Afghanistan: A Guideline to Payroll and Employer of Record

Run your business seamlessly with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Afghanistan.

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Overview

Situated at the crossroads of major historical civilizations, Afghanistan has long been renowned for its cultural diversity and is often called the "roundabout of the ancient world." Its strategic location has brought many people over the centuries through the region of Afghanistan, including Persians, Greeks, Arabs, Turks, and Mughals. This intermingling of cultures has produced a uniquely diverse and vibrant population in Afghanistan. The Afghan people have proven themselves to be highly skilled, talented, and able to contribute great richness to the workforce.

Do your organization's expansion plans require hiring employees in Afghanistan? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo – one of the top Global payroll providers, assists organizations worldwide with onboarding and managing employees in Afghanistan - processing payroll, managing local compliance requirements, benefits, and more.

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Kabul 

Currency

Afghani Afghan (AFN)

Official Language

Dari and Pashto

Fiscal Year

21 March - 20 March

Date Format

DD/MM/YYYY

Country Calling Code

+93

Other Languages

Uzbeki, English, Turkmeni, Urdu, Pashai, Nuristani, Arabic and Balochi

Time Zone

GMT +04:30

Global Payroll

Overview

Handling payroll for a widespread workforce can pose a major challenge for any firm. The added complication of compliance can make things worse and drastically affect the time and efforts that can be used in other equally important aspects of an organization's development. 

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform, Neeyamo Payroll.

How is payroll calculated?

Neeyamo acts as a personalized payroll tax calculator for employers looking to outsource their payroll needs. Neeyamo ensures adherence to local regulatory requirements using multi-level controls, provides timely and accurate payroll courtesy of our experts worldwide, and uses a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare.

Employee Taxes

The income tax of legal persons shall be 20% of taxable income for the tax year.

The income tax shall be assessed and exchanged for Afghani currency.

Employer Taxes

Income Tax in Afghanistan

Natural and legal persons are obliged to pay the tax as follows, 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% of taxable income for the tax year. 

The income tax shall be assessed and exchanged for Afghani currency.

The exchange rate shall be the average of open rates determined by Da Afghanistan Bank on the basis of the 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% tax bracket. 

The Income Tax Law (Article 4) provides a monthly schedule of withholding rates.  

Social Insurance Program

Employed persons in private-sector establishments, cooperatives, social organizations, joint enterprises, and government are covered.

Payroll Cycle

Overview

Undoubtedly, payroll is a critical aspect of any organization. The Pay cycle is a notable feature that provides a sense of accountability for an employee to be paid consistently for their work.

Frequency

Afghanistan's Payroll Frequency is Monthly.

13th Month Cycle

There is no statutory requirement to pay the 13th or 14th month's salary. However, many employers have decided to offer the 13th month's salary to their employees. There is no 14th month salary.

Global Work

Overview

What is an Employer of Record?

An Employer of Record service provider helps you eliminate the hassle of handling the complexities of setting up a new employee in remote locations. They act as legal employers, facilitate salary payments, and handle everything from health care and insurance, travel insurance, payroll taxes, and employee benefits to comply with local tax laws and regulations.

This ensures that the client company can safely focus on the employees' everyday tasks, knowing it has a cost-effective solution as it continues its global expansion.

HR Mandates and Practices

Minimum Wage

There is no minimum wage for a permanent worker in the private sector. However, the minimum wage for a permanent worker in the government sector is AFN 6000 per month. For a nonpermanent private sector employee, the minimum wage is 5500 AFN.

Overtime

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.

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 (weekends or holidays)

Data Retention Policy

There is no general personal data protection law. Regulator: There is no data protection authority. Summary: Whilst there is no general data protection law in Afghanistan, the Constitution of Afghanistan provides for the right to confidentiality and privacy of communications.

Hiring and Onboarding Requirements

Hiring

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:

  1. Establish your own new legal entity, banking, accounting, and payroll service in Afghanistan, or
  2. use an Employer of Record like Global Expansion who can handle all of the details for you.

Onboarding

New employees are required to bring the following:

  • Personal Details(Name, Surname, DOB)
  • Passport
  • Full Birth Certificate
  • Identity Document
  • Proof of educational qualifications
  • Police Clearance Certificate from the country of origin

Probation

The probationary period should not exceed two weeks.

Leave

Public Holidays

The following leaves are observed in Afghanistan

  • February 15: Liberation Day

  • April 22: Eid al-Fitr

  • April 23: Eid al-Fitr Holiday

  • April 24: Eid al-Fitr Holiday

  • April 28: Afghan Victory Day

  • May 1: Labor Day

  • June 27: Day of Arafat

  • June 28: Eid al-Qurban

  • June 29: Eid al-Qurban

  • June 30: Eid al-Qurban

  • July 28: Ashura

  • August 15: Anniversary of Taliban Rule

  • August 19: Independence Day (National Day)

  • August 31: Anniversary of the Withdrawal of Foreign Troops

  • September 9: Martyrs and Ahmad Shah Masoud Day

  • September 27: The Prophet's Birthday (Tentative Date)

If National Day falls on a weekend, a day in lieu is granted either on the day preceding or following the weekend.

Payments over holidays:

According to Article 50 of the Labour Code, an employee will be paid for authorized recreational leave in advance.

According to Article 44, in companies where the employer cannot give holidays during public holidays because the work cannot be delayed, the employee will be entitled to 50% of the salary in addition to the normal overtime wage as an incentive.

Annual Leave

Men and women in Afghanistan are entitled to 20 days of paid recreational leave per year. Employees are entitled to 10 days of paid essential leave.

Maternity Leave

A female employee is entitled to 90 days of paid maternity leave. Thirty days of leave is granted before the delivery, and the remaining is granted post-delivery.

Paternity Leave

There is no provision for paternity leave.

Sick Leave

Employees are 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 based on a written notice. 

Termination

Overview

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

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 be given in writing, it is generally recommended.

Termination upon immediate notice is possible during the probationary period unless the reason for termination is the 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 the 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 Pay

When an employee is terminated because of cessation of work, reduction in staff, imprisonment, or refusal to work, the 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.

Visa

Overview

Afghan visa applicants must follow the Islamic Republic of Afghanistan laws and have a standard processing time of 5-7 business days. Work visa applicants must obtain a work permit from relevant agencies and provide an official letter of introduction from their employer, sponsoring government, or organization. Applicants must be below 65 years old and provide educational documents, visa applications, invitations, and confirmation letters from the Consular Affairs Directorate-General of the Ministry of Foreign Affairs. Afghan Business Visa applicants must provide an introduction, work permit, business license, address, and documentation for commercial activities, tax payments, and bank account numbers.

Employee Background Checks

Legal and Background Checks

Background checks are not mandatory in Afghanistan, but if this is a requirement of employment, an employer may legally conduct one and/or ask for a police clearance from the PNG authorities.

  • Educational Background 

  • Employment History

  • Employment Verification

  • Passport Validation

Last updated on November 15, 2023

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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