Rule2023-12569
Acquisition Regulation: Foreign Tax Reporting, Conference Planning, and Trade and Investment Activities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 15, 2023
Effective
July 17, 2023
Issuing agencies
Agency for International Development
Abstract
The United States Agency for International Development (USAID) is amending its Acquisition Regulation (AIDAR) regarding contractor requirements on foreign tax reporting, conference planning, and trade and investment activities. These revisions are intended to bring the AIDAR into compliance with revised Agency policies and procedures and statutory requirements.
Full Text
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<title>Federal Register, Volume 88 Issue 115 (Thursday, June 15, 2023)</title>
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[Federal Register Volume 88, Number 115 (Thursday, June 15, 2023)]
[Rules and Regulations]
[Pages 39189-39193]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-12569]
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AGENCY FOR INTERNATIONAL DEVELOPMENT
48 CFR Parts 726, 729, 731, and 752
RIN 0412-AB04
Acquisition Regulation: Foreign Tax Reporting, Conference
Planning, and Trade and Investment Activities
AGENCY: U.S. Agency for International Development.
ACTION: Final rule.
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SUMMARY: The United States Agency for International Development (USAID)
is amending its Acquisition Regulation (AIDAR) regarding contractor
requirements on foreign tax reporting, conference planning, and trade
and investment activities. These revisions are intended to bring the
AIDAR into compliance with revised Agency policies and procedures and
statutory requirements.
DATES: Effective July 17, 2023.
FOR FURTHER INFORMATION CONTACT: Kelly Miskowski, USAID M/OAA/P, at
202-916-2752 or <a href="/cdn-cgi/l/email-protection#8afae5e6e3e9f3e7ebe3e6e8e5f2cafff9ebe3eea4ede5fc"><span class="__cf_email__" data-cfemail="9aeaf5f6f3f9e3f7fbf3f6f8f5e2daefe9fbf3feb4fdf5ec">[email protected]</span></a> for clarification of content or
information pertaining to status or publication schedules. All
inquiries regarding this rule must cite RIN No. 0412-AB04.
SUPPLEMENTARY INFORMATION:
[[Page 39190]]
A. Background
USAID published a proposed rule in the Federal Register at 87 FR
22843 on April 18, 2022, to amend the AIDAR regarding contractor
requirements on foreign tax reporting, conference planning, and trade
and investment activities as outlined in 48 CFR parts 726, 729, 731,
and 752.
B. Discussion and Analysis
Two respondents submitted public comments in response to the
proposed rule. A discussion of the comments is provided as follows:
1. Summary of Changes
USAID reviewed the public comments in the development of the final
rule; however, no changes were made as a result of the public comments
received. Some administrative changes were made to revise the title of
subpart 726.71 and to correct the title of Sec. 752.226-70 to read:
Trade and Investment Activities and the ``Impact on U.S. Jobs'' and
``Workers' Rights'' and to revise capitalization throughout.
2. Analysis of Public Comments
Below are the Agency's responses to comments on the proposed rule.
(i) Foreign Tax Reporting
A. Comment: One commenter (#1) indicated that some countries
require that contractors withhold income tax from vendors in a manner
similar to employee income tax withholding. They requested that USAID
confirm that this type of withholding is exempt from the foreign tax
reporting requirements in section 752.229-71.
Response: USAID cannot confirm on a blanket basis whether the
vendor taxes described would be exempt as this is a fact-specific
inquiry. The determination needs to be made at the country level by the
Department of State based on the specific tax code. We recommend
reaching out to your Contracting Officer for country-specific guidance.
B. Comment: Commenter #1 also expressed a concern that there is
confusion as to when the cost of VAT or customs taxes may be allowable.
They requested that the regulation be revised to be more similar to
USAID's Mandatory Standard Provision for Federal assistance awards to
include language that indicates that host government taxes (such as
VAT) are not allowable where the Contracting Officer provides the
necessary means to the contractor to obtain an exemption or refund of
the taxes, and the contractor fails to take reasonable steps to obtain
this exemption.
Response: The issue of foreign tax allowability is outside the
scope of this rule. This rulemaking pertains to foreign tax reporting.
Some foreign tax payments may need to be reported, even if allowable.
Questions about allowability should be coordinated with your relevant
Contracting Officer as this is a fact-specific inquiry and depends on
the country of taxation. For further information, please see USAID's
Procurement Executive Bulletin (PEB) 2017-02, ``Exemptions and
Allowability of Host Government Taxes''.
C. Comment: A commenter (#2) requested information on how USAID/
Washington will communicate to Mission Directors to renegotiate and
revise procedures for exemption of reimbursement of taxes.
Response: Internal agency communications are outside of the scope
of this rulemaking. However, USAID will communicate the contents of
this rule through existing communications channels with missions.
D. Comment: Commenter #2 also recommended revised language in
752.229-71 to indicate ``the mission controller'' rather than ``point
of contact at the Embassy, Mission . . .'' to identify where the report
must be submitted.
Response: USAID appreciates the recommendation but does not believe
a change is necessary. The specifics on where the reporting must be
submitted will be included in each solicitation and resulting award.
(ii) Conference Planning and Approvals
A. Comment: Commenter #2 requested that the text specify that USAID
is required to report to Congress on conferences as a main reason for
the requirement.
Response: USAID appreciates the recommendation but does not believe
a change is necessary.
B. Comment: Commenter #2 also requested clarity on what costs are
associated with ``costs to ensure the safety of attending government
officials.''
Response: These terms and definitions come directly from OMB Memo
M-12-12 (``Promoting Efficient Spending to Support Agency
Operations''), as amended by OMB Memo M-17-08. OMB notes that
``Conference expenses include any associated authorized travel and per
diem expenses, hire of rooms for official business, audiovisual use,
light refreshments, registration fees, ground transportation, and other
expenses as defined by the FTR. . .The FTR provides some examples of
direct and indirect conference costs included within conference
expenses. See 41 CFR 301-74.2. Conference expenses should be net of any
fees or revenue received by the Agency through the conference and
should not include costs to ensure the safety of attending governmental
officials.'' (See OMB Memo M-17-08, footnote 2) USAID, in implementing
these OMB memos, adopts these terms as defined in the OMB memos and
Federal Travel Regulations and considers a wide array of scenarios for
``costs to ensure the safety of attending government officials''.
Although not exhaustive, illustrative examples include: the additional
costs related to selecting a safe location with historically low crime
rates and a venue offering protective services such as security guards
and restrictive access technology.
C. Comment: Commenter #2 requested amending the definition of USAID
employee to include ``Foreign Service Limited''.
Response: USAID believes that the definition as drafted is
inclusive of all USAID employees for purposes of conference planning
policy--including staff hired under the Foreign Service Limited
appointments.
D. Comment: Commenter #2 also indicated that the exceptions should
be reviewed for compliance with any reporting under relevant
appropriations.
Response: USAID acknowledges the comment and confirms that this
clause has been reviewed internally to comply with relevant
appropriations requirements.
E. Comment: Commenter #2 suggested deletion of paragraph (c)(4) of
the clause 752.231-72 as these conferences are not funded by USAID.
Response: USAID appreciates the recommendation but does not believe
a change is necessary. This section outlines a circumstance when USAID
funding is not being used for the venue but is being used for costs
associated with USAID employees and/or Personal Services Contractors
attending or light refreshments. Although USAID is partially funding
costs associated with the conference, prior approval is not required in
this very specific situation to reduce burden on contractors.
F. Comment: Commenter #2 also requested clarity on whether the
information outlined in (f)(1)-(6) is needed to request approval of a
conference.
Response: The information required to request prior approval of a
conference is outlined in section 752.231-72(f)(1) through (7). These
items must be submitted.
[[Page 39191]]
(iii) Trade and Investment Activities
A. Comment: Commenter #2 requested definitions for the terms ``gray
area'', ``prohibited activity'', and ``activity'' generally.
Response: The Agency makes a determination whether the clause
applies or not during the planning phase, in accordance with Agency
policy outlined in Automated Directives System (ADS) Chapter 225 (used
as a reference here). The term ``gray area'' is not included in the
contract clause 752.226-70 and does not need to be defined. For
informational purposes, contractors may review definitions and guidance
of these terms as outlined in ADS 225. USAID is not establishing any
new definition of ``activity.'' Rather, ``activity'' has the same
meaning as used throughout the AIDAR. More specifically, an activity
relates to any effort performed by the contractor within the scope of
work.
B. Comment: Commenter #2 requested more clarity on the phrase
``authorized by USAID'' to ask who would be responsible for
authorization. They referred specifically to AIDAR 752.226-70(a) which
indicates that ``no funds . . . may be used'' unless ``specifically set
forth in this contract or otherwise authorized by USAID in writing''.
Response: Contractors should communicate with their Contracting
Officer who will issue an approval in accordance with Agency guidance.
C. Regulatory Considerations and Determinations
Executive Orders 12866, 13563, and 14094
Executive Order (E.O.) 12866, Regulatory Planning and Review, as
amended and reaffirmed by E.O. 13563, ``Improving Regulation and
Regulatory Review,'' and E.O. 14094, ``Modernizing Regulatory Review,''
directs agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). E.O. 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. This rule has been determined
``nonsignificant'' under E.O. 12866. This rule is not a major rule
under 5 U.S.C. 804.
D. Regulatory Flexibility Act
USAID does not expect this proposed rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
Therefore, an Initial Regulatory Flexibility Analysis has not been
performed.
E. Paperwork Reduction Act
This rule contains information collection requirements that have
been approved by the Office of Management and Budget under the
Paperwork Reduction Act (44 U.S.C. chapter 35). This information
collection requirement has been assigned OMB Control Number 0412-0619,
entitled ``AIDAR: Foreign Tax Reporting, Conference Planning, and Trade
and Investment Activities''.
List of Subjects in 48 CFR Chapter 7 Parts 726, 729, 731, and 752
Government procurement.
For the reasons discussed in the preamble, USAID amends 48 CFR
Chapter 7 as set forth below:
0
1. The authority citation for 48 CFR part 726 continues to read as
follows:
Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C.
2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR
1979 Comp., p. 435.
PART 726--OTHER SOCIOECONOMIC PROGRAMS
Subpart 726.71--Trade and Investment Activities and the ``Impact on
U.S. Jobs'' and ``Workers' Rights''
0
2. Revise the heading for subpart 726.71 to read as set forth above.
0
3. Revise section 726.7101 to read as follows:
726.7101 Trade and Investment Activities and the ``Impact on U.S.
Jobs'' and ``Workers' Rights.''
(a) Policy. USAID policy and required procedures in ADS Chapter 225
(Program Principles for Trade and Investment Activities and the
``Impact on U.S. Jobs'' and ``Workers' Rights'') implement statutory
prohibitions on obligation and expenditure of appropriated funds. ADS
Chapter 225 requires Agency operating units to analyze a project or
activity to ensure compliance with U.S. foreign policy objectives as
stated in Section 601 of the Foreign Assistance Act (FAA) of 1961, as
amended; the U.S. Government's trade and development objectives set
forth in trade legislation; and related policy documents. If the
analysis concludes that the project or activity meets the criteria for
what the ADS chapter describes as ``gray-area activities'' or if the
contract statement of work has the potential to evolve into what the
chapter defines as a prohibited activity, then the planner must include
in the procurement request language appropriately tailored to the
specific circumstances for the contract statement of work.
(b) Special contract requirement. The contracting officer must
insert in Section H of the uniform contract format a clause
substantially the same as the clause in 752.226-70 when informed by the
requesting operating unit that the statement of work or statement of
objectives includes gray-area activities or investment-related
activities where specific activities are not identified at the time of
obligation but could be for investment-related activities, as described
in ADS Chapter 225.
Sec. 726.7102 [Removed]
0
4. Remove Sec. 726.7102.
PART 729--TAXES
0
5. The authority citation for 48 CFR part 729 is revised to read as
follows:
Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C.
2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR
1979 Comp., p. 435.
Subpart 729.4--Contract Clauses
0
6. Revise Sec. 729.402-70 to read as follows:
729.402-70 Foreign contracts.
(a) The annual Department of State, Foreign Operations, and Related
Programs Appropriations Act (SFOAA) requires USAID to take certain
steps to prevent countries from imposing taxes, including value added
tax (VAT) and customs duties, on U.S. foreign assistance, or if
imposed, requires the countries to reimburse the assessed taxes or
duties. The SFOAA also requires certain reporting to Congress on host
country taxation. Because countries imposing such taxes assess them
directly on contractors, USAID requires contractors to report annually
on whether taxes have been imposed and, if so, whether the foreign
government reimbursed the taxes.
(b) The contracting officer must insert the clause at Sec.
752.229-71, Reporting of Foreign Taxes, in solicitations and resulting
contracts when:
(1) A contract is fully or partially funded with funds appropriated
under titles III through VI of an SFOAA making appropriations for the
Department of State, foreign operations, and related programs, and
(2) The contract is to be performed wholly or partly in a foreign
country.
[[Page 39192]]
PART 731--CONTRACT COST PRINCIPLES AND PROCEDURES
0
7. The authority citation for 48 CFR parts 731 and 752 continues to
read as follows:
Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C.
2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR
1979 Comp., p. 435.
Subpart 731.2--Contracts With Commercial Organizations
0
8. Revise Sec. 731.205-43 to read as follows:
731.205-43 Trade, business, technical and professional activity
costs--USAID conference approval requirements.
(a) Definitions. As used in this section--
Conference means a seminar, meeting, retreat, symposium, workshop,
training activity or other such event that is funded in whole or in
part by USAID.
Net conference expense means the total conference expenses
excluding: any fees or revenue received by the Agency through the
conference, costs to ensure the safety of attending governmental
officials, and salary of USAID employees and USAID personal services
contractors.
Personal Services Contractor (PSC) means any individual who is
awarded a personal services contract in accordance with AIDAR appendix
D or J of this chapter.
Temporary duty (TDY) travel means official travel at least fifty
(50) miles from both the traveler's home and duty station for a period
exceeding twelve (12) hours.
USAID employee means a USAID direct-hire employee or a direct-hire
Federal employee from another U.S. government agency detailed to USAID.
(b) Prior approval. USAID policy requires contractors to obtain
contracting officer approval of the following, unless an exception in
paragraph (c) of the clause at 752.231-72 applies:
(1) A conference funded in whole, or in part, by USAID when ten
(10) or more USAID employees or personal services contractors are
required to travel on temporary duty status to attend the conference;
or
(2) A conference funded in whole, or in part, by USAID when the net
conference expense funded by USAID is expected to exceed $100,000,
regardless of the number of USAID employees or USAID personal services
contractors who will participate in the conference.
(c) Allowability of cost. Costs associated with a conference that
meets the criteria above, incurred without USAID prior written
approval, are unallowable.
(d) Solicitation provision and contract clause. Contracting
officers must insert the clause at 752.231-72 in all USAID-funded
solicitations and contracts anticipated to include a requirement for a
USAID-funded conference.
Subpart 731.3--Contracts With Educational Institutions
0
9. Add Sec. 731.374 to read as follows:
731.374 Conference approval requirements.
USAID's policies regarding conference approval requirements are set
forth in (48 CFR) AIDAR 731.205-43. These policies are also applicable
to contracts with educational institutions.
Subpart 731.7--Contracts With Nonprofit Organizations
0
10. Add Sec. 731.775 to read as follows:
731.775 Conference approval requirements.
USAID's policies regarding conference approval requirements are set
forth in (48 CFR) AIDAR 731.205-43. These policies are also applicable
to contracts with nonprofit organizations.
PART 752--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
Subpart 752.2--Text of Provisions and Clauses
0
11. Add 752.226-70 to read as follows:
752.226-70 Trade and Investment Activities and the ``Impact on U.S.
Jobs'' and ``Workers' Rights.''
As prescribed in 48 CFR 726.7101(b), insert a clause substantially
as follows:
Trade and Investment Activities and the ``Impact on U.S. Jobs'' and
``Workers' Rights'' (Jul 2023)
(a) Except as specifically set forth in this contract or
otherwise authorized by USAID in writing, no funds or other support
provided under this contract may be used for any activity that:
provides financial incentives and other assistance for U.S.
companies to relocate operations abroad if it is likely to result in
the loss of U.S. jobs; contributes to violations of internationally
recognized workers' rights defined in 19 U.S.C. 2467(4); or provides
financial incentives for entities located outside the United States
to relocate or transfer jobs from the United States to other
countries or provide financial incentives that would adversely
affect the labor force in the United States.
(b) In the event the Contractor is requested to provide services
in any of the above areas or requires clarification from USAID as to
whether an activity would be consistent with the limitation set
forth above, the Contractor must notify the Contracting Officer and
provide a detailed description of the expected impact of the
proposed activity. The Contractor must not proceed with the activity
until advised by USAID in writing that it may do so.
(c) The Contractor must ensure that its employees and
subcontractors providing trade and investment support services are
made aware of the restrictions set forth in this clause and must
include this clause in all subcontracts.
(End of clause)
0
12. Revise 752.229-71 to read as follows:
752.229-71 Reporting of Foreign Taxes
As prescribed in (48 CFR) AIDAR 729.402-70(b), insert the following
clause in applicable solicitations and resulting contracts. The
contracting officer must insert the address and point of contact at the
Embassy, Mission, or M/CFO/CMP as appropriate under paragraph (d) of
this clause.
Reporting of Foreign Taxes (Jul 2023)
(a) Definitions. As used in this clause--
Foreign government includes any foreign governmental entity.
Foreign taxes include value-added taxes and customs duties but
not individual income taxes assessed to local staff.
Local staff means Cooperating Country National employees.
(b) Annual report. (1) The Contractor must submit a report
detailing foreign taxes assessed under this contract during the
prior U.S. government fiscal year. The report must be submitted
annually by April 16.
(2) A report is required even if the Contractor did not pay any
foreign taxes during the reporting period. A cumulative report may
be provided if the Contractor is performing more than one award in
the foreign country.
(c) Contents of report. The report must contain:
(1) Contractor name.
(2) Contact name with phone number and email address.
(3) Contract number(s).
(4) Amount of foreign taxes assessed by each foreign government
(listed separately) under this contract during the prior U.S.
Government fiscal year.
(i) Taxes assessed on any individual transaction of less than
$500 should not be reported.
(ii) The Contractor must report only foreign taxes assessed by a
foreign government receiving U.S. assistance under this contract.
The Contractor must not report on foreign taxes assessed by a third-
party foreign government.
(5) Any reimbursements of foreign taxes received by the
Contractor on the taxes reported in paragraph (c)(4) of this clause
received through the date of the report.
(d) Submission of report. The Contractor must submit the report
to: [Contracting Officer must insert address and point of
[[Page 39193]]
contact at the Embassy or Mission in the country in which the
contract will be performed, or CFO/CMP for USAID/W-issued contracts,
as appropriate], with a copy to the Contracting Officer's
Representative.
(e) Subcontracts. The Contractor must include this reporting
requirement in all subcontracts issued under this contract. The
Contractor shall collect and incorporate into the Contractor's
report all information received from subcontractors pursuant to this
clause.
(End of clause)
0
13. Revise 752.231-72 to read as follows:
752.231-72 Conference planning and required approval
As prescribed in (48 CFR) AIDAR 731.205-43(d), insert the following
clause in section H of all USAID-funded solicitations and contracts
anticipated to include a requirement for a USAID-funded conference.
Conference Planning and Required Approval (Jul 2023)
(a) Definitions. As used in this clause--
Conference means a seminar, meeting, retreat, symposium,
workshop, training activity or other such event that is funded in
whole or in part by USAID.
Net conference expense means the total conference expenses
excluding: any fees or revenue received by the Agency through the
conference, costs to ensure the safety of attending governmental
officials, and salary of USAID employees and USAID personal services
contractors.
Personal Services Contractor (PSC) means any individual who is
awarded a personal services contract in accordance with AIDAR
appendix D or J of this chapter.
Temporary duty (TDY) travel means official travel at least fifty
(50) miles from both the traveler's home and duty station for a
period exceeding twelve (12) hours.
USAID employee means a USAID direct-hire employee or a direct-
hire Federal employee from another U.S. government agency detailed
to USAID.
(b) Prior approval. Unless an exception in paragraph (c)
applies, the Contractor must obtain prior written approval from the
Contracting Officer at least 30 days prior to committing costs, for
the following:
(1) A conference funded in whole or in part by USAID when ten
(10) or more USAID employees or Personal Services Contractors are
required to travel on temporary duty status to attend the
conference; or
(2) A conference funded in whole or in part by USAID and
attended by USAID employees or USAID Personal Services Contractors,
when the net conference expense funded by USAID is expected to
exceed $100,000, regardless of the number of USAID participants.
(c) Exceptions. Prior USAID approval is not required for the
following:
(1) Co-creation conferences to facilitate the design of programs
or procurements.
(2) Events funded and scheduled by the Center for Professional
Development within the USAID Office of Human Capital and Talent
Management.
(3) A single course presented by an instructor conducted at a
U.S. Government training facility (including the Washington Learning
Center or other USAID training facilities), a commercial training
facility, or other venue if a U.S. Government training facility is
not available.
(4) Conferences conducted at a U.S. Government facility or other
venue not paid directly or indirectly by USAID, when travel of USAID
employees or USAID Personal Services Contractors, light refreshments
and, if applicable, costs associated with participation of the
Contractor's staff are the only direct costs associated with the
event.
(d) Allowability of cost. Costs associated with a conference
that meet the criteria above, incurred without USAID prior written
approval, are unallowable.
(e) Post-award. Conferences approved at the time of award will
be incorporated into the contract. The Contractor must submit
subsequent requests for approval of conferences on a case-by-case
basis, or requests for multiple conferences may be submitted at one
time.
(f) Documentation. Requests for approval of a conference that
meets the criteria in paragraphs (b) of this clause must include:
(1) A brief summary of the proposed event;
(2) A justification for the conference and alternatives
considered, e.g., teleconferencing and video-conferencing;
(3) The estimated budget by line item (e.g., travel and per
diem, venue, facilitators, meals, equipment, printing, access fees,
ground transportation);
(4) A list of USAID employees or PSCs attending and a
justification for each, and the number of other USAID-funded
participants (e.g., Contractor personnel);
(5) A cost comparison for at least three potential venues
(including a U.S. Government owned or leased facility) and a
justification if the lowest cost facility is not selected;
(6) If meals will be provided to local USAID employees or PSCs
(a local employee would not be in travel status), a statement on
whether the meals are a necessary expense to support the conference
objectives; and
(7) A statement signed by an employee of the Contractor with
authority to bind the Contractor, confirming that strict fiscal
responsibility has been exercised in making decisions regarding
conference expenditures, the proposed costs are comprehensive and
represent the greatest cost advantage to the U.S. Government, and
that the proposed conference representation has been limited to the
minimum number necessary to support the conference objectives.
(End of clause)
Mark Walther,
Chief Acquisition Officer.
[FR Doc. 2023-12569 Filed 6-14-23; 8:45 am]
BILLING CODE 6116-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.