Fiddling with figures

Wedding halls do booming business, but there is no transparency about their earnings, says the Ministry of Finance. An investigation.
The government levies two kinds of taxes on the business. A flat 20 percent of the net earnings are to be paid to tax authorities and another 5 percent for every wedding feast.

Wedding halls – there are 87 registered in Kabul alone – claim they pay 1.5 million Afs (21,800 USD) each to the government every quarter but a close inspection of the records by Killid show negligible tax collections.

Wedding hall owners make contradictory claims. They say business is dull and also that more than one thousand guests are welcomed every night.

At the rate of one thousand wedding guests, the average number of guests arriving at a wedding hall in Kabul every month would be 30,000.

By even the most conservative estimates, the rate for food per plate in Kabul is 560 Afs (8 USD). This is the tariff that the wedding halls on the busy road to Kabul International Airport charge. The most expensive rate is 1,250 Afs (18 USD). A wedding hall that charges even the modest rate of 500 Afs (7 USD) per plate could earn as much as 15 million Afs (218,200 USD) each month.

What then will be the wedding hall’s tax liability? It should be paying the Ministry of Finance 750,000 Afs (10,900 USD) as tax for food and 2.25 million Afs (32,725 USD) from its revenue every three months.

Looking the other way

Between them, Kabul’s top 10 wedding halls are likely to be pocketing 7.5 million Afs (109,000 USD) which rightfully belongs to the government. There is no doubt that the well-oiled system of looking the other way includes officials in the Ministry of Finance. In the record books, wedding hall owners underwrite the number of guests, and corrupt tax officials ignore the fiddling with figures.

Amena Ahmadi, head of the department of tax in the Ministry of Finance, says inspection teams regularly visit wedding halls to monitor the business on the ground. They check the number of guests and per plate food rates. But the surprise inspections are hamstrung by a shortage of staff. “The department cannot send an employee to each and every wedding hall,” she said.

Wedding halls, however, reject the allegations of corruption and point fingers, instead, at the Ministry of Finance. Amanullah Tahmas, manager at Esteqlal wedding hall, is ready to acknowledge a nexus between corrupt wedding hall officials and Ministry of Finance staff but he claims he has never submitted to pressure to pay bribes.

Mohammad Afzal Akbar, the manager at Mumtaz Mahal wedding hall, admits there were problems earlier in the collection of taxes. They have now been sorted out, he adds. This wedding hall pays the government 1.5 million Afs (21,500 USD) in taxes each quarter.

Meanwhile, Nurudin Jami, manager at Shar e Naw wedding hall also admits to a general lack of transparency in the business but he insists that his business is not involved in corruption.

That is dismissed by Sayed Ekram Afzali, head of Integrity Watch Afghanistan. He thinks there is no transparency at all in tax collection from wedding halls. He says there is not a single instance when a file involving corruption in a wedding hall has been forwarded to the Attorney General Office (AG’s Office).

Curiously even audits of wedding hall businesses have not revealed any corruption.

Managers of Esteqlal, Mumtaz Mahal and another wedding hall called Oranoos complain that the scrutiny has been bad for business. The number of guests every night has shrunk, and so have their earnings. Mohammad Salam, the manager at Oranoos, says they have paid 1.5 million Afs (21,800 USD) as tax earlier, but now it has decreased to 400,000 Afs (5,820 USD) as a result of fewer guests.

Produce the proof

Haji Ghulam Sidiq, a deputy in the hotels union in Kabul, did not have figures for the tax paid by wedding halls every quarter but said the increase or decrease in taxes has a direct connection to the numbers at a wedding feast. He admitted that tax contributions have decreased in the past two years though it still runs into the millions of Afghanis. “There are rumours that there is corruption but there is no proof,” he said. Employees of the finance ministry collude with staff in some hotels to deflate guest numbers or the food to reduce the tax burden, he added.

Amena Ahmadi, head of the department of tax in the Ministry of Finance, says 22 wedding halls and restaurants were closed for not paying taxes in the first and second quarter of 2016 (from June). She further says that some of the wedding halls that were closed have restarted business but the ministry has been not been able to intervene.

Ajmal Abdulrahimzai, spokesperson for the ministry, claims the government is serious about pursuing wedding halls to pay taxes.