Defense Federal Acquisition Regulation Supplement
Part 229--Taxes
TABLE OF CONTENTS
SUBPART 229.1--GENERAL.
229.101 Resolving tax problems.
SUBPART 229.4--CONTRACT CLAUSES
229.402 Foreign contracts.
229.402-1 Foreign fixed-price contracts.
229.402-70 Additional clauses.
SUBPART 229.70--SPECIAL PROCEDURES FOR OVERSEAS CONTRACTS
229.7000 Scope of subpart.
229.7001 Tax exemption in Spain
229.7002 Tax exemption in the United Kingdom.
229.7002-1 Value added tax.
229.7002-2 Import duty.
229.7002-3 Value added tax or import duty problem resolution.
229.7002-4 Information required by HM Customs and Excise.
229.101 Resolving tax problems.
(a) Within DoD, the agency-designated legal counsels are the defense agency General Counsels, the General Counsels of the Navy and Air Force, and for the Army, the Chief, Contract Law Division, Office of the Judge Advocate General.
(c) The contracting officer may direct the contractor to litigate the applicability of a particular tax if--
(i) The contract is either a cost reimbursement type or a fixed price type with a tax escalation clause; and
(ii) The direction is coordinated with the agency-designated legal counsel through the DoD Tax Policy and Advisory Group.
(d) (i) Tax relief agreements between the United States and foreign governments in Europe that exempt the United States from payment of specific taxes on purchases made for common defense purposes are maintained by the United States European Command (USEUCOM). For further information contact HQ USEUCOM, ATTN: ECLA, Unit 30400, Box 1000, APO AE 09128; Telephone: DSN 430-8001/7263, Commercial 49-0711-680-8001/7263; Telefax. 49-0711-680-5732.
(ii) Tax relief also may be available in countries that have not signed tax relief agreements. The potential for such relief should be explored in accordance with paragraph (d)(iii) of this section.
(iii) Review DoDD 5100.64, Department of Defense Foreign Tax Relief Program, before contracting with a foreign source. Refer questions on implementation of the program to the Commanding Officers in Table 29-1, Designated Commanding Officers, which have been designated under subsection E.7 of DoDD 5100.64 to serve as--
(A) Single point of contact for U.S. contracting offices for investigation and resolution of specific foreign tax relief matters; and
(B) Liaison with responsible diplomatic mission and local foreign tax authorities.
(iv) Refer foreign tax relief questions which have not been resolved by the designated Commanding Officer to the agency-designated legal counsel.
(v) When an acquisition is for a contract to be performed in a country or area listed in Table 29-1, Designated Commanding Officers--
(A) Obtain from the designated Commanding Officer detailed information concerning the taxes and duties from which the Government of the United States is exempt, and
(B) Provide the information to prospective offerors.
(C) Do not provide prospective offerors any other information about foreign taxes or duties.
(D) Issue tax exemption certificates, as appropriate, to assist the contractor in obtaining relief from foreign taxes and duties which were excluded from the contract price.
(E) Seek advice and assistance from the designated Commanding Officer and, if necessary, the agency-designated legal counsel if the contractor notifies the contracting officer that it has been assessed a tax or duty by a foreign government which could increase the contract price.
(vi) Also see subpart 229.70 for special procedures for obtaining tax relief and duty-free import privileges when conducting U.S. Government acquisitions in certain foreign countries.
TABLE 29-1, DESIGNATED COMMANDING OFFICERS
Country or Area Designated Commanding Officer
Australia Commander in Chief, Pacific Representative, Australia
Azores Commander, U.S. Forces, Azores
Bahrain Commander in Chief, U.S. Naval Forces, Europe
Belgium Commander in Chief, U.S. Army, Europe
Bermuda Commanding Officer, U.S. Naval Air Station, Bermuda
Canada Commander, Space Command
Caribbean Islands
(including Bahamas) Commander, Antilles Defense Command
Denmark Commander in Chief, U.S. Air Forces, Europe
Ethiopia Commander in Chief, U.S. Army, Europe
France Commander in Chief, U.S. Army, Europe
Germany Commander in Chief, U.S. Army, Europe
Greece Commander in Chief, U.S. Air Forces, Europe
Greenland Commander, Space Command
Iceland Commander, Iceland Defense Force
Iran Commander in Chief, U.S. Army, Europe
Italy Commander in Chief, U.S. Naval Forces, Europe
Japan Commander, U.S. Forces, Japan
Korea Commander, U.S. Forces, Korea
Luxembourg Commander in Chief, U.S. Army, Europe
Morocco Commander in Chief, U.S. Naval Forces, Europe
Netherlands Commander in Chief, U.S. Air Forces, Europe
New Zealand Commander, U.S. Naval Support Forces, Antarctica
Norway Commander in Chief, U.S. Air Forces, Europe
Philippines Commander in Chief, Pacific Representative, Philippines
Portugal Commander in Chief, U.S. Naval Forces, Europe
Spain Commander in Chief, U.S. Air Forces, Europe
Taiwan Commander, U.S. Military Assistance Command, Thailand
Turkey Commander in Chief, U.S. Air Forces, Europe
United Kingdom Commander in Chief, U.S. Air Forces, Europe
SUBPART 229.4--CONTRACT CLAUSES
229.402-1 Foreign fixed-price contracts.
Use the clause at 252.229-7000, Invoices Exclusive of Taxes or Duties, in solicitations and contracts when a fixed-price contract will be awarded to a foreign concern.
229.402-70 Additional clauses.
(a) Use the clause at 252.229-7001, Tax Relief, in solicitations and contracts when a contract will be awarded to a foreign concern in a foreign country. When contract performance will be in Germany, use the clause with its Alternate I.
(b) Use the clause at 252.229-7002, Customs Exemptions (Germany), in solicitations and contracts requiring the import of U.S. manufactured products into Germany.
(c) Use the clause at 252.229-7003, Tax Exemptions (Italy), in solicitations and contracts when contract performance will be in Italy.
(d) Use the clause at 252.229-7004, Status of Contractor as a Direct Contractor (Spain), in solicitations and contracts requiring the import into Spain of supplies for construction, development, maintenance, or operation of Spanish-American installations and facilities.
(e) Use the clause at 252.229-7005, Tax Exemptions (Spain), in solicitations and contracts when contract performance will be in Spain.
(f) Use the clause at 252.229-7006, Value Added Tax Exclusion (United Kingdom), in solicitations and contracts when contract performance will be in the United Kingdom.
(g) Use the clause at 252.229-7007, Verification of United States Receipt of Goods, in solicitations and contracts when contract performance will be in the United Kingdom.
(h) Use the clause at 252.229-7008, Relief from Import Duty (United Kingdom), in solicitations issued and contracts awarded in the United Kingdom.
(i) Use the clause at 252.229-7009, Relief from Customs Duty and Value Added Tax on Fuel (Passenger Vehicles) (United Kingdom), in solicitations issued and contracts awarded in the United Kingdom for fuels (gasoline or diesel) and lubricants used in passenger vehicles (excluding taxis).
(j) Use the clause at 252.229-7010, Relief from Customs Duty on Fuel (United Kingdom), in solicitations issued and contracts awarded in the United Kingdom that require the use of fuels (gasoline or diesel) and lubricants in taxis or vehicles other than passenger vehicles.
SUBPART 229.70--SPECIAL PROCEDURES FOR OVERSEAS CONTRACTS
229.7000 Scope of subpart.
This subpart prescribes procedures to be used by contracting officers to obtain tax relief and duty-free import privileges when conducting U.S. Government acquisitions in certain foreign countries.
229.7001 Tax exemption in Spain.
(a) The Joint United States Military Group (JUSMG), Spain Policy Directive 400.4, or subsequent directive, applies to U.S. contracting offices acquiring supplies or services in Spain when the introduction of material or equipment into Spain is required for contract performance.
(b) Upon award of a contract with a Direct Contractor, as defined in the clause at 252.229-7004, the contracting officer will notify JUSMG-MAAG Madrid, Spain, and HQ 16AF/LGTT and forward three copies of the contract to JUSMG-MAAG, Spain.
(c) If copies of the contract are not available and duty-free import of equipment or materials is urgent, the contracting officer will send JUSMG-MAAG three copies of the Letter of Intent or a similar document indicating the pending award. In these cases, authorization for duty-free import will be issued by the Government of Spain. Upon formal award, the contracting officer will forward three copies of the completed contract to JUSMG-MAAG, Spain.
(d) The contracting officer will notify JUSMG-MAAG, Spain, and HQ 16AF/ LGTT of ports-of-entry and identify the customs agents who will clear property on their behalf. Additional documents required for port-of-entry and customs clearance can be obtained by contacting HQ 16AF/LGTT. This information will be passed to the Secretaria General Tecnica del Ministerio de Hacienda (Technical General Secretariat of the Ministry of Finance). A list of customs agents may be obtained from the 600 ABG, APO AE 90646.
229.7002 Tax exemption in the United Kingdom.
This section contains procedures to be followed in securing relief from the British value added tax and import duties.
(a) U.S. Government purchases qualifying for tax relief are equipment, materials, facilities, and services for the common defense effort and for foreign aid programs.
(b) To facilitate the resolution of issues concerning specific waivers of import duty or tax exemption for U.S. Government purchases (see 229.7002- 3), contracting offices shall provide the name and activity address of personnel who have been granted warranted contracting authority to Her Majesty's (HM) Customs and Excise at the following address: HM Customs and Excise, International Customs Division G, Branch 4, Adelaide House, London Bridge, London EC4R 9DB.
229.7002-2 Import duty.
No import duty shall be paid by the United States and contract prices shall be exclusive of duty, except when the administrative cost compared to the low dollar value of a contract makes it impracticable to obtain relief from contract import duty. In this instance, the contracting officer shall document the contract file with a statement that--
(a) The administrative burden of securing tax relief under the contract was out of proportion to the tax relief involved;
(b) It is impracticable to secure tax relief;
(c) Tax relief is therefore not being secured; and
(d) The acquisition does not involve the expenditure of any funds to establish a permanent military installation.
229.7002-3 Value added tax or import duty problem resolution.
In the event a value added tax or import duty problem cannot be resolved at the contracting officer's level, refer the issue to HQ Third Air Force, Staff Judge Advocate, Unit 4840, Box 45, APO AE 09459. Direct contact with HM Customs and Excise in London is prohibited.
229.7002-4 Information required by HM Customs and Excise.
(a) School bus contracts. Provide one copy of the contract and all modifications to HM Customs and Excise.
(b) Road fuel contracts. For contracts that involve an application for relief from duty on the road fuel used in performance of the contract, provide--
(1) To HM Customs and Excise--
(i) Contract number;
(ii) Name and address of contractor;
(iii) Type of work (e.g., laundry, transportation);
(iv) Area of work; and
(v) Period of performance.
(2) To the regional office of HM Custom and Excise to which the contractor applied for relief from the duty on road fuel--one copy of the contract.
(c) Other contracts awarded to United Kingdom firms. Provide information when requested by HM Customs and Excise.