Since the United States’ withdrawal from Afghanistan in August 2021, the U.S. government has provided substantial financial support to the Afghan people, totaling over $2.8 billion in humanitarian and development assistance. However, recent findings reveal a troubling diversion of these funds. According to a report by the Special Inspector General for Afghanistan Reconstruction (SIGAR), at least $10.9 million of U.S. taxpayer money has ended up in the hands of the Taliban-controlled government. This sum, paid through various taxes, fees, import duties, and public utilities, highlights significant oversight issues within U.S. agencies.
The SIGAR report [1], released in May 2024, reviewed the extent to which U.S. funds have benefited the Taliban since their takeover. The findings are alarming: 38 out of 65 implementing partners confirmed paying the Taliban-controlled government. These payments included:
- $10.4 million in taxes, comprising salary withholdings, income taxes, and other business-related taxes.
- $346,839 for utilities, covering essential services such as electricity and water.
- $176,596 in fees, including payments for permits, licenses, and work authorizations.
- $9,215 in customs duties, levied on the importation of goods necessary for humanitarian efforts.
Breakdown of Taxes Paid
The $10.4 million in taxes paid to the Taliban-controlled government included several categories:
- Salary Withholdings and Income Taxes: These accounted for nearly $8.6 million and were imposed on the salaries of employees working for U.S.-funded programs.
- Business Receipts Tax: Applied to the gross sales of companies, this tax contributed significantly to the total amount.
- Contractor Withholding Tax: Ranging from 2 to 7 percent, this tax was levied on work performed by companies and the purchase of products.
- Other Taxes: Included property tax, sales tax, and VAT imposed on various goods and services.
The report underscores a severe lack of oversight by U.S. agencies. Despite regulations requiring the reporting of foreign taxes, fees, duties, and utilities, many payments went unreported. The U.S. Department of State (State) and the U.S. Agency for International Development (USAID) were found to have failed to enforce these reporting requirements comprehensively.
The Taliban has leveraged these funds to bolster their control and legitimacy. Implementing partners reported direct pressure from the Taliban, including demands for involvement in program design, recruitment of Taliban-approved individuals, and diversion of aid. This manipulation has severely disrupted humanitarian efforts, diverting aid from its intended recipients.
SIGAR made several recommendations to improve oversight and ensure U.S. funds do not benefit the Taliban:
- Expand foreign tax reporting requirements to all U.S. award agreements in Afghanistan.
- Ensure responsible officials include foreign tax reporting requirements in applicable awards.
- Collect required foreign tax reports from implementing partners.
- Adhere to the Office of Foreign Assets Control (OFAC) requirement to maintain records of transactions with blocked persons for five years.