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

FAR 52.229-9 Taxes—Cost-Reimbursement Contracts With Foreign Governments.

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 says that taxes or duties from which the U.S. Government is exempt by agreement with a foreign government, or from which a subcontractor is exempt under foreign law, cannot be charged as allowable costs under this contract. It also requires that if a subcontractor gets a foreign tax credit reducing its U.S. federal income tax because of a reimbursed tax or duty, the amount of that reduction must be paid to the U.S. Treasury when the tax return is filed.

Applies to: Cost-reimbursement contracts with foreign governments

What it requires

  • Do not treat exempt foreign taxes or duties as allowable costs under this contract.
  • If a subcontractor obtains a foreign tax credit reducing its U.S. federal income tax due to a reimbursed tax or duty, pay the amount of the reduction to the Treasurer of the United States when the federal income tax return is filed.

Key terms: allowable cost · foreign tax credit · Federal income tax liability · Internal Revenue Code · 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(b), insert the following clause:

Taxes—Cost-Reimbursement Contracts With Foreign Governments (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 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 any subcontractor 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 (not credited to the contract) to the Treasurer of the United States at the time the Federal income tax return is filed.

(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.

← 52.229-8 Taxes—Foreign Cost-Reimbursement Contracts. · 52.229-10 State of New Mexico Gross Receipts and Compensating Tax. →

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 52.229-9 Taxes—Cost-Reimbursement Contracts With Foreign Governments · SpendQuery