Frequently Asked Questions
What are the opportunities for doing business in Afghanistan?
- Business opportunities are largely driven by Afghanistan's need to renovate its infrastructure which was weakened by years of war and neglect.
- There are emerging opportunities in both residential and commercial real estate development.
- Because of the large push in real estate development, there are many opportunities for construction and construction materials manufacturing/importation into Afghanistan.
- With the drawdown of international military forces there are significant opportunities for transportation and logistics services.
- The information technology and telecommunications sectors are growing and represent significant upside potential.
- The extractive industries including minerals, marble, commodity metals and others are an emerging opportunity.
- Handmade articles including rugs and carpets represent an export opportunity.
- The security economy generates significant demand for goods and services, equipment and operations and maintenance of the national army and police forces.
- Agriculture remains a strong market driver with significant opportunities in agri-business and agriculture distribution and infrastructure. Dried fruits, nuts and seeds have overtaken carpets to account for half of total exports. However, Afghanistan’s export of fresh produce accounts for only 6 percent of total trade due to Afghanistan limited agriculture and food processing infrastructure including a lack of cold and dry storage facilities.
What are some of the key market challenges for doing business in Afghanistan?
There are many challenges to doing business in Afghanistan. Some of these are as follows:
- Poor infrastructure, including limited access to power, transportation and telecommunications networks is prevalent throughout the country.
- Afghanistan also has a weak legal framework, regulatory enforcement, and dispute resolution mechanisms that make it difficult to resolve business disagreements in country.
- Corruption is a serious challenge to doing business in Afghanistan.
- Foreign legal persons may not own land, and securing clear title to land is a long, time-consuming, expensive process.
- The commercial banking system provides limited commercial financing.
- Customs regulations and procedures are neither transparent nor consistent.
- The government and the private sector both face a shortage of skilled labor and trained personnel.
What are critical factors to consider in pricing products in Afghanistan?
Factors to consider in pricing are as follows:
- Corporate income tax of 20%; low by regional standards. Personal income tax ranges from 0 – 20%.
- Business Receipts Tax ranging from 2 – 10%, based on sector, revenue and billing.
- Import tariffs in the range of 0 – 25%.
- High transport costs.
- Competition from cheap, low-quality goods and services from Pakistan, China and Iran.
What should I consider as I develop my market entry strategy?
- Strong local knowledge is a vital part of business development in Afghanistan.
- Be familiar with key players both in business and in government.
- Visit the country, get to know your potential partners and their capabilities to do business with U.S. firms, and meet with local Chambers of Commerce especially the American Chamber of Commerce (AMCHAM), the Afghanistan Investment Support Agency (AISA) and the Export Promotion Agency of Afghanistan (EPAA). Many U.S. firms may find it beneficial to partner with a local firm which knows the region and can advise on security, and other issues of doing business in the region.
- Expect high costs associated with doing business in an insecure and volatile region.
- Before travel, U.S. citizens should review the Consular Information Sheet (Country Specific Information) and Travel Warning for Afghanistan.
- Personal relationships are especially important in Afghanistan, and with the legal and regulatory framework still in a nascent stage, businesses are built almost entirely on the strength of the business relationships.
What do I need to obtain a business license?
To operate a business legally in Afghanistan requires a business license. This license is awarded through AISA and is to be renewed annually. Certain industries, e.g. the health sector, require an additional license from the responsible ministry. Both need to be obtained prior to starting business operations. AISA’s website, http://www.aisa.org.af/, provides detailed information on both the AISA license as well as all other additional licenses.
AISA’s Investor Support Department will assist the investor in determining whether or not a business requires an additional license and with the following procedures, which are necessary to obtain a business license:
- Completion of the Investment Application Form and Application Form for Tax ID Number
- Registration of the Investment Application Form
- Provision of guidance on the requirements for submission of a business plan and review of the project documents to ensure it is within the country’s legal framework
- Registration of investment documents in commercial court and announcement of investors’ business/investment details in a reputable Afghan newspaper
- Payment of License Fee and Issuance of Investment License. (Fees are based on the type of business and are commensurate with the amount invested.)
To register, a company must first proceed to the Ministry of Foreign Affairs (MoFA) with an introductory letter from its embassy. The U.S. Embassy’s Commercial Section can provide this letter upon provision of the following:
--Federal Tax ID Number on IRS Letterhead;
--Articles of Incorporation from the U.S. State the company is registered with;
--Short (one sentence) description of the business;
--Copy of Passport ID Page of President; Vice-President; and/or Country Representative
The MoFA then sends the information to AISA to license the entity. Once the AISA forms are completed, information on the organization is also sent to the Afghanistan Central Business Registry (ACBR) for registration. The ACBR facilitates the registration of businesses, combining all of the functions previously performed by the Commercial Court, the Ministry of Justice (MoJ) and the Ministry of Finance (MoF). . The ACBR issues the partner a tax identification number (TIN), registers the business and publishes the information in the Official Gazette of the MoJ. The partner receives a registration number from the ACBR which then allows AISA to issue the license.
The entire process takes about one to two weeks. Licensing fees range from USD $100 to $1000, depending on the size of initial investment.
Please contact the Feraidoon Zaki (firstname.lastname@example.org) at the Commercial Office, Embassy Kabul for any support requirements.
How do I sell to the Afghan Government?
The Government of the Islamic Republic of Afghanistan (GIRoA) has established a procurement agency to facilitate the purchase of goods and services for the Government. This agency, the Afghanistan Reconstruction and Development Service (ARDS), uses internationally recognized procurement procedures. Companies that wish to receive procurement notices can do so by registering through email at email@example.com. Notices on new procurements are sent electronically to all companies registered with ARDS. ARDS also maintains a list of suppliers.
How do I protect my intellectual property?
Several general principles are important for effective management of intellectual property (“IP”) rights in Afghanistan. It is important to have an overall strategy to protect your IP. Your U.S. trademark and patent registrations will not protect you in Afghanistan. There is no such thing as an “international copyright” that will automatically protect an author’s writings throughout the entire world. Protection against unauthorized use in a particular country depends, basically, on the national laws of that country. However, most countries do offer copyright protection to foreign works under certain conditions, and these conditions have been greatly simplified by international copyright treaties and conventions.
Registration of patents and trademarks is on a first-in-time, first-in-right basis, so you should consider applying for trademark and patent protection even before selling your products or services in the Afghan market. It is vital that companies understand that intellectual property is primarily a private right and that the U.S. Government generally cannot enforce rights for private individuals in Afghanistan. It is the responsibility of the rights' holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. Companies may wish to seek advice from local attorneys or IP consultants who are experts in Afghan law. The U.S. Embassy provides a list of local lawyers here.
While the U.S. Government stands ready to assist, there is little which can be done if the rights holders have not taken these fundamental steps necessary to securing and enforcing their IP in a timely fashion. Moreover, in many countries, rights holders who delay enforcing their rights on a mistaken belief that the USG can provide a political resolution to a legal problem may find that their rights have been eroded or abrogated due to legal doctrines such as statutes of limitations, laches, estoppel, or unreasonable delay in prosecuting a lawsuit. In no instance should U.S. Government advice be seen as a substitute for the obligation of a rights holder to promptly pursue its case.
It is always advisable to conduct due diligence on potential partners. Negotiate from the position of your partner and give your partner clear incentives to honor the contract. A good partner is an important ally in protecting IP rights. Consider carefully, however, whether to permit your partner to register your IP rights on your behalf. Doing so may create a risk that your partner will list itself as the IP owner and fail to transfer the rights should the partnership end. Keep an eye on your cost structure and reduce the margins (and the incentive) of would-be bad actors. Projects and sales in Afghanistan require constant attention. Work with legal counsel familiar with Afghanistan laws to create a solid contract that includes non-compete clauses, and confidentiality/non-disclosure provisions.
What are the leading sectors for U. S. Export and Investment in Afghanistan?
- Construction Services
- Construction Materials
- Mining and Power
- Labor-intensive Manufacturing
- Opportunities and Resources
- Transportation and Logistics
- Dried Fruits and Nuts
- Dairy Products
- Skins and Leather
- Meat Processing
- Cotton and Sugar
- Mills and Baking
- Non-traditional Products
- Processing and Packaging
- Cold Storage and Transportation
For more detailed information regarding all aspects of doing business in Afghanistan, including primary export /import markets, please consult the Afghan Commercial Guide by clicking here
What are the Import Tariffs like in Afghanistan?
Afghanistan maintains the lowest import tariffs in the region. A new tariff regime (dated March 21, 2010 and amended in December 2010) reduced tariff rates for 18 tariff lines (covering beverages and textile items) and increased tariff for 177 tariff lines (mostly on fruits and vegetables, timber, ceramic tiles and some steel products.)
The simple average tariff in 2009 was 5.86% and in 2010, 5.61%. In 2009 the average weighted rate was 6.4% and in 2010, 7.5%.
The total number of tariff bands was simplified to the following 11 categories:
- essential food and non-food products, 2.5%;
- raw materials, 1%;
- fats and oils, 3.5%;
- food and textile, metals, 10%;
- kerosene, oil products and articles from leather, 8%;
- gasoline for vehicles and jet fuel, 12%;
- machinery equipment 0%;
- petroleum products, 5%;
- other import goods, 16%;
- marble, 20%;
- luxury and non-priority products, 25%.
Even at these revised tariff rates, Afghan tariffs will remain the lowest in the region, compared with average tariff rates in Pakistan of 15%, India, 13% and Tajikistan, 11%.
What are the visa requirements for entry into Afghanistan?
A passport and valid visa are required to enter and exit Afghanistan. Afghan entry visas are not available at Kabul International Airport. American citizens who arrive without a visa are subject to confiscation of their passport and face heavy fines and difficulties in retrieving their passport and obtaining a visa, as well as possible deportation from the country.
For the most updated requirements to obtain an Afghan visa, please contact the Embassy of Afghanistan located at 2341 Wyoming Ave. NW, Washington, D.C. 20008, phone 202-483-6410, fax 202-483-6488, here.
U.S. companies that require travel of foreign businesspersons to the United States should know that it can take an average of between 60 and 90 days for an Afghan citizen to receive a visa to visit the United States due to a lengthy clearance process. The visa application process, including the appointment request must now be completed on-line. Please see the U.S. Embassy website, here, for instructions.
State Department Visa website: here.
U.S. Embassy in Afghanistan: here.