Afghanistan gets tough on tax evasion

KABUL—Afghanistan is cracking down on tax evasion to repair its finances as the country’s economy struggles with renewed violence and the withdrawal of the huge coalition presence that fed business for years.

The departure of most foreign troops two years ago allowed the Taliban to take advantage of the security vacuum and escalate attacks on the government, hurting consumer and business confidence. Double-digit economic growth rates collapsed to almost zero a year after the withdrawal.

The Pentagon last week said it would redeploy 300 Marines in Afghanistan’s Helmand province, which has been on the brink of falling to the Taliban for months.

To plug persistently high fiscal deficits, the Afghan government in the past two years has served notice to scores of companies for tax evasion dating back as far as 2002, targeting both domestic and foreign firms with measures such as operating-license suspensions, according to the finance ministry.

Afghan and foreign firms say the tax regime has made the business environment even more challenging, citing new fees and uncertainty over arrears, just as the conflict with the Taliban-led insurgency is getting worse.

But the new regime, along with anticorruption measures, has sharply increased the government’s revenue collection, Finance Minister Eklil Hakimi told The Wall Street Journal in a recent interview.

Read the whole story from The Wall Street Journal.