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In the Name of Allah, the most Gracious and Merciful

LAW ON DOMESTIC AND FOREIGN

PRIVATE INVESTMENT INAFGHANISTAN

Mohammad ‘Samim Faizy’

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General Provisions

• Purpose of law• The purposes of this Law are to promote the role of private

investment, both domestic and foreign, in the economy of the country, and to create a legal regime together with an administrative structure that will encourage, support and protect foreign and domestic private Investors in order to promote economic development, expand the labor market, increase.

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Cont…• production and export earnings, promote technology transfer,

improve national prosperity and advance the standard of living.

• material goods and services in an enterprise approved by the High Commission on Investment.

• “Investment”: Utilization of tangible and intangible capital in the form of cash, credit,

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Permitted areas of investment

• According to provisions of this law and the Commercial Law, qualified domestic or foreign entities legally can invest in all sectors of the economy—whether production or service-related.

• Non Permitted areas of Investment• Private sector is not allowed to invest in those areas which is

restricted by Islam and government of Afghanistan.

• Ex; narcotics, wine, casinos, exploration of natural resources.

• Domestic, foreign, or joint ventures may take any of the following forms:

• One hundred percent domestic private equity.

• One hundred percent foreign private equity.

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Cont…

• Any combination of domestic and foreign private equity.

Joint venture between the Government of Afghanistan

and the private sector, whether domestic or foreign.

• In the last two categories, the parties shall determine the

percentage of equity by mutual consent.

• Company should prepare and provide their accounts according to international standard to relevant authority for auditing.

 

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Coordination and Monitoring

• The high commission which is composed of • 1. Minister of Commerce• 2. Minister of Justice• 3. Minister of Foreign Affairs• 4. Minister of Finance• 5. Minister of Planning• 6. Minister of Reconstruction

• Will coordinate and monitor the office of private investment.

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Cont…

• The High Commission shall have two rotating seats for the private sector, with one-year terms. For the first year, the Chamber of Commerce will elect these representatives. Subsequently, investors will propose to the High Commission a new modality of electing these representatives.

• The Office of Private Investment (roles, responsibilities and organizational chart) will be created within the framework of the Ministry of Commerce.

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Cont…

• The Director of the Office of Private Investment mentioned shall serve as the Secretary of the High Commission.

Thanks from your attention

Azamt Khan will Continue…….

Registration

(1) An enterprise shall be deemed approved when it is accepted by the Commission or the Office

The office shall be obliged to keep and maintain records of approved enterprises.

(2) Approved Enterprises may operate either as:

1- Business entities organized under Afghan law, [or] 2- Business entities organized under the laws of another nation, but registered and approved to do business in Afghanistan in accordance with the laws of Afghanistan.

(3) Approved Enterprises may have ownership in any of the following forms:

• - One hundred percent (100%) ownership by Investors.• - A joint venture between the Government of Afghanistan and private

Investors.

Applying for Registration

(1) The application for approval of an enterprise shall be submitted to the Office. The application shall contain the details required by the Commission in accordance with this law, and the relevant Regulations, Rules and Procedures.

(2) A Person may register an existing enterprise or an enterprise that is in the process of formation.

procedures for registration of an enterprise or denial of registration(1) Within a fixed time period, the Commission and the Office,shall

make a decision regarding the registration of an entity’s application that meets the terms established by this Law, and shall inform the applicant.

(2) An application for registration can only be denied when it is not submitted in accordance with this Law. [If] the Commission or Office [has denied an application, it] shall give an explanation in writing for the denial.

(3)When the applicant amends the application according to paragraph (2) of this Article, the applicant may re-apply.

4) If the Commission or Office does not send the reply for denial within the fixed period, the entity shall be deemed to be an approved enterprise.

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Cont...(5) If the Commission or Office has accepted the registration

of an existing entity, it shall immediately register such entity and provide a certificate of registration to the entity evidencing its status as an Approved Enterprise.

(6) If the Commission or Office has accepted the application for registration of an entity that has not yet been formed, it shall register such entity without delay and provide a certificate of registration to the entity. Thereafter, the entity must establish its legal form within a fixed time period as determined by the Commission

Reporting

(1) An Approved Enterprise must immediately notify the Office if there has been a change in its ownership, capital structure, or contribution of additional capital.

(2) An Approved Enterprises shall annually file an update with the Office within ninety (90) days of the end of the fiscal year, which shall include the information referred to in Article 11 (registration) of this Law, along with such other information as the Commission or the Office deems appropriate.

Loss of Approved Enterprise Status

(1) The Status of an Approved Enterprise shall be revoked when:

• - The Approved Enterprise entity is dissolved;• - The Approved Enterprise can not continue to operate; [or]• - The Approved Enterprise violates the provisions of this

Law.

(2) The Commission or the Office shall grant the Approved Enterprise a period of three (3) months to remedy the violation.

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Benefits, Waivers and Obligations of Approved Enterprises

TAXES

The Government shall grant the short term, medium term and long term tax form the private investment.

 

CUSTOMS DUTIES 

There will be no export charges on the products of the approved enterprises on export for four years from the start of production.

RENTING OF LAND

Foreign investors, based on the classification of their Approved Enterprise as short-term, medium-term or long-term, may lease real estate for ten, twenty or thirty years, respectively. However the high commission can extend the period of the lease.

ACCESS TO BANKINGall the investors have the right to open banking account in Afghanistan both in afghan or in foreign currency.

labor and employment• An approved enterprise can hire foreign person in order to

conduct its business activities.

• Whenever possible, private investors are encouraged to employ Afghan personnel who posses the relevant skills, and thus assist in furthering their technical and professional development.

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