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Clauses · DFARS · Administration and definitions

DFARS 252.229-7011 Reporting of Foreign Taxes - U.S. Assistance Programs

Does the regulation require it to flow down?

Yes

Paragraph (e): all subcontracts for commodities that exceed $500. No commercial or COTS carve-out is written into the paragraph, so if the clause is in the chain above you and you buy commodities over $500, it passes through regardless of the commercial character of the buy.

Form
substance, including paragraph (e) itself — self-perpetuating
Reaches
all tiers

Checked against acquisition.gov on 2026-08-05 · edition SEP 2005 · base v0.9.3 Read the text ↗

What it makes you produce

2 items for your checklist, slowest first.

  1. Something you write2

    Days to weeks, and nobody outside your company has to agree to it.

    • A written notice to the foreign government that the commodities are exempt from value added tax and customs duties, with the Letter of Offer and Acceptance, the country-to-country agreement or the interagency agreement as the documentation

      DFARS 252.229-7011(c)

    • Prompt notice to the contracting officer where the foreign government imposes the taxes anyway, with documentation showing it had been apprised of the exemption

      DFARS 252.229-7011(d)

When it is used

Solicitations and contracts funded with U.S. assistance appropriations provided in the annual foreign operations appropriations act (DFARS 229.170-4). No dollar threshold on the contract itself. The underlying exemption (229.170-2, implementing section 579 of Division E of the Consolidated Appropriations Act, 2003, Pub. L. 108-7) applies to a contract or subcontract for commodities when the funds are appropriated by the annual foreign operations appropriations act AND the value of the contract or subcontract is $500 or more; it does NOT apply to the acquisition of services, and it is generally implemented through Letters of Offer and Acceptance, country-to-country agreements, or Federal interagency agreements. 'Commodities' means any materials, articles, supplies, goods, or equipment.

Read closely

(d)'s documentation is the whole point of the clause: it is what the United States uses to demand the money back from the recipient country, and without it there is nothing to demand it with — the tax stays on your margin. (e) puts the substance into every purchase order for commodities over $500. The clause sets no retention period of its own, so the order's general records clause governs.

The 3 templates that name it, with the line
233RTX Flowdown of U.S. Government Contract Clauses Under U.S. Government ContractsRTXline 1635273BAE Systems Inc. USGOVA — FAR/DFARS Flow Down Provisions for Subcontracts/Purchase Orders under a U.S. Government (DoD) Prime ContractBAE Systemsline 1196178AAR Component Services NY — U.S. Government Contract FAR and DFARS Clauses Incorporated by ReferenceAAR Corpline 1524

Source: acquisition.gov, DFARS 252.229-7011, DFARS 229.170-1 through 229.170-4 and DFARS 212.301 (verified 2026-08-05); DoD Class Deviation 2026-O0007, DFARS Part 229, 2025-12-18, Attachment A1, 229.170-2/229.170-4 and 252.229-7011

This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.