IRS Final Rule Outlines Exemptions, Collection Procedures for Foreign Government Procurement Tax
The Internal Revenue Service issued a final rule (here) on Aug. 18 outlining exemptions and procedures for collecting a 2 percent tax on payments made by the U.S. government for foreign procurement purchases. The tax, mandated by a law passed…
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in 2011, applies to payments from the U.S. government to foreign parties where the goods are manufactured or produced or the services are provided in any country that is not a party to the World Trade Organization Government Procurement Agreement or a free trade agreement with the U.S. that includes procurement provisions, the IRS said. Other countries have income tax treaties with the U.S. that exempt them from the tax, and humanitarian assistance is exempt as well, among other types of contracts.