AFGHANISTAN

PUBLIC POLICY
POLICY
AFGHANISTAN
PUBLIC
RESEARCH
ORGANIZATION
RESEARCH
ORGANIZATION
www.appro.org.af

Policy Brief
October 2016

www.appro.org.af

Administrative Corruption
in Tax Collection

About APPRO:

Background

Afghanistan Public Policy Research

Organization (APPRO) is an independent social research organization with
a mandate to promote social and
policy learning to benefit development and reconstruction efforts in
Afghanistan and other less developed countries through conducting
applied research, monitoring and
evaluation, and training and mentoring. APPRO is registered with the
Ministry of Economy in Afghanistan
as a non-profit, non-government organization. APPRO is headquartered
in Kabul, Afghanistan, with offices in
Mazar-e Shrif (north), Herat (west),
Kandahar (south), Jalalabad (east),
and Bamyan (center). APPRO is also
the founding organization of APPROEurope, registered in Belgium.

By all accounts, corruption has become

part of the daily life in Afghanistan with
administrative corruption in taxation
and business licensing becoming a
major concern for the government and
its international donors in Afghanistan.
There is broad consensus that administrative corruption undermines development and government legitimacy and
effectiveness.

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Email: mail@appro.org.af
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Fax: +32 2 895 36 02
This and other publications by APPRO
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Citizens are subjected to 32 different

expressions by the corrupt officials to
alert them to the fact that receiving
services will require the payment of
bribes. The overwhelming majority of
the citizens do not resist requests for
bribes due, mainly, to the fact that they
are afraid of questioning authority and
fear consequences. These dynamics
have given to the widespread impression among international observers
that in Afghanistan there is a culture
of corruption. This however, has
not always been the case. Until 2001
there was a tradition in Afghanistan of
shaming the families of those who were
thought to be involved in bribery. Today,
those who refuse to take bribes are
looked down upon as being incapable
or lacking courage.
When confronted with the charge that
taking bribes is against the principles
of Islam, corrupt officials and various
types of professionals claim that
taking foreigners money in bribes is
ghanimat, a war trophy, in a holy war

that apparently has not yet ended.

Further, some even claim that they
are taking as much bribe as possible
because it belongs to the Afghan
people. Overwhelmingly, public
opinion about administrative corruption in Afghanistan does not agree with
this rationalization. APPROs work on
corruption since 2010 shows clearly
that administrative corruption is seen
by the vast majority of Afghans as
self-serving and in violation of Islamic
principles. That corruption happens
because the perpetrators are not
prosecuted and thus have no fear
of the consequences of abusing the
public and that the public feels unprotected if it dares to contest demands
by corrupt officials for bribes in return
for services.
Since 2014 the Government of Afghanistan has given renewed urgency to the
need to curb administrative corruption.
To capitalize on this political will APPRO
and its partners established Citizens
Forum Against Corruption (CFAC) as
an arena in which civil society organizations, private sector actors, and
government officials wishing to resist
corruption interact and explore ways in
which endemic administrative corruption could be brought under control
through evidence-based advocacy
and dialogue. CFAC focuses on the
interactions between taxpayers and
officials at the Ministry of Finances
Revenue Department through the
Small, Medium-sized, and Large-sized
Taxpayers Offices (STO, MTO, and LTO).

Arbitrariness: The organizational structure

of the tax offices is not clearly delineated
Inefficient Bureaucracy: The prevalent ineffi- and there is a general lack of procedural
ciency of government administrative bureau- information. Changes in the Tax Law are not
cracy often acts as the incentive for taxpayers sufficiently disseminated, leaving everyone
to seek short cuts through paying bribes to
at the mercy of self-serving interpretathe willing officials. To illustrate, the complitions by corrupt tax officials. Arbitrarily, the
cated and ever-changing financial declaration tax payable by a private health clinic, for
form for reporting revenue and calculating
example, is calculated by the bribe seeking
the tax payable is 15 pages long and carries
tax officer on the basis of the month with
a penalty of 20,000 Afghanis (approximately
the highest revenue and extrapolated to the
$400 USD) if wrongly completed. Completing whole year, forcing the taxpayer into negotiathis form is time consuming and risky for the tions with the tax officer about how to lessen
taxpayer and creates opportunities for the
the amount of tax payable. A lack of oversight
corrupt official to offer assistance and fast
and independent validation of income and
tracking services in return for bribes.
tax liability mean that corrupt officials have
Methods of Seeking Bribes: Corrupt officials much latitude over establishing the amount
of taxes and penalties owed.
systematically find faults with tax payment
forms, however perfectly completed,
Recommendations
claiming that the forms are wrongly
completed, additional forms need to be filled Simplify and Standardize Tax Forms:
Until 2001 there was
out, or that extra documentation is needed.
There little or no need for a 15-page
a tradition in AfghanDelays
in
the
submission
of
tax
forms
often
document to be filled out by the
istan of shaming the
result
in
missing
deadlines
for
tax
declarataxpayer. There is also no justification
families of those who
tion and the payment of fines for lateness in
for a penalty of around 400 USD for
were thought to be
submission. Faced with this, the taxpayer is
involved in bribery.
incorrectly completing a form. The form
given the choice of paying a bribe to have the
should be shortened and the penalty
problem taken care of by a corrupt official
removed.
or complete the paperwork which often
takes months and incur the payment of the Provide Submission Procedures and
Guidance: All three tax collecting offices,
accumulated daily fine for being late.
STO, MTO, and LTO, should provide clear
Digitization of Tax Calculation and Payment:
guidelines in written form and inforWith donor support, the MTO has intromation points within their premises for
duced a new computerized tax payment
taxpayers with questions.
system. Computerization has not remedied
Provide Full Access to Tax Law and
tax processing delays because, according
Amendments: All requests for informato the taxpayers, the system is often down
tion and documentation by tax officials
and there are always long delays in entering
must be tied to the legal provisions
the data into the system. In addition to
within the Tax Law and its various
delays, corrupt officials can force bribes by
amendments. In cases of disagreement
intentionally entering the wrong data on
the onus must be on the tax official to
taxpayers forms.
provide legal support for the requests for
documents and information.
Administrative corrup- Aggressiveness and Unprofessionalism
tion is seen by the vast in Service Provision: Tax officials are
majority of Afghans
described as impolite and aggressive toward Increase Tax Law Literacy: Consideration needs to be given to Ministry of
as self-serving and in taxpayers. There is widespread belief that
Finance-supported initiatives on Tax Law
violation of Islamic
corrupt tax officers work in collusion as part
literacy with a focus on the legal requireprinciples.
of an organized network. There are also
ments and the rights and obligations of
widespread rumors that positions dealing
the taxpayers
with taxpayers are bought and sold, with
each position having a price tag based on
Such initiatives would work best if carried
its potential to collect bribes. There is also
out in close collaboration with taxpayers
a general fear of retaliation by corrupt tax
groups and business associations.
officials if a taxpayer resists or complains
Address Small Businesses Needs:
about paying a bribe.
Particular attention should be paid to
Intentional Bureaucratic Confusion and
how to tax micro and small businesses
Citizens are subjected
to 32 different expressions by the corrupt
officials to alert
them to the fact that
receiving services will
require the payment
of bribes.

Drivers of Corruption in Taxation

which typically lack records of their

government and donors to create opportransactions, have little or no literacy
tunities for the emergence of qualified,
or business management systems, and
independent, and licensed tax consulthus are at the mercy of predating tax
tants.This would be particularly effective
officials who could request arbitrary
if coupled with digitalized tax forms to be
amounts as taxes payable. Small and
completed online by the taxpayers.
micro businesses falling into this category
include shopkeepers, mechanics, or small Monitor and Act on Taxpayer-Tax
Collector Interactions: As a deterrent to
restaurants.
bribery initiated by both the taxpayers
Make Efficient and Effective Use of
and corrupt tax officials, consider
Digitization: There is no reason for not
installing cameras that record all interacallowing taxpayers to complete their tax
tions in STO, MTO, and LTO and keep the
forms online and receive confirmation
records for at least one month.
The typical price to
as to its state of completion. Removing
Strengthen and Protect Citizens Forum
secure the assisthe human factor in this process is likely
tance of a corrupt tax
Against Corruption (CFAC): CFAC was
to reduce opportunities for meddling by
official is 50 percent
established in early 2016 to guide and
corrupt tax officials.
of the taxes payable
protect victims of tax corruption. CFAC
and penalties owed.
Establish a Class of Professional,
brings together civil society organizations
Of this 50 percent, half
Independent Tax Consultants: Since
and businesses to protect themselves
is paid to the governtaxpayers have little time to go through
and advocate for legal and administrative
ment while the other
the complicated process of completing
reform to curb corruption. Efforts should
half is taken as the
forms,
even
in
digitized
form,
and
be made, by civil society and governfee to fix the problem.
preparing
support
documentation,
there
mental authorities alike, to continue to
Many of the corrupt
is
a
firm
demand
for
professional
tax
support CFAC. For more information on
tax officials offer their
services as consulconsultants who could do this on behalf
CFAC, see: http://www.nac-pp.net/abouttants to the hapless
of the taxpayer for a small, competitive
cfac/
tax paying clients.
fee. Efforts should be made by the
If you dont pay
[bribes], your
taxes will not get
processed.