Doing business in Afghanistan

How quickly can I set up a business?

What is the minimum investment needed?

Initial Investment: There is no statutory requirement for an initial investment in Afghanistan. However, companies are required to declare that their initial capital minimum amount is AFN 1,000,000 in the Articles of Association when registering with the Afghanistan Central Business Registry (ACBR).

Certain regulated sectors, such as banking, telecom, and construction, require higher paid‑in capital as per the ministry rules.

In certain sectors, obtaining a new license requires a bank guarantee of AFN 500,000. These sectors include trading, logistics, large‑scale mining, insurance, transit, air services, and cargo; all other sectors do not require such a bank guarantee.

Licensing Fee: Licensing fees vary depending on activity type. According to MoIC’s official fee schedule, the annual company license fees are:

• Mining extraction company: AFN 200,000
• Petroleum materials extraction company: AFN 300,000
• Security services company: AFN 1,000,000
• Private schools: AFN 10,000
• All other business: AFN 18,500

Sources:

• MoIC – Investment Facilities
• Embassy of Afghanistan (Doha) – Tax & Duties

How can I raise finance?

A newly incorporated company is typically funded by its share capital.

Businesses can get a loan from private banks by providing land or a building as a guarantee, with a legitimate business license and other required documents.

What are the legal requirements for setting up my business?

To establish a business in Afghanistan, registration is done through the Afghanistan Central Business Registry (ACBR) under the Ministry of Industry and Commerce (MoIC).

Process Steps

1. Submit initial documents to ACBR (business plan, office rent contract, ID/passport, photos).
2. Choose a business name and verify availability.
3. Prepare incorporation documents, including Articles of Association and shareholder details (for companies).
4. Submit the application to MoIC for review and approval.
5. Obtain a business license in the relevant category (industrial, commercial, or service).
   • During the process, the company or

individual is also assigned for obtaining Taxpayer Identification Number (TIN), a post box, and a phone number.

Note that certain types of businesses may need a sector-specific license from a relevant line ministry in addition to the ACBR license.

• MoIC – BUSINESS REGISTRATION
• Embassy of Afghanistan (Doha) – Registration Procedure

What structure should I consider?

In Afghanistan, the Ministry of Industry and Commerce (MoIC) recognizes several legal structures:

• Sole Proprietorship (Individual License): For single‑person businesses, the simplest form of registration.
• Partnership: For two or more individuals jointly conducting business under shared ownership and liability.
• Limited Liability Company (LLC): Offers flexibility and limited liability protection for shareholders.
• Corporation: A separate legal entity formed under Articles of Incorporation; suitable for larger or multi‑owner enterprises.
• Branch Office (Foreign Companies): Foreign companies may establish a branch office in Afghanistan. A branch is not a separate legal entity but an extension of the foreign parent company. It must register with MoIC/ACBR.

 Direct Source:

• MoIC – Business Licensing

What advice can you give me in regards to payroll and taxation requirements?

• Locations: Kabul is the main hub; Herat, Mazar‑e‑Sharif, Kandahar, and Jalalabad are growing trade centres.
• Payroll and HR practices in Afghanistan are formally guided by the Afghan Labor Law, which sets standards for employment contracts, working hours, leave entitlements, and termination procedures.

Tax and Regulatory Requirements:

Withholding Taxes:

• Salaries/wage withholding tax (monthly; progressive rates):
  • AFN 0 – 5,000 → 0%
  • AFN 5,001 – 12,500 → 2%
  • AFN 12,501 – 100,000 → 10%
  • AFN 100,000 and higher → 20%
• Contractor withholding tax:
  • 2% for licensed contractors (with TIN)
  • 7% for unregistered contractors
• Rent withholding tax (monthly):
  • AFN 0 – 9,999 → 0%
  • AFN 10,000 – 100,000 → 10% flat
  • AFN 100,00 and higher → 15% flat
• Interest/dividends withholding tax:
  • 20% flat

Business Receipts Tax:

• Assessed on gross turnover before any deductions
• Rates:
  • 2% on the industrials sector
  • 5% on airlines and regular hospitality industries
  • 10% on telecom and superior hospitality industries
  • 4% on all other business
• Can be claimed as a deduction against net taxable profits

Corporate Income Tax:

• 20% flat rate on net taxable profits

VAT

• n/a – Law is passed but currently not in effect

Reporting:

• Monthly filings for payroll, rent, and contractor withholding tax.
• Quarterly filings for BRT tax.
• Annual corporate income tax returns with supporting documents.
• NGOs must additionally submit semi-annual project reports to the Ministry of Economy.

Tax Clearance:

• Taxpayers must obtain annual tax clearance letters
• Taxpayers are also subject to tax audits

Is there anything else that I should know?

Investors should be aware that Afghanistan has established investment facilities and legal frameworks designed to encourage private sector growth.

Key points:

• NGO Licensing: Local and international NGOs need to register and obtain licensing through the Ministry of Economy (MoE). The registration fees are AFN 50,000 for local NGOs and USD 5,000 for international NGOs. NGO licenses are renewable every three years.
• Investment Facilities: Streamlined licensing and registration processes for new businesses are available under MoIC oversight, with incentives for qualifying investors.
• Legal Protections: Contracts and disputes are overseen by the Ministry of Justice, with English resources available for foreign investors.
• Repatriation of Profits: Profits can be freely repatriated, though subject to dividend withholding tax.
• Dividend Deductibility: Dividends can be claimed as a deduction against taxable net profits (to avoid double taxation of shareholders) if tax was appropriately withheld at the time of payment.
• Banking Access: Banks are capable of holding deposits, conducting domestic and international wire transfers, and issuing financing. The Afghan Credit Guarantee Foundation (ACGF) supports lending through credit guarantees.
• Embassy Support: Afghan embassies abroad (Doha, Dubai, etc.) assist investors with registration guidance and coordination with MoIC.
• Sanctions Clarification: Afghanistan is not subject to comprehensive country-wide sanctions; OFAC’s General License 20 authorizes ordinary commercial business transactions, provided they do not involve blocked individuals or entities.

Sources:

• MoIC – Investment Facilities

• Afghanistan Embassy in Doha – Investment in Afghanistan
• Ministry of Justice – English Resources
• OFAC – Afghanistan-Related Sanctions