Afghanistan: Operating a Business

In this page: Setting Up a Company | The Active Population in Figures | Working Conditions | Cost of Labour | Social Partners

Setting Up a Company

Limited liability company: Number of partners: Minimum: 1 director and 2 shareholders. A resident company agent and a board of supervisors must also be appointed.
Capital (max/min): No mandated minimum share capital requirement
Shareholders and liability: Limited to the amount of share capital subscribed
Corporation: Number of partners: Minimum: 1 director and 2 shareholders. A resident company agent and a board of supervisors must also be appointed.
Capital (max/min): No mandated minimum share capital requirement
Shareholders and liability: Limited to the amount of share capital subscribed. Liability of shareholders is limited to the unpaid amount of their subscribed shares
Partnership: Number of partners: Minimum: 2 with no maximum.
Capital (max/min): No mandated minimum share capital requirement
Shareholders and liability: Unlimited liability. Afghan Partnership Law provides for a special partnership status, in which one or more Partners have unlimited liability (General Partners) and the rest of the
Partners have limited liability with a definite capital (special partners). However, these special partners are fully liable to third persons. A credit partnership can also be established, in which each of the partners is responsible for their specific part

The Competent Organisation: Afghanistan Central Business Registry (ACBR) issues the commercial license required to perform any commercial activity. Additional licenses for certain activities (import of medicines, telecommunication, banking, hotel and restaurant, private hospital, private university, film production company, printing house, transportation, travel agency) must be obtained from the competent authority. Please check the full list here.

Business Setup Procedures: Consult the Ministry of Commerce and Industries, to find out about different commercial laws that apply to limited liability companies, corporations and partnerships.
Consult Doing Business Website, to know about procedures to start a Business in Afghanistan.

The Active Population in Figures

	2018	2019	2020
Labour Force	10,319,153	10,701,549	10,657,912

Source: International Labour Organization, ILOSTAT database

	2017	2018	2019
Total activity rate	50.21%	50.35%	50.49%
Men activity rate	76.58%	76.51%	76.44%
Women activity rate	21.91%	22.32%	22.74%

Source: International Labour Organization, ILOSTAT database

Working Conditions

Legal Weekly Duration: 40 hours a week. Reduced to 35 hours a week for youth aged 15 to 18 and pregnant women, 30 hours a week for employees engaged in underground work and work under conditions that are injurious to their health.
Retirement Age: The Labour Law sets the pension age at 65. Employers can extend the working period of their staff for another 5 years at the consent of the employee. The Labour Law provides for special retirement scheme for employees engaged in arduous work. For every five years of engagement in arduous work, the working period of the employee shall be reduced by one year and for every five years of underground work or types of work carried out under conditions that are harmful to health, the working period shall be reduced by two years.
Working Contracts: All employers must offer their employees an employment contract for a definite or indefinite period of time. According to the Afghan Labour Law, this contract shall fulfill the following conditions:
1. Legitimacy
2. Defining the subject matter of the contract
3. Absence of legal obstacles against work
4. The type of work or occupation which the employee will practice
5. Wage, rights and privileges of Employee
6. Timing and hours of Work
7. Leave
8. Workplace or unit where the employee will engage in work;
9. The date of contract signing
10.The term of the contract
Contracts for definite period shall be for one year pursuant to Article 14(2) of the Afghan Labour Law. They can be extended when agreed to by the two parties. Upon termination of the term in a fixed term contract, should the parties take no action within a month, the contract is deemed to be extended with the same terms and conditions.
Labour Laws: Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.

Cost of Labour

Minimum Wage: AFN 5,000 per month in the public sector (source: ILO, 2013, latest available data). AFN 5,500 for workers in the nonpermanent private sector. There is no minimum wage set for permanent workers in the private sector workers; however, the labour law prevents paying private sector workers less than government workers.
Average Wage: AFN 11,857 (Asia Foundation, 2017 Afghan Survey Report)
Social Contributions: Social Security Contributions Paid By Employers: None
Social Security Contributions Paid By Employees: Currently, there is no social security scheme in Afghanistan. No contributions are therefore required on this account.

Social Partners

Social Dialogue and Involvement of Social Partners: The first trade unions in Afghanistan were formed in 1967. Taliban rule put an effective end to all trade union activity in the country. National Union of Afghan Workers and Employees, the largest Afghan trade union, became operational again in the 2000s and is one of the ILO constituents in the country, along with Central Council of Labour Unions of Afghanistan (CCLUA). While Article 147 of the Labour Law guarantees the right of workers to join trade unions, unions do not have much room to operate and have limited exposure among workers.
Labour Unions: National Union of Afghanistan Workers and Employees (NUAWE)
Unionisation Rate: National Union of Afghan Workers and Employees (NUAWE), the largest trade union in Afghanistan, has around 160,000 members, accounting for 1.5% of the labour force.
Labour Regulation Bodies: Ministry of Labour, Social Affairs, Martyrs and Disabled

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