Employment Guide to Hiring in Afghanistan | Salary, Laws & Taxes

1. Solutions Why Global Expansion Technology Tools Resources Speak To An Expert Back to Countrypedia Definitive Guide to Hiring in Afghanistan Find everything you need to confidently hire in Afghanistan - labor law, tax law, compliance, payroll, benefits and more. Capital Kabul Population 40.1 MM Monetary Unit Afghan afghani Download Guide Share Hiring In Afghanistan Hiring In Afghanistan Hiring employees compliantly in Afghanistan means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Afghanistan so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can: Labor Laws In Afghanistan Afghanistan Salary and Wages Income Tax in Afghanistan (a) Establish your own new legal entity, banking, accounting and payroll service in Afghanistan or Social Security in Afghanistan (b) use an Employer of Record like Global Expansion who can handle all of the details for you. Immigration Afghanistan Value Added Tax (Vat) Mandatory Benefits Of Afghanistan Need assistance hiring in Afghanistan? Contact us about our International EOR Service Payments And Invoicing in Afghanistan Accrued Benefits in Afghanistan Labor Laws In Afghanistan Payroll Accruals in Afghanistan Employment laws in Afghanistan are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Afghanistan employment laws and Afghanistan policies here. Why use Global Expansion to hire in Afghanistan Hi and welcome to Global Probation Period in Afghanistan Expansion, your partner in global Download Guide employment solutions. Probationary period should not exceed 2 weeks Can I help you find what you need? Annual Leave in Afghanistan

2. The employees are entitled to 20 days of paid recreational leave per year. Employees are entitled to 10 days of paid essential leave Holidays in Afghanistan 15th February Liberation Day 20th March Nowruz   First day of Ramadan 28th April Mujahideen Victory Day 1st May Labor Day   Eid al-Fitr   Day of Arafat   Eid al-Adha 19th August Afghan Independence Day   Ashura   Prophet's Birthday Onboard employees in days, anywhere in the world Maternity Leave Afghanistan A female employee is entitled to 90 days of paid maternity leave. 30 days of leave is granted before the delivery and the remaining is granted post delivery Paternity Leave Afghanistan There is no paternity leave Sick Leave in Afghanistan An employee is entitled to 20 days of sick leave with pay and other allowances per year. Employee’s sick leave for up to three days can be granted on the basis of a written notice. Work Hours in Afghanistan The typical workweek is Sunday through Thursday.  Business hours are typically 7:30 AM to 4:30 PM. The Labor Law sets a maximum of 40 work hours per week on average.

3. Overtime in Afghanistan The overtime may not exceed four hours a day An hourly wage for overtime is paid 25% more than the official working hour rate on ordinary days and 50% more than the hourly rate on off days (weekend or holidays) Termination of Employment in Afghanistan Under the Labor Law, an employment contract may be terminated under the following circumstances: agreement by the parties end of contract term retirement death of the employee a disability hindering the performance of work cessation of work for more than six months dissolution of the company or reduction in the number of staff final conviction leading to at least two months’ imprisonment of the employee disciplinary reasons refusal to work and an unsatisfactory probationary period. The procedures for dismissal generally require 30 days’ notice, although it is common for employers to provide one month’s salary and benefits in lieu of notice. Under some circumstances, the employee may also be entitled to severance pay. The Labor Law does not make any provision for immediate termination. Collective redundancies can generally not be carried out without the approval of the Ministry of Labor, Social Affairs, Martyrs and Disabled. Notice Period in Afghanistan If the employer wishes to terminate the employment agreement for any of the reasons provided for in the law, one month’s notice is required.  Although the law does not state explicitly that the notice must give in writing, it is generally recommended.  Termination upon immediate notice is possible during the probationary period, unless the reason for termination is unsatisfactory performance of the employee.  Employees may terminate the employment agreement without prior notice if the employer has violated the labor law or breached the provisions of the employment agreement.  Termination without notice to employer is also allowed in the case of incurable illness of the employee. In other circumstances, one month’s prior written notice is the general rule. Severance in Afghanistan When an employee is terminated because of cessation of work, reduction in staff, imprisonment or refusal to work, the

4. employer is obliged to make severance payments, based on the duration of employment as follows: less than one year: one month’s salary including entitlements; one to five years: two months’ salary including entitlements; five to ten years: four months’ salary including entitlements; and more than ten years: six months’ salary including entitlements. 13th / 14th Month Pay Yes There is no statutory requirement to pay the 13th or 14th month salary, however many employers have decided to offer the 13th month salary to their employees. There is no 14th month salary. Other payments over holidays: According to Art 50 or the Labour Code, when an employee will be paid in advance for authorised recreational leave. According to Art 44 in companies where the employer is unable to give holidays during public holidays because the work cannot be delayed, the employee will be entitled to 50% salary in addition to the normal overtime wage as an incentive. Afghanistan Salary and Wages Start working with an EoR Income Tax in Afghanistan The natural and legal persons are obliged to pay the tax as following based on the provisions of this Law:  - Resident persons: from overall income (income from both Afghan and Non-Afghan sources) - Non-resident persons: Only from Afghan revenue sources. The income tax of legal persons shall be 20 percent of taxable income for the tax year. The income tax shall be assessed and exchange to Afghani currency. The exchange rate shall be the average of open rates determined by Da Afghanistan Bank on the basis of buy rate at the end of each month. Effective as of 1 Hamal 1388, the new tax law reduced the monthly exemption from AFN 12,500 to AFN 5,000 (or prorated share for alternate payroll periods) per person. The tax law also added a 2 percent tax bracket. The Income Tax Law (Article 4) provides a monthly schedule of withholding rates.  The income tax of natural persons is calculated as below chart: Income slab per month Applicable Rate Between AFN 0 and 5000 0%

5. Between AFN 5000 and 12,500 2% of amount over 5000 AFN 12,500 to 100,000 150 + 10% of amount over 12,500 8,900 + 20% of the amount over 100,000 Over 100,000 Hire anyone, anywhere Social Security in Afghanistan Social Insurance Program Employed persons in private-sector establishments, cooperatives, social organizations, joint enterprises, and government are covered Social Insurance Program Contribution Employer 0% Employee 3% Start working with an EoR Immigration Afghanistan Applicants for an Afghan visa, regardless of the type of visa, are required to obey the laws of the Islamic Republic of Afghanistan.  Currently, the standard visa processing time is 5-7 business days but this may vary on an individual basis. Foreign nationals who have entered Afghanistan on an Entry Visa or a Work Visa are eligible to work.  This category of individuals must obtain a work permit from relevant agencies after entry to Afghanistan.  If employment is the purpose of your visit, an official letter of introduction from your employer, sponsoring government or organization stating the purpose and duration of your trip is required.  Please also include any sponsorship information and a financial guarantee for expenses that will be incurred in Afghanistan.  Applicants applying for a Work Visa should be below the age of retirement (65) and must provide their educational documents along with the visa application, invitation or introduction letter from the employer company in

6. Afghanistan (including passport information, the purpose of travel and duration of stay of the applicant).  Additionally, they should also have a confirmation letter from Consular Affairs Directorate-General of the Ministry of Foreign Affairs of the I.R. of Afghanistan. Those who intend to travel to Afghanistan for investment and business purposes can apply for an Afghan Business Visa by providing the following documentation: - Introduction or permission letter from the Ministry of Foreign Affairs, Chamber of Commerce, or other related official bodies - Work permit and business license - Address of the company - Documents providing the type of commercial activities, payment of taxes and bank account number Type of Visa/Permit Validity Documentation Eligibility OV is issued by the Afghanistan Missions abroad to the foreign nationals who hold Service and Special Passports or UN Laissez-Passer. It can also be issued to those who enter the territory of the Islamic Republic of Afghanistan for conducting official assignments in the diplomatic and consular missions of foreign countries, institutions, agencies or international organizations. Visa application form (physically signed) Passport size photo Passport with 6-month validity Official Visa (OV) Varies Letter of introduction with purpose of visit Green Card (for US citizens) Business Visa (BV) 1 to 3 years Introduction or permission letter from the Ministry of Foreign Affairs, Chamber of Commerce, or other related official bodies BV is issued to the foreign nationals who enter into the territory of the Islamic Republic of Afghanistan for the purpose of business, investment, marketing, commercial transactions, guardianship, liquidation, handling of corporate affairs, and commercial property; selling and buying property; participation in exhibitions; commercial events and other similar issues. Work permit and business license Address of the company Documents providing the type of commercial activities, payment of taxes and bank account number A new notarized bank

7. statement with having a minimum of US $100,000 deposit Police Clearance or No-Objection Certificate Visa application form (physically signed) Passport size photo Passport with 6-month validity WV is issued to employees, doctors, teachers, trainers, experts, engineers, pilots, the staff of ground transportation and foreign technical workers based on need and previous invitations for the purpose of working at Diplomatic and Consular Representations, UN Offices, International Organizations; Government and Non- Governmental Organizations; National and International Agencies. Visa application form (physically signed) Passport size photo Passport with 6-month validity Working Entry Visa (WV) 1 year Proof of educational qualification Invitation or introduction letter from the employer company in Afghanistan Need assistance hiring in Afghanistan? Contact us about our International EOR Service Value Added Tax (Vat) The Afghanistan Revenue Department (ARD) has announced that the country is moving forward with the implementation of its new VAT regime with effect from 22 December 2021 The standard VAT rate is 10% VAT Standard Rate 10%  

8. Hire anyone, anywhere Mandatory Benefits Of Afghanistan These are mandatory benefits as postulated by law These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay Statutory benefits also include social security benefits Hire anyone, anywhere Mandatory Bene?ts Overview Probationary Period Annual Leave Public Holidays Maternity Leave Sick Leave Overtime Pay Notice Period Severance Pay Social Security Benefits Payments And Invoicing in Afghanistan The taxable year is the solar year which starts from the first day of Jadi (21st December) and ends on the last day of Qaws (20th December). A legal person (but not a natural person) wishing to use a different taxation year may apply in writing to the Ministry of Finance explaining the reasons for the requested change. The Afghanistan Revenue Department (ARD) is responsible for the administration and collection of tax and non-tax revenue for the Government of Afghanistan Accrued Benefits in Afghanistan Christmas Bonus% 0% Christmas Bonus Over Vacations % 0% Severance per Year % Severance payments, based on the duration of employment are as follows: • less than one year: one month’s salary

9. (8.33% of annual salary) • one to five years: two months’ salary (16.66% of annual salary) • five to ten years: four months’ salary (33.33% of annual salary) • more than ten years: six months’ salary (50% of annual salary). Based on 20 days of paid vacation a year (5.49% of annual salary) Vacations % Notice % One month’s notice is required (8.33%) Christmas Bonus Over Notifications% 0% Based on 20 days of paid vacation a year (5.49% of annual salary) Vacations Plus% The total employment accruals as a percentage of salary per anum are equal to 22.15% of annual salary. Total percentage of Salary (yearly) Need assistance hiring in Afghanistan? Contact us about our International EOR Service Payroll Accruals in Afghanistan Country Accruals Additional Information Vacation 9.59% Maternity leave     90 Sick leave     5.48% Payroll Accruals Additional information Employment Accruals     Employees are entitled to 20 days of paid recreational leave and 10 days of paid essential leave. Therefore, Employers must take into account the costs associated with this paid leave. This equals 30 days of pay or 8.22% of annual salary (30/365 days) Annual Leave A female employee is entitled to 90 days of paid maternity leave. This equals 24.65% of annual salary (90/365) Maternity Leave  This equals 5.48% of annual salary (20/365) An employee is entitled to 20 days of sick leave with pay Sick Leave An hourly wage for overtime is paid 25% more than the official working hour rate on ordinary days and 50% more than the hourly rate on off days (weekend or holidays). The overtime may not exceed four hours a day Overtime Pay   Severance Pay Severance Pay is based on duration of employment: - • less than one year: one month’s salary including entitlements; • one to five years: two This equals 16.66% of annual salary (2/12 months)

10. months’ salary including entitlements; • five to ten years: four months’ salary including entitlements; and • more than ten years: six months’ salary including entitlements. Note: - For the purpose of this calculation, assume one to five years employment period. Social Security Contribution Employers are not required to make any contribution to the social insurance program.   Onboard employees in days, anywhere in the world Why use Global Expansion to hire in Afghanistan Establishing a branch office or subsidiary in Afghanistan can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Afghanistanian labor laws are complex. The company also has a responsibility to comply with specific employment practices dictated by Afghanistanian law to maintain its good standing as an equal opportunity employer. Global Expansion makes it easy for you to expand into Afghanistan. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees. We enable you to stay in control of everything. Our Afghanistanian Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.   Ready to hire anywhere in the world? Grow your team the right way with Global Expansion. Request a Proposal Contact Solutions Why Global Expansion Tools United States Employer of Record How we’re different CountryPedia United Kingdom Employment Compliance About GX Global Hiring Guides Follow 7,083 Portugal Global Immigration Technology Resources France Global Taxes How we’re different Articles Philippines Global Payroll About GX Blog

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