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FAR and DFARS › FAR Part 52: Solicitation Provisions and Contract Clauses › Subpart 52.2

FAR 52.229-8 Taxes—Foreign Cost-Reimbursement Contracts.

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 clause applies to cost-reimbursement contracts performed in a foreign country. It says that taxes or duties from which the U.S. Government is exempt by agreement, or from which the contractor or subcontractor is exempt under foreign law, cannot be charged to the contract as an allowable cost. If the contractor gets a U.S. foreign tax credit because of a reimbursed foreign tax, the amount of that credit reduction must be paid or credited back to the U.S. Government as the Contracting Officer directs.

Applies to: Foreign cost-reimbursement contracts

What it requires

  • Do not treat exempt foreign taxes or duties as allowable costs under the contract.
  • Pay or credit to the U.S. Government any reduction in Federal income tax liability from a foreign tax credit obtained because of a reimbursed tax or duty, at the time of the offset, as the Contracting Officer directs.

Key terms: allowable cost · foreign tax credit · Federal income tax liability · Contracting Officer · subcontractor

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

The text

As prescribed in 29.402-2(a), insert the following clause:

Taxes—Foreign Cost-Reimbursement Contracts (MAR 1990)

(a) Any tax or duty from which the United States Government is exempt by agreement with the Government of ____ [insert name of the foreign government], or from which the Contractor or any subcontractor under this contract is exempt under the laws of ____ [insert name of country], shall not constitute an allowable cost under this contract.

(b) If the Contractor or subcontractor under this contract obtains a foreign tax credit that reduces its Federal income tax liability under the United States Internal Revenue Code (Title 26, U.S.C.) because of the payment of any tax or duty that was reimbursed under this contract, the amount of the reduction shall be paid or credited at the time of such offset to the Government of the United States as the Contracting Officer directs.

(End of clause)

Sections it refers to

  • 29.402-2 Foreign cost-reimbursement contracts.

Sections that refer to it

  • 29.402-2 Foreign cost-reimbursement contracts.

← 52.229-7 Taxes—Fixed-Price Contracts With Foreign Governments. · 52.229-9 Taxes—Cost-Reimbursement Contracts With Foreign Governments. →

Rule changes for FAR Part 52

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

FAR 52.229-8 Taxes—Foreign Cost-Reimbursement Contracts · SpendQuery