t need any new plan (to require a) foreign company to pay tax," Afghan Finance Minister Omar Zakhilwal told The Post in a text message in response to questions. "Whatever is not exempted by law and treaties will not be exempted."

Afghanistan is "serious against tax evasion”, the paper quotes Zakhilwal as saying.

Bureau Report