Tax on certain foreign procurements
FAR 29.402-3 requires specific tax-related provisions and clauses in most foreign procurement solicitations and contracts, with clear exceptions, to ensure compliance with U.S. tax laws.
Overview
FAR 29.402-3 establishes requirements for addressing the U.S. tax on certain foreign procurements. It mandates the inclusion of specific provisions and clauses in solicitations and contracts to ensure compliance with tax obligations under U.S. law. The regulation applies to most solicitations, including those for commercial products and services, but outlines several exceptions, such as acquisitions below the simplified acquisition threshold, emergency acquisitions, and certain humanitarian assistance contracts. Contracting officers must insert provision 52.229-11 in applicable solicitations and clause 52.229-12 in contracts where the contractor is identified as a foreign person. This ensures that foreign contractors are aware of and comply with U.S. tax requirements related to foreign procurements.
Key Rules
- Provision 52.229-11 Requirement
- Must be included in most solicitations, except for specified exceptions (e.g., low-value, emergency, or certain humanitarian contracts).
- Clause 52.229-12 Requirement
- Must be included in solicitations containing 52.229-11 and in contracts where the contractor is a foreign person per their representation.
Responsibilities
- Contracting Officers: Ensure correct insertion of the provision and clause in solicitations and contracts, and verify applicability of exceptions.
- Contractors: Accurately represent their status as a foreign person and comply with any tax obligations if applicable.
- Agencies: Oversee compliance and ensure exceptions are properly documented.
Practical Implications
- This section ensures the U.S. government addresses tax liabilities on foreign procurements, reducing risk of non-compliance.
- Contractors must be diligent in their representations, as misrepresentation can lead to penalties.
- Contracting officers must be aware of exceptions to avoid unnecessary administrative burden or omission of required clauses.