Q A.2013.07.30.pdf

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Freight Forwarding Services for Japan Freight Railway Company (JFRC) 5-ton Containers in Japan
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FA520913T0071
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Q A Consumption Tax Exemption (Refer to the question in the Minutes of Preproposal Conference dated 20 Jun 2013 paragraph 5.c SF1449.)

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Questions & Answers

RFQ No. FA5209-13-T-0071

Freight Forwarding Services for JFRC 5-ton containers in Japan

As of 30 Jul 2013

DATE: 30 Jul 2013

No. 1 FAR 52.212-4, Consumption Tax Exemption (Refer to the question in the Minutes of

Preproposal Conference, dated 20 Jun 2013, paragraph 5.c, SF1449.)

Question: The solicitation provision FAR 52.212-4 states that consumption tax is exempted for services procured for US Forces' official purposes. What about the consumption tax that subcontractors incur? Should contractors include the costs of Japanese consumption taxes in prices to offer to solicitations?

Answer: No. Contractors should NOT include any Japanese taxes, including consumption taxes, in prices/offers submitted in response to solicitations.

The US-Japan Status of Forces Agreement (SOFA) specifically excludes payment of Japanese taxes for materials, supplies, equipment and services procured for official purposes in Japan by the United

States armed forces or by authorized procurement agencies of the United States armed forces, i.e., by a FAR-warranted contracting officer. Although subcontractors are initially required to pay consumption taxes, under the Japanese Consumption Tax Law, the prime contractor may seek a refund from the local

Japanese tax office for any consumption taxes its subcontractors paid in support of the US Forces related acquisitions. The prime contractor then refunds the Japanese consumption taxes to the subcontractors. Therefore, Japanese consumption taxes should not be included in offers submitted to the US Forces.

The following procedures should be used to obtain consumption tax exclusion or refund:

Prime contractor:

1. Complete and submit Japanese consumption tax refund form available online or from the local tax office.

Subcontractor:

1. First, the subcontractor must pay the tax on materials, supplies, equipment, and services procured.

2. The subcontractor requests refund of Japanese consumption tax from the prime contractor.

3. The prime contractor seeks refund from Japanese tax office and refunds money to subcontractor.

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