Federal Acquisition Regulation: Taxes-Foreign Contracts in Afghanistan, 67623-67626 [2020-21700]
Download as PDF
<![CDATA[
Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 10 and 12
[FAC 2021–02; FAR Case 2020–006; Item
V; Docket No. FAR–2020–0006, Sequence
No. 1]
RIN 9000–AO09
Federal Acquisition Regulation:
Documentation of Market Research
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
implement a section of the National
Defense Authorization Act for Fiscal
Year 2020 that requires the head of the
agency to document the results of
market research in a manner appropriate
to the size and complexity of the
acquisition.
SUMMARY:
Effective: November 23, 2020.
Ms.
Camara Francis, Procurement Analyst,
at 202–550–0935 or camara.francis@
gsa.gov for clarification of content. For
information pertaining to status or
publication schedules, contact the
Regulatory Secretariat Division at 202–
501–4755. Please cite FAC 2021–02,
FAR Case 2020–006.
SUPPLEMENTARY INFORMATION:
DATES:
FOR FURTHER INFORMATION CONTACT:
I. Background
DoD, GSA, and NASA are issuing a
final rule to implement section 818 of
the National Defense Authorization Act
for Fiscal Year 2020 (Pub. L. 116–92).
Section 818 amends 10 U.S.C. 2377(c)
and 41 U.S.C. 3307(d) to require the
head of the agency to document the
results of market research in a manner
appropriate to the size and complexity
of the acquisition.
khammond on DSKJM1Z7X2PROD with RULES2
II. Discussion and Analysis
Paragraph (e) of FAR 10.002 currently
states that agencies should document
the results of market research in a
manner appropriate to the size and
complexity of the acquisition. The
change will make this mandatory.
Conforming changes were made to FAR
12.101.
VerDate Sep<11>2014
18:11 Oct 22, 2020
Jkt 253001
III. Publication of This Final Rule for
Public Comment Is Not Required by
Statute
The statutory provision that applies to
the publication of the FAR is 41 U.S.C.
1707. Specifically, 41 U.S.C. 1707(a)(1)
requires that a procurement policy,
regulation, procedure or form (including
an amendment or modification thereof)
must be published for public comment
if it relates to the expenditure of
appropriated funds, and has either a
significant effect beyond the internal
operating procedures of the agency
issuing the policy, regulation, procedure
or form, or has a significant cost or
administrative impact on contractors or
offerors. This final rule is not required
to be published for public comment,
because it addresses agency
documentation of market research.
These requirements affect only the
internal operating procedures of the
Government.
IV. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct 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 is not a significant
regulatory action and, therefore, was not
subject to review under Section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
V. Executive Order 13771
This rule is not subject to E.O. 13771,
because this rule is not a significant
regulatory action under E.O. 12866.
VI. Regulatory Flexibility Act
Because a notice of proposed
rulemaking and an opportunity for
public comment are not required to be
given for this rule under 41 U.S.C.
1707(a)(1) (see section III. of this
preamble), the analytical requirements
of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.) are not applicable.
Accordingly, no regulatory flexibility
analysis is required, and none has been
prepared.
VII. Paperwork Reduction Act
The rule does not contain any
information collection requirements that
require the approval of the Office of
PO 00000
Frm 00013
Fmt 4701
Sfmt 4700
67623
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 10 and
12
Government procurement.
William F. Clark,
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 10 and 12 as set
forth below:
■ 1. The authority citation for 48 CFR
parts 10 and 12 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C.
chapter 137; and 51 U.S.C. 20113.
PART 10—MARKET RESEARCH
10.002
[Amended]
2. Amend section 10.002 by removing
from paragraph (e) ‘‘Agencies should’’
and adding ‘‘The head of the agency
shall’’ in its place.
■
PART 12—ACQUISITION OF
COMMERCIAL ITEMS
12.101
[Amended]
3. Amend section 12.101 by removing
from the introductory text ‘‘Agencies’’
and adding ‘‘The head of the agency’’ in
its place.
■
[FR Doc. 2020–21699 Filed 10–22–20; 8:45 am]
BILLING CODE 6820–EP–P
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 12, 29, and 52
[FAC 2021–02; FAR Case 2018–023; Item
VI; Docket No. FAR–2018–0023, Sequence
No. 1]
RIN 9000–AN81
Federal Acquisition Regulation:
Taxes—Foreign Contracts in
Afghanistan
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
add two new clauses that notify
SUMMARY:
E:\FR\FM\23OCR2.SGM
23OCR2
67624
Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations
contractors of requirements relating to
Afghanistan taxes or similar charges
when contracts are being performed in
Afghanistan.
DATES: Effective: November 23, 2020.
FOR FURTHER INFORMATION CONTACT: Mr.
Kevin Funk, Procurement Analyst, at
202–357–5805 or kevin.funk@gsa.gov
for clarification of content. For
information pertaining to status or
publication schedules, contact the
Regulatory Secretariat Division at 202–
501–4755. Please cite FAC 2021–02,
FAR Case 2018–023.
SUPPLEMENTARY INFORMATION:
khammond on DSKJM1Z7X2PROD with RULES2
I. Background
DoD, GSA, and NASA published a
proposed rule on September 20, 2019, at
84 FR 49502, to add two new clauses
that notify contractors of requirements
relating to Afghanistan taxes or similar
charges when contracts are being
performed in Afghanistan. A correction
to the proposed rule was published on
October 15, 2019, at 84 FR 55109, to
correct the regulation identifier number.
Agreements established with the
Islamic Republic of Afghanistan exempt
the United States Forces and the North
Atlantic Treaty Organization (NATO)
Forces, and their contractors from
liability for Afghanistan taxes and
similar charges (e.g., customs, duties,
fees).
The Security and Defense Cooperation
Agreement (the Agreement) between the
Islamic Republic of Afghanistan and the
United States of America was signed on
September 30, 2014, and entered into
force on January 1, 2015. The
Agreement exempts the United States
Forces from paying any tax or similar
charge assessed by the Government of
Afghanistan within Afghanistan. The
Agreement exempts United States
contractors and subcontractors (other
than those that are Afghan legal entities
or residents) from paying any tax or
similar charges assessed by the
Government of Afghanistan within
Afghanistan on their activities relating
to or on behalf of the United States
Forces under a contract or subcontract
with or in support of United States
Forces. The Agreement also exempts the
acquisition, importation, exportation,
reexportation, transportation, and use of
supplies and services in Afghanistan, by
or on behalf of the United States Forces,
from any taxes, customs, duties, fees, or
similar charges in Afghanistan.
The Status of Forces Agreement
(SOFA) between NATO and the Islamic
Republic of Afghanistan was issued on
September 30, 2014, and entered into
force on January 1, 2015. The SOFA
exempts NATO Forces (other than those
VerDate Sep<11>2014
18:11 Oct 22, 2020
Jkt 253001
that are Afghan legal entities or
residents) from paying any tax or similar
charge assessed by the Government of
Afghanistan within Afghanistan. The
SOFA exempts NATO contractors and
subcontractors (other than those that are
Afghan legal entities or residents) from
paying any tax or similar charge
assessed by the Government of
Afghanistan within Afghanistan on their
activities relating to or on behalf of
NATO Forces under a contract or
subcontract with or in support of NATO
Forces. The SOFA also exempts the
acquisition, importation, exportation,
reexportation, transportation, and use of
supplies and services in Afghanistan
from all Afghan taxes, customs, duties,
fees, or similar charges.
This rule adds two new clauses that
notify contractors of requirements
relating to Afghanistan taxes or similar
charges when certain contracts are being
performed in Afghanistan. Since both
agreements are currently effective for
contractors operating in Afghanistan,
this rule is only notifying contractors
about the exemptions from liability for
Afghanistan taxes, customs, duties, fees
or similar charges. The rule is not
adding any new requirements for
contractors, however, it is providing
unified guidance for contractors
performing in Afghanistan.
No public comments were submitted
in response to the proposed rule.
However, the rule was updated to
clarify that both clauses only exempt
taxes or similar charges assessed by the
Government of Afghanistan.
in Afghanistan. Not applying these
clauses to contracts below the SAT and
for the acquisition of commercial items,
including COTS items, would exclude
contracts intended to be covered by this
rule and undermine the overarching
purpose of the rule for providing
guidance to all applicable contractors.
Consequently, DoD, GSA, and NASA are
applying the rule to applicable contracts
below the SAT and for the acquisition
of applicable commercial items,
including COTS items.
II. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold (SAT) and for Commercial
Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This rule creates two new clauses: (1)
FAR 52.229–13, Taxes—Foreign
Contracts in Afghanistan, and (2) FAR
52.229–14, Taxes—Foreign Contracts in
Afghanistan (North Atlantic Treaty
Organization Status of Forces
Agreement). The objective of the rule is
to notify U.S. Government contractors
that certain contracts performed in
Afghanistan are exempt from payment
liability for Afghan taxes, customs,
duties, fees or similar charges pursuant
to the Agreement and SOFA.
DoD, GSA, and NASA are applying
these two clauses to applicable
solicitations and contracts below the
SAT and to the acquisition of
commercial items, including COTS
items, as defined at FAR 2.101. This
rule clarifies the application of
requirements relating to treatment of
Afghan taxes, customs, duties, fees or
similar charges for contracts performed
V. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared
a Final Regulatory Flexibility Analysis
(FRFA) consistent with the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq. The
FRFA is summarized as follows:
PO 00000
Frm 00014
Fmt 4701
Sfmt 4700
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct 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 is not a significant
regulatory action and, therefore, is not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
IV. Executive Order 13771
This rule is not subject to E.O. 13771,
because this rule is not a significant
regulatory action under E.O. 12866.
DoD, GSA, and NASA are issuing a final
rule amending the Federal Acquisition
Regulation (FAR) to add two new clauses that
notify contractors of requirements relating to
Afghanistan taxes, customs, duties, fees, or
similar charges when certain contracts are
being performed in Afghanistan.
The Agreement between the Islamic
Republic of Afghanistan and the U.S.
Government exempts the U.S. Forces, and
their contractors and subcontractors (other
than those that are Afghan legal entities or
residents), from paying any tax or similar
charge assessed on activities associated with
contracts performed within Afghanistan.
The Status of Forces Agreement (SOFA)
between the North Atlantic Treaty
Organization (NATO) and the Islamic
Republic of Afghanistan exempts NATO
Forces and their contractors and
subcontractors (other than those that are
Afghan legal entities or residents) from
paying any tax or similar charge assessed
within Afghanistan.
E:\FR\FM\23OCR2.SGM
23OCR2
Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations
The objective is to notify contractors of
both the Agreement and SOFA to clarify how
they apply to contracts performed in
Afghanistan.
There were no issues raised by the public
in response to the Initial Regulatory
Flexibility Analysis provided in the proposed
rule.
According to data in the Federal
Procurement Data System, the Government
awarded an annual average of 4,277 contracts
for fiscal years 2017 and 2018 with the
principal place of performance in
Afghanistan to 444 unique contractors
annually, of which 488 contracts were
awarded annually to 110 unique small
businesses (23 percent). There was an
average of 488 contracts with the principal
place of performance in Afghanistan awarded
annually to small businesses in fiscal years
2017 and 2018. There was an average of
3,789 contracts with the principal place of
performance in Afghanistan awarded
annually to large businesses. The number of
potential subcontractors to which the clause
would flow down was calculated by using a
ratio of 1:3, subcontractors per prime contract
(4,277 annual prime contracts). This equates
to 1,426 subcontractors, of which DoD, GSA,
and NASA estimate that 75 percent would be
small entities (i.e., 1,069). The total number
of prime contractor and subcontractor small
businesses impacted annually is 1,577.
The final rule does not include additional
reporting, record keeping requirements, or
other compliance requirements.
There are no available alternatives to the
final rule to accomplish the desired objective
of the statute.
We do not expect this final rule to have a
significant economic impact on a substantial
number of small entities, because the rule is
not implementing any new requirements
with which small entities must comply. Also,
small entities will benefit from having one
governmentwide clause that identifies the
current requirements relating to Afghanistan
taxes or similar charges when contracts are
being performed in Afghanistan.
Interested parties may obtain a copy
of the FRFA from the Regulatory
Secretariat Division. The Regulatory
Secretariat Division has submitted a
copy of the FRFA to the Chief Counsel
for Advocacy of the Small Business
Administration.
khammond on DSKJM1Z7X2PROD with RULES2
VI. Paperwork Reduction Act
This rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 12, 29,
and 52
Government procurement.
William F. Clark
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 12, 29, and 52 as
set forth below:
1. The authority citation for 48 CFR
parts 12, 29, and 52 continues to read
as follows:
■
Authority: 40 U.S.C. 121(c); 10 U.S.C.
chapter 137; and 51 U.S.C. 20113.
PART 12—ACQUISITION OF
COMMERCIAL ITEMS
2. Amend section 12.301 by
redesignating paragraph (d)(13) as
paragraph (d)(15) and adding a new
paragraph (d)(13) and paragraph (d)(14)
to read as follows:
■
12.301 Solicitation provisions and
contract clauses for the acquisition of
commercial items.
*
*
*
*
*
(d) * * *
(13) Insert the clause at 52.229–13,
Taxes—Foreign Contracts in
Afghanistan, as prescribed in 29.402–
4(a).
(14) Insert the clause at 52.229–14,
Taxes—Foreign Contracts in
Afghanistan (North Atlantic Treaty
Organization Status of Forces
Agreement), as prescribed in 29.402–
4(b).
*
*
*
*
*
PART 29—TAXES
3. Add section 29.001 to read as
follows:
■
29.001
Definitions.
As used in this part—
North Atlantic Treaty Organization
(NATO) Forces means the Members of
the Force, Members of the Civilian
Component, NATO Personnel and all
property, equipment, and materiel of
NATO, NATO Member States, and
Operational Partners present in the
territory of Afghanistan.
U.S. Forces means the entity
comprising the members of the force
and of the civilian component, and all
property, equipment, and materiel of the
United States Armed Forces present in
the territory of Afghanistan.
4. Add section 29.402–4 to read as
follows:
■
VerDate Sep<11>2014
18:11 Oct 22, 2020
Jkt 253001
PO 00000
Frm 00015
Fmt 4701
Sfmt 4700
67625
29.402–4 Taxes—Foreign Contracts in
Afghanistan.
(a) Use the clause at 52.229–13,
Taxes—Foreign Contracts in
Afghanistan, in solicitations and
contracts with performance in
Afghanistan awarded by or on behalf of
U.S. Forces, unless the clause at 52.229–
14 is used.
(b) Use the clause at 52.229–14,
Taxes—Foreign Contracts in
Afghanistan (North Atlantic Treaty
Organization Status of Forces
Agreement), instead of the clause at
52.229–13, Taxes—Foreign Contracts in
Afghanistan, in solicitations and
contracts with performance in
Afghanistan awarded on behalf of or in
support of the North Atlantic Treaty
Organization (NATO), which are
governed by the NATO Status of Forces
Agreement (SOFA).
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
5. Add sections 52.229–13 and
52.229–14 to read as follows:
■
52.229–13 Taxes—Foreign Contracts in
Afghanistan.
As prescribed in 29.402–4(a), use the
following clause:
Taxes—Foreign Contracts in Afghanistan
(Nov 2020)
(a) Definition. U.S. Forces, as used in this
clause, means the entity comprising the
members of the force and of the civilian
component, and all property, equipment, and
materiel of the United States Armed Forces
present in the territory of Afghanistan.
(b) Tax exemption. This acquisition is
covered by the Security and Defense
Cooperation Agreement (the Agreement)
between the Islamic Republic of Afghanistan
(Afghanistan) and the United States of
America signed on September 30, 2014, and
entered into force on January 1, 2015.
(1) The Agreement exempts the United
States Government, and its contractors and
subcontractors (other than those that are
Afghan legal entities or residents), from
paying any tax or similar charge assessed by
the Government of Afghanistan on activities
associated with this contract within
Afghanistan if the activities are on behalf of
or in support of U.S. Forces. The Agreement
also exempts the acquisition, importation,
exportation, reexportation, transportation,
and use of supplies and services in
Afghanistan, on behalf of or in support of
U.S. Forces, from any taxes, customs, duties,
fees, or similar charges imposed by the
Government of Afghanistan.
(2) The Contractor shall exclude any
Afghan taxes, customs, duties, fees, or similar
charges from the contract price, other than
those charged to Afghan legal entities or
residents.
(3) The Agreement does not exempt Afghan
employees of Government contractors and
subcontractors from Afghan tax laws. To the
E:\FR\FM\23OCR2.SGM
23OCR2
67626
Federal Register / Vol. 85, No. 206 / Friday, October 23, 2020 / Rules and Regulations
extent required by Afghan law, the
Contractor shall withhold tax from the wages
of these employees and remit those payments
to the appropriate Afghan taxing authority.
These withholdings are an individual’s
liability, not a tax against the Contractor.
(c) Subcontracts. The Contractor shall
include the substance of this clause,
including this paragraph (c), in all
subcontracts, including subcontracts for
commercial items.
(End of clause)
52.229–14 Taxes—Foreign Contracts in
Afghanistan (North Atlantic Treaty
Organization Status of Forces Agreement).
As prescribed in 29.402–4(b), use the
following clause:
khammond on DSKJM1Z7X2PROD with RULES2
Taxes—Foreign Contracts in Afghanistan
(North Atlantic Treaty Organization Status
of Forces Agreement) (Nov 2020)
(a) Definition. North Atlantic Treaty
Organization (NATO) Forces, as used in this
clause, means the Members of the Force,
Members of the Civilian Component, NATO
Personnel and all property, equipment, and
materiel of NATO, NATO Member States,
and Operational Partners present in the
territory of Afghanistan.
(b) Tax exemption. This acquisition is
covered by the Status of Forces Agreement
(SOFA) entered into between NATO and the
Islamic Republic of Afghanistan
(Afghanistan) issued on September 30, 2014,
and entered into force on January 1, 2015.
(1) The SOFA exempts NATO Forces and
its contractors and subcontractors (other than
those that are Afghan legal entities or
residents) from paying any tax or similar
charge assessed by the Government of
Afghanistan within Afghanistan if the
activities are on behalf of or in support of
NATO Forces. The SOFA also exempts the
acquisition, importation, exportation,
reexportation, transportation, and use of
supplies and services in Afghanistan on
behalf of or in support of NATO Forces from
all Afghan taxes, customs, duties, fees, or
similar charges.
(2) The Contractor shall exclude any
Afghan taxes, customs, duties, fees or similar
charges from the contract price, other than
those charged to Afghan legal entities or
residents.
(3) Afghan citizens employed by NATO
contractors and subcontractors are subject to
Afghan tax laws. To the extent required by
Afghan law, the Contractor shall withhold
tax from the wages of these employees and
remit those withholdings to the appropriate
Afghan taxing authority. These withholdings
are an individual’s liability, not a tax against
the Contractor.
(c) Subcontracts. The Contractor shall
include the substance of this clause,
including this paragraph (c), in all
subcontracts including subcontracts for
commercial items.
(End of clause)
[FR Doc. 2020–21700 Filed 10–22–20; 8:45 am]
BILLING CODE 6820–EP–P
VerDate Sep<11>2014
18:11 Oct 22, 2020
Jkt 253001
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 22 and 52
[FAC 2021–02; FAR Case 2019–002; Item
VII; Docket No. FAR 2019–0004, Sequence
No. 1]
RIN 9000–AN85
Federal Acquisition Regulation:
Recreational Services on Federal
Lands
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA are
issuing a final rule to amend the Federal
Acquisition Regulation (FAR) to
implement a Department of Labor (DOL)
rule, which exempts certain contracts
for seasonal recreational services or
seasonal recreational equipment rental
for the general public on Federal lands
from an Executive order on minimum
wage. This rule does not change the
extent to which contractors can be used
to assist Federal agencies with
providing services on Federal lands.
This rule only changes the extent to
which minimum wages are required for
applicable Federal contracts.
DATES: Effective: November 23, 2020.
FOR FURTHER INFORMATION CONTACT: Mr.
Kevin Funk, Procurement Analyst, at
202–357–5805 or kevin.funk@gsa.gov
for clarification of content. For
information pertaining to status or
publication schedules, contact the
Regulatory Secretariat Division at 202–
501–4755. Please cite FAC 2021–02,
FAR Case 2019–002.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
DoD, GSA, and NASA published a
proposed rule on October 21, 2019, at 84
FR 56157, to amend the FAR to
implement a DOL final rule, Minimum
Wage for Contractors; Updating
Regulations To Reflect Executive Order
13838, published in the Federal
Register at 83 FR 48537 on September
26, 2018.
The DOL rule implemented Executive
Order (E.O.) 13838, Exemption From
Executive Order 13658 for Recreational
Services on Federal Lands (May 25,
2018, published June 1, 2018, 83 FR
25341), which exempted certain
PO 00000
Frm 00016
Fmt 4701
Sfmt 4700
contracts and contract-like instruments
from the requirements of E.O. 13658,
Establishing a Minimum Wage for
Contractors. E.O. 13658 raised the
hourly minimum wage paid to workers
performing on or in connection with
covered Federal contracts to: (i) $10.10
per hour, beginning January 1, 2015;
and (ii) beginning January 1, 2016, and
annually thereafter, an amount
determined by the Secretary of Labor in
accordance with the E.O. As of January
1, 2020, E.O. 13658 raised minimum
wage to $10.80 per hour (84 FR 49345).
E.O. 13838 and DOL’s implementing
regulation exempt contracts or contractlike instruments entered into with the
Federal Government in connection with
seasonal recreational services or
seasonal recreational equipment rental
for the general public on Federal lands
from the requirements of E.O. 13658;
lodging and food services are not
exempted.
The purpose of this rule is to make a
conforming change in the FAR. This
rule implements E.O. 13838 by
amending FAR 22.1903(b)(2) and FAR
clause 52.222–55(c)(2) to conform to the
DOL rule by adding seasonal
recreational services or seasonal
recreational equipment rental for the
general public on Federal lands to the
list of exemptions.
Eighteen respondents provided
comments in response to the proposed
rule.
II. Discussion and Analysis
The Civilian Agency Acquisition
Council and the Defense Acquisition
Regulations Council (the Councils)
reviewed the public comments in the
development of the final rule. A
discussion of the comments and the
changes made to the rule as a result of
those comments are provided as
follows:
A. Changes to Rule
A new definition for ‘‘seasonal
recreational equipment rental’’ was
added to provide additional clarity
within the rule. An additional
conforming editorial change was also
made within the FAR clause at 52.222–
55.
B. Analysis of Public Comments
1. Support for the Rule
Comment: One respondent expressed
support for the rule.
Response: Noted.
2. Legal Sufficiency of Rule
Comment: Two respondents stated the
rule was illegal or would violate E.O.
13658.
E:\FR\FM\23OCR2.SGM
23OCR2
]]>Agencies
[Federal Register Volume 85, Number 206 (Friday, October 23, 2020)]
[Rules and Regulations]
[Pages 67623-67626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21700]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 12, 29, and 52
[FAC 2021-02; FAR Case 2018-023; Item VI; Docket No. FAR-2018-0023,
Sequence No. 1]
RIN 9000-AN81
Federal Acquisition Regulation: Taxes--Foreign Contracts in
Afghanistan
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to add two new clauses that notify
[[Page 67624]]
contractors of requirements relating to Afghanistan taxes or similar
charges when contracts are being performed in Afghanistan.
DATES: Effective: November 23, 2020.
FOR FURTHER INFORMATION CONTACT: Mr. Kevin Funk, Procurement Analyst,
at 202-357-5805 or [email protected] for clarification of content. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat Division at 202-501-4755. Please cite FAC 2021-
02, FAR Case 2018-023.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule on September 20, 2019,
at 84 FR 49502, to add two new clauses that notify contractors of
requirements relating to Afghanistan taxes or similar charges when
contracts are being performed in Afghanistan. A correction to the
proposed rule was published on October 15, 2019, at 84 FR 55109, to
correct the regulation identifier number.
Agreements established with the Islamic Republic of Afghanistan
exempt the United States Forces and the North Atlantic Treaty
Organization (NATO) Forces, and their contractors from liability for
Afghanistan taxes and similar charges (e.g., customs, duties, fees).
The Security and Defense Cooperation Agreement (the Agreement)
between the Islamic Republic of Afghanistan and the United States of
America was signed on September 30, 2014, and entered into force on
January 1, 2015. The Agreement exempts the United States Forces from
paying any tax or similar charge assessed by the Government of
Afghanistan within Afghanistan. The Agreement exempts United States
contractors and subcontractors (other than those that are Afghan legal
entities or residents) from paying any tax or similar charges assessed
by the Government of Afghanistan within Afghanistan on their activities
relating to or on behalf of the United States Forces under a contract
or subcontract with or in support of United States Forces. The
Agreement also exempts the acquisition, importation, exportation,
reexportation, transportation, and use of supplies and services in
Afghanistan, by or on behalf of the United States Forces, from any
taxes, customs, duties, fees, or similar charges in Afghanistan.
The Status of Forces Agreement (SOFA) between NATO and the Islamic
Republic of Afghanistan was issued on September 30, 2014, and entered
into force on January 1, 2015. The SOFA exempts NATO Forces (other than
those that are Afghan legal entities or residents) from paying any tax
or similar charge assessed by the Government of Afghanistan within
Afghanistan. The SOFA exempts NATO contractors and subcontractors
(other than those that are Afghan legal entities or residents) from
paying any tax or similar charge assessed by the Government of
Afghanistan within Afghanistan on their activities relating to or on
behalf of NATO Forces under a contract or subcontract with or in
support of NATO Forces. The SOFA also exempts the acquisition,
importation, exportation, reexportation, transportation, and use of
supplies and services in Afghanistan from all Afghan taxes, customs,
duties, fees, or similar charges.
This rule adds two new clauses that notify contractors of
requirements relating to Afghanistan taxes or similar charges when
certain contracts are being performed in Afghanistan. Since both
agreements are currently effective for contractors operating in
Afghanistan, this rule is only notifying contractors about the
exemptions from liability for Afghanistan taxes, customs, duties, fees
or similar charges. The rule is not adding any new requirements for
contractors, however, it is providing unified guidance for contractors
performing in Afghanistan.
No public comments were submitted in response to the proposed rule.
However, the rule was updated to clarify that both clauses only exempt
taxes or similar charges assessed by the Government of Afghanistan.
II. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This rule creates two new clauses: (1) FAR 52.229-13, Taxes--
Foreign Contracts in Afghanistan, and (2) FAR 52.229-14, Taxes--Foreign
Contracts in Afghanistan (North Atlantic Treaty Organization Status of
Forces Agreement). The objective of the rule is to notify U.S.
Government contractors that certain contracts performed in Afghanistan
are exempt from payment liability for Afghan taxes, customs, duties,
fees or similar charges pursuant to the Agreement and SOFA.
DoD, GSA, and NASA are applying these two clauses to applicable
solicitations and contracts below the SAT and to the acquisition of
commercial items, including COTS items, as defined at FAR 2.101. This
rule clarifies the application of requirements relating to treatment of
Afghan taxes, customs, duties, fees or similar charges for contracts
performed in Afghanistan. Not applying these clauses to contracts below
the SAT and for the acquisition of commercial items, including COTS
items, would exclude contracts intended to be covered by this rule and
undermine the overarching purpose of the rule for providing guidance to
all applicable contractors. Consequently, DoD, GSA, and NASA are
applying the rule to applicable contracts below the SAT and for the
acquisition of applicable commercial items, including COTS items.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct 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 is not a significant regulatory action and, therefore, is not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993. This rule is not a major rule
under 5 U.S.C. 804.
IV. Executive Order 13771
This rule is not subject to E.O. 13771, because this rule is not a
significant regulatory action under E.O. 12866.
V. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows:
DoD, GSA, and NASA are issuing a final rule amending the Federal
Acquisition Regulation (FAR) to add two new clauses that notify
contractors of requirements relating to Afghanistan taxes, customs,
duties, fees, or similar charges when certain contracts are being
performed in Afghanistan.
The Agreement between the Islamic Republic of Afghanistan and
the U.S. Government exempts the U.S. Forces, and their contractors
and subcontractors (other than those that are Afghan legal entities
or residents), from paying any tax or similar charge assessed on
activities associated with contracts performed within Afghanistan.
The Status of Forces Agreement (SOFA) between the North Atlantic
Treaty Organization (NATO) and the Islamic Republic of Afghanistan
exempts NATO Forces and their contractors and subcontractors (other
than those that are Afghan legal entities or residents) from paying
any tax or similar charge assessed within Afghanistan.
[[Page 67625]]
The objective is to notify contractors of both the Agreement and
SOFA to clarify how they apply to contracts performed in
Afghanistan.
There were no issues raised by the public in response to the
Initial Regulatory Flexibility Analysis provided in the proposed
rule.
According to data in the Federal Procurement Data System, the
Government awarded an annual average of 4,277 contracts for fiscal
years 2017 and 2018 with the principal place of performance in
Afghanistan to 444 unique contractors annually, of which 488
contracts were awarded annually to 110 unique small businesses (23
percent). There was an average of 488 contracts with the principal
place of performance in Afghanistan awarded annually to small
businesses in fiscal years 2017 and 2018. There was an average of
3,789 contracts with the principal place of performance in
Afghanistan awarded annually to large businesses. The number of
potential subcontractors to which the clause would flow down was
calculated by using a ratio of 1:3, subcontractors per prime
contract (4,277 annual prime contracts). This equates to 1,426
subcontractors, of which DoD, GSA, and NASA estimate that 75 percent
would be small entities (i.e., 1,069). The total number of prime
contractor and subcontractor small businesses impacted annually is
1,577.
The final rule does not include additional reporting, record
keeping requirements, or other compliance requirements.
There are no available alternatives to the final rule to
accomplish the desired objective of the statute.
We do not expect this final rule to have a significant economic
impact on a substantial number of small entities, because the rule
is not implementing any new requirements with which small entities
must comply. Also, small entities will benefit from having one
governmentwide clause that identifies the current requirements
relating to Afghanistan taxes or similar charges when contracts are
being performed in Afghanistan.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat Division. The Regulatory Secretariat Division
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of
the Small Business Administration.
VI. Paperwork Reduction Act
This rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 12, 29, and 52
Government procurement.
William F. Clark
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 12, 29, and 52 as
set forth below:
0
1. The authority citation for 48 CFR parts 12, 29, and 52 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 12--ACQUISITION OF COMMERCIAL ITEMS
0
2. Amend section 12.301 by redesignating paragraph (d)(13) as paragraph
(d)(15) and adding a new paragraph (d)(13) and paragraph (d)(14) to
read as follows:
12.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(d) * * *
(13) Insert the clause at 52.229-13, Taxes--Foreign Contracts in
Afghanistan, as prescribed in 29.402-4(a).
(14) Insert the clause at 52.229-14, Taxes--Foreign Contracts in
Afghanistan (North Atlantic Treaty Organization Status of Forces
Agreement), as prescribed in 29.402-4(b).
* * * * *
PART 29--TAXES
0
3. Add section 29.001 to read as follows:
29.001 Definitions.
As used in this part--
North Atlantic Treaty Organization (NATO) Forces means the Members
of the Force, Members of the Civilian Component, NATO Personnel and all
property, equipment, and materiel of NATO, NATO Member States, and
Operational Partners present in the territory of Afghanistan.
U.S. Forces means the entity comprising the members of the force
and of the civilian component, and all property, equipment, and
materiel of the United States Armed Forces present in the territory of
Afghanistan.
0
4. Add section 29.402-4 to read as follows:
29.402-4 Taxes--Foreign Contracts in Afghanistan.
(a) Use the clause at 52.229-13, Taxes--Foreign Contracts in
Afghanistan, in solicitations and contracts with performance in
Afghanistan awarded by or on behalf of U.S. Forces, unless the clause
at 52.229-14 is used.
(b) Use the clause at 52.229-14, Taxes--Foreign Contracts in
Afghanistan (North Atlantic Treaty Organization Status of Forces
Agreement), instead of the clause at 52.229-13, Taxes--Foreign
Contracts in Afghanistan, in solicitations and contracts with
performance in Afghanistan awarded on behalf of or in support of the
North Atlantic Treaty Organization (NATO), which are governed by the
NATO Status of Forces Agreement (SOFA).
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
5. Add sections 52.229-13 and 52.229-14 to read as follows:
52.229-13 Taxes--Foreign Contracts in Afghanistan.
As prescribed in 29.402-4(a), use the following clause:
Taxes--Foreign Contracts in Afghanistan (Nov 2020)
(a) Definition. U.S. Forces, as used in this clause, means the
entity comprising the members of the force and of the civilian
component, and all property, equipment, and materiel of the United
States Armed Forces present in the territory of Afghanistan.
(b) Tax exemption. This acquisition is covered by the Security
and Defense Cooperation Agreement (the Agreement) between the
Islamic Republic of Afghanistan (Afghanistan) and the United States
of America signed on September 30, 2014, and entered into force on
January 1, 2015.
(1) The Agreement exempts the United States Government, and its
contractors and subcontractors (other than those that are Afghan
legal entities or residents), from paying any tax or similar charge
assessed by the Government of Afghanistan on activities associated
with this contract within Afghanistan if the activities are on
behalf of or in support of U.S. Forces. The Agreement also exempts
the acquisition, importation, exportation, reexportation,
transportation, and use of supplies and services in Afghanistan, on
behalf of or in support of U.S. Forces, from any taxes, customs,
duties, fees, or similar charges imposed by the Government of
Afghanistan.
(2) The Contractor shall exclude any Afghan taxes, customs,
duties, fees, or similar charges from the contract price, other than
those charged to Afghan legal entities or residents.
(3) The Agreement does not exempt Afghan employees of Government
contractors and subcontractors from Afghan tax laws. To the
[[Page 67626]]
extent required by Afghan law, the Contractor shall withhold tax
from the wages of these employees and remit those payments to the
appropriate Afghan taxing authority. These withholdings are an
individual's liability, not a tax against the Contractor.
(c) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (c), in all subcontracts,
including subcontracts for commercial items.
(End of clause)
52.229-14 Taxes--Foreign Contracts in Afghanistan (North Atlantic
Treaty Organization Status of Forces Agreement).
As prescribed in 29.402-4(b), use the following clause:
Taxes--Foreign Contracts in Afghanistan (North Atlantic Treaty
Organization Status of Forces Agreement) (Nov 2020)
(a) Definition. North Atlantic Treaty Organization (NATO)
Forces, as used in this clause, means the Members of the Force,
Members of the Civilian Component, NATO Personnel and all property,
equipment, and materiel of NATO, NATO Member States, and Operational
Partners present in the territory of Afghanistan.
(b) Tax exemption. This acquisition is covered by the Status of
Forces Agreement (SOFA) entered into between NATO and the Islamic
Republic of Afghanistan (Afghanistan) issued on September 30, 2014,
and entered into force on January 1, 2015.
(1) The SOFA exempts NATO Forces and its contractors and
subcontractors (other than those that are Afghan legal entities or
residents) from paying any tax or similar charge assessed by the
Government of Afghanistan within Afghanistan if the activities are
on behalf of or in support of NATO Forces. The SOFA also exempts the
acquisition, importation, exportation, reexportation,
transportation, and use of supplies and services in Afghanistan on
behalf of or in support of NATO Forces from all Afghan taxes,
customs, duties, fees, or similar charges.
(2) The Contractor shall exclude any Afghan taxes, customs,
duties, fees or similar charges from the contract price, other than
those charged to Afghan legal entities or residents.
(3) Afghan citizens employed by NATO contractors and
subcontractors are subject to Afghan tax laws. To the extent
required by Afghan law, the Contractor shall withhold tax from the
wages of these employees and remit those withholdings to the
appropriate Afghan taxing authority. These withholdings are an
individual's liability, not a tax against the Contractor.
(c) Subcontracts. The Contractor shall include the substance of
this clause, including this paragraph (c), in all subcontracts
including subcontracts for commercial items.
(End of clause)
[FR Doc. 2020-21700 Filed 10-22-20; 8:45 am]
BILLING CODE 6820-EP-P
