SpendQueryBeta

FAR and DFARS › DFARS Part 229: Taxes › Subpart 229.1

DFARS 229.170-2 Policy.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section states that U.S. bilateral agreements with foreign governments must exempt commodities bought under U.S. assistance programs from foreign taxation, and if taxes are still imposed, the foreign government must reimburse the U.S. Government. It matters to contractors because it defines when a foreign tax exemption applies to their commodity contracts or subcontracts and requires reporting of noncompliance.

Applies to: Contracts or subcontracts for commodities funded by annual foreign operations appropriations

What it requires

  • Report noncompliance for effective implementation

Key terms: commodities · foreign tax exemption · bilateral agreements · letters of offer and acceptance · noncompliance

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) By law, bilateral agreements with foreign governments must include a provision that commodities acquired under contracts funded by U.S. assistance programs shall be exempt from taxation by the foreign government. If taxes or customs duties nevertheless are imposed, the foreign government must reimburse the amount of such taxes to the U.S. Government (Section 579 of Division E of the Consolidated Appropriations Act, 2003 (Pub. L. 108-7), as amended by Section 506 of Division D of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and similar sections in subsequent acts).

(b) This foreign tax exemption—

(1) Applies to a contract or subcontract for commodities when—

(i) The funds are appropriated by the annual foreign operations appropriations act; and

(ii) The value of the contract or subcontract is $500 or more;

(2) Does not apply to the acquisition of services;

(3) Generally is implemented through letters of offer and acceptance, other country-to-country agreements, or Federal interagency agreements; and

(4) Requires reporting of noncompliance for effective implementation.

Sections that refer to it

← 229.170-1 Definition. · 229.170-3 Reports. →

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

DFARS 229.170-2 Policy · SpendQuery