11/11/2014
Law on Private Investment in Afghanistan
Chapter One
General Provisions
Article 1:
the basis This Law is enacted pursuant to Article Ten of the Constitution of Afghanistan to encourage, support, and protect private investments and enterprises based on the free market economic system, and to regulate the affairs related thereto.
Article 2:
Purpose of law The purposes of this Law are to promote the role of private investment, both domestic and foreign, in the economy of the country, and to create a legal regime together with an administrative structure that will encourage, support and protect foreign and domestic private Investors in order to promote economic development, expand the labor market, increase production and export earnings, promote technology transfer, improve national prosperity and advance the standard of living.
Article 3:
[Definitions] of expressions The following terms shall have the meanings set forth below:
1. “Capital Assets” means all available capital and assets whether movable or immovable, including, without limitation, equipment and machinery.
2. “Commission” shall have the meaning set forth in Article 6 of this law.
3. “Foreign Investment” means Investment in the form of freely convertible foreign currency or contributions in kind, transferred from outside by a Foreign Person to the country.
4. “Foreign Investor” means a Foreign Person who has provided Foreign Investment in the country.
5. “Foreign Loan" means a loan, debenture, bond or other form of debt extended to an Approved Enterprise in freely convertible foreign currency by a Foreign Person for the purpose of enabling the Enterprise to carry on its business.
6. “Person” shall include the following:
“Natural Domestic Person” means an individual whose identity is recognized by applicable law.
“Legal Domestic Person” means a person that has been established in the form of a corporation, partnership, sole proprietorship, limited liability company, joint venture, association, joint stock company, trust or other entity under the applicable law.
“Natural Foreign Person” means an individual who has the citizenship of [a country] other than Afghanistan.
“Legal Foreign Person” means a person whose legal form is specified pursuant to laws other than those of Afghanistan.
7. “Infrastructure” means any equipment, facilities or service that is provided for the benefit of or utilized by the public or any section of the public and shall include, without limitation:
• Power generation or transmission facilities;
• Water supply and treatment facilities;
• Sewerage or sewage treatment facilities;
• Waste-treatment or disposal facilities;
• Airport facilities and facilities in the health and education sectors;
• Telecommunications and broadcasting facilities;
• Any other service or facility that is designated by the competent authorities as Infrastructure in accordance with the provisions of this Law.
8. “Investment” means currency and contributions in kind, including, without limitation, licenses, leases, machinery, equipment, and industrial or intellectual property rights, paid or provided for the purpose of acquiring shares of stock or [other] ownership interests in an Approved Enterprise.
9. “Natural Resources” means mines or natural deposits of oil, gas, gold, silver, coal or any other minerals, hydrocarbons, or other resources, whether in their natural state or under any kind of treatment.
10. “Approved Enterprise” means a business entity registered pursuant to the procedures set forth in Articles 12 of this law.
11. ICSID: means The International Center for Settlement of Investment Disputes referred to in Article 30 of this Law.
12. “UNCITRAL Rules” means the arbitration rules of the United Nations Commission on International Trade Law.
13. “Office” means The Afghan Investment Support Agency, established pursuant to Article 8.
(1).2 of this law.
Article 4: Permitted Investment (1) Except as otherwise set forth in Article 5 of this law, [all] Foreign or Domestic Persons may make investments in all sectors of the economy. (2) A Foreign Person may only make an Investment in the country through a Foreign Investment in [an Approved Enterprise] or through reinvestment from an existing Approved Enterprise.
Article 5: Areas Where Investment May be Prohibited, Restricted or Subject to Special Terms
(1) Investments in the following sectors shall be prohibited:
1. development of nuclear power;
2. establishment of casinos and similar establishments;
3. production of narcotics and other intoxicants; Except for section 2 of this paragraph, the Commission may, taking into consideration the national interests, from time to time make changes to these sectors.
(2) The Commission may from time to time limit the foreign beneficial ownership in certain industries, economic sectors or business entities. Investments present in an Approved Enterprise shall be an exception to this rule.
(3) The Commission must discuss with relevant ministries and administrations, and approve, with the consent of such ministry or ministries, on a case-by-case basis, investment in certain sectors of the economy and certain types of Investment. With respect to such investments, the Commission may choose to apply terms that are different from those generally applied to Investments pursuant to this Law, PROVIDED, HOWEVER, that the Ministry of Finance approves tax related incentives that are more generous than those set forth in the Law.
(4) The restricted economic sectors shall include:
1. Production and sale of weapons, ammunition and explosives;
2. Non-banking finance activities;
3. Insurance activities;
4. Investments in Natural Resources (including forestry) and Infrastructure (including telecommunication facilities, pipeline construction and operation), unless investment in such sectors is permitted pursuant to the special [relevant] laws. In the latter case, such investment shall be regulated by such special laws.
(5) The Commission may from time to time amend the list of investments referenced in this Article.
