6 in every 10 mid-level taxpayers evade taxes

KABUL (Pajhwok): If active,  on average, 15,000 mid-level taxpayers deny paying an estimated 17 billion afghanis amount in taxes annually in Afghanistan, Pajhwok Afghan News has learnt.

An official at the Ministry of finance (MoF) said some individuals in power or being powerful refused to pay taxes. They included parliament members and those having close links with government officials and tribal elders, he said.

Producers or business companies with investment or products value ranging between five hundred million to one billion afghanis are considered middle level taxpayers. The criterion is different for other provinces.

NGOs, wedding halls, restaurants, hotels, hospitals, tourist agencies, schools and others are in the category of middle level taxpayers provided their investment could meet the defined standards.

According to Amena Ahmadi, head of middle-level taxpayer department at the MoF, of total 23,000 middle level taxpayers, 9,955 paid 10 million afg in 2015, while in 2016 of the total 25,500 middle level taxpayers, 13,000 paid 13 billion afs.

She added during the first five months of the ongoing year, 7,000 middle level taxpayers of the total 25,500 paid 5.4 billion afs in tax.

Pajhwok statistics show since fiscal year 2015 until May 2017, among every 10 middle level taxpayers, six evade taxes. Some of the taxpayers might have been evaded tax while some might have been inactive.

The statistics also show,15,000 middle level taxpayers on average had escaped taxes if they had been active during the past two and a half years.

If had been active and paid taxes, the tax of 15,000 taxpayers being paid to the government revenue is estimated at around 41 billion afghanis over the past two and half years.

The middle level tax department refused to provide the list of these 15,000 tax evading companies to Pajhwok. The department officials said work on preparing the list was underway and a copy of the list would provided to Pajhwok when completed.

They, however, provided a list of 14 health institutes, 19 schools and higher educational institutes and 19 hotels in Kabul, which do not pay taxes.

Factors behind tax escape

Amena Ahmadi said administrative corruption, misuse of authority or use of influence, power and lack of awareness about the law were main reasons behind the non-payment of taxes.

According to the income tax law, a taxpayer counts his/her income and pays the tax, but some individuals do not disclose their sources of income and thus escape tax.

Yousuf Ghaznavi, an investigative officer at MoF, said some business markets owned by parliament members or people who have close ties with government and tribal elders refused to pay taxes.

He said: “Haji Ramzan, who owns a huge garments market in Metab Qala area of Kabul has not paid taxes over the past few years. But I will not let him and will take the tax from him. Some markets in Shahr-i-Naw area show strong resistance to paying taxes.”

“Our local teams cannot be blamed for the situation, I told them not to take bribe and they also are often threatened by powerful individuals.”

“Some show them gun bullets and others offer bribe in order not to ask them for tax. They are so powerful that they can challenge our president and minister who according to them cannot ask them for tax.”

Abdul Qayyum Arifi, a university teacher, said administrative corruption, the lack of professional individuals and taxpayer encouragement programmes were some of the reasons behind tax evasion.

He said the government, specially the MoF, in the first phase should take effective measures to control corruption and ensure the law was implemented on every citizen equally.

Arif said MoF should work to enhance the capacity of its staff involved in tax collection and equip them with necessary machinery and tools.

He added the ministry should launch more awareness creating programmes for taxpayers who could be encouraged by decreasing levy and by making sure the income tax payment procedure was simple and easy.

Amena Ahmadi, who has been working as head of the middle level tax collection department, said the department had taken steps to facilitate taxpayers and ensure the law was implemented on every individual.

She said anti-corruption steps had been taken and recently five officials of the department, who wanted to take bribe from taxpayers, had been arrested.

She said individuals escaping tax would be dealt in accordance with the law, including advise in the first stage, cash fine, freezing of his/her business temporary, non renewal of the license and referral to the attorney office.

Ahmadi, without going into details, said in the past two years, the Finance Ministry held meetings with different individuals who refused to pay taxes. The meetings, she said, were successful and more taxpayers started paying taxes but the overall situation remained unsatisfactory.

She said some refusing taxpayers had been advised, others fined and 19 hotels closed by the ministry temporally, but their owners did not respect the law and tried to use their influence.

She said ministry employees were sometimes treated in the worst possible manner, abused and threatened with elimination after asking for taxes.

 “When we lock a company over refusing to pay tax, the next day the company is opened, when we complain to police, we find them less cooperative,” she added.

But Najibullah Danish, acting spokesman of the Ministry of Interior (MoI), said police had always cooperated with MoF officials and would expand their cooperation in future.

“We are ready to help the MoF in tax collection and if any of our department shows less interest, do inform us, we will take immediate action,” he said.

Individuals who evade taxes

Pajhwok tried to reach the individuals the MoF had listed as refusing to pay taxes.

Most of them could not be reached for comment and some refused to discuss the issue.

Mehrabuddin, in-charge of Hussainzada City Centre owned by Haji Ramazan in Mehtab Qela area of Kabul, said he had no permission to talk to the media and said Ramazan also had not time to talk to the media.

Also Pajhwok reporter went to Kabura Private Higher Education Institute to ask the concerned person regarding non-payment of taxes, but Dr. Mustafa Andesh, executive director of the institute, said Kapura was paying taxes but provided no documents because the person concerned was on leave.

He promised to talk to Pajhwok and show documents of tax payment next time, but when contacted again, he said his organisation had cleared all taxes and there was no need for talks in this regard.

Safiullah Jilani, head of Isteqlal Hotel in Kabul, said he had paid one-fourth of his taxes in 2016 and would pay the remaining as well.

He rejected the notion that hotel owners hid actual income, saying everything was on record. “Sometimes hotel owners give discount to consumers, which does not mean the income is hidden.”

Dr. Habib Mohmand, head of Mohmand Private Hospital, said from the past two years, the hospital had not been active. He said they had to pay fine and additional taxes to leaving the hospital inactive.

Dr. Nafaiullah, head of the Private Hospitals Union (PHU), said most of the private sector hospitals paid taxes. He said some private health centres might be refusing to pay taxes due to huge fines.

He said some taxpayers had been fined up to 10 million afs for not paying taxes in time and now it was difficult for them to clear the dues.

Ahmad Khalid Ziae, deputy director of Khana-i-Faham private school in Kabul City, said: “We have paid our taxes in three quarters, only one quarter is left and the fine from 2015 and 2016 has not been entered into the system.”

Rozena Azemi, head of Nazo Ana clinic, said she paid taxes and everything was clear with MoF.

nh/ma

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