Afghanistan May Offer Tax Incentives To Investors

by Lorys Charalambous, Tax-News.com, Cyprus

07 May 2002

Afghanistan Reconstruction Minister Amin Farhang is proposing to offer 100% tax exemption to foreign companies that make business investments in the devastated country. Mr Farhang, who spent 20 years' exile in Germany as a professor of economics, will shortly present his programme to Hamid Karzai's cabinet.

"My personal opinion is that foreign companies who put their money and trust into Afghanistan should be able to take their profits back home," Mr Farhang said.

His policy would allow foreign companies to keep 100 per cent of their profits in return for creating local jobs. Mr Farhang said he was also keen to encourage joint-venture partnerships between foreign companies and Afghan firms.

"In the past, all aspects of the Afghan economy were in the hands of the government, but now we must change that," he said. There has been little or no foreign investment in Afghanistan since the 1979 Soviet invasion and subsequent civil war. Many factories have been plundered or destroyed, while roads and telecommunications systems are in ruins. However, the country has considerable reserves of coal, copper, iron ore, chromium and precious stones.

German Chancellor Gerhard Schroeder will visit Afghanistan this week, accompanied by a delegation of businessmen. And President Bush gave the country a boost last Friday when he restored normal trade relations, giving Afghan exports low tariff access to US markets.

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