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Last Updated: January 8, 2012

-STATUTE

(a) Imposition of tax
      There is hereby imposed on any foreign person that receives a
    specified Federal procurement payment a tax equal to 2 percent of
    the amount of such specified Federal procurement payment.
    (b) Specified Federal procurement payment
      For purposes of this section, the term "specified Federal
    procurement payment" means any payment made pursuant to a contract
    with the Government of the United States for - 
        (1) the provision of goods, if such goods are manufactured or
      produced in any country which is not a party to an international
      procurement agreement with the United States, or
        (2) the provision of services, if such services are provided in
      any country which is not a party to an international procurement
      agreement with the United States.
    (c) Foreign person
      For purposes of this section, the term "foreign person" means any
    person other than a United States person.
    (d) Administrative provisions
      (1) Withholding
        The amount deducted and withheld under chapter 3 shall be
      increased by the amount of tax imposed by this section on such
      payment.
      (2) Other administrative provisions
        For purposes of subtitle F, any tax imposed by this section
      shall be treated as a tax imposed by subtitle A.

-SOURCE

(Added Pub. L. 111-347, title III, Sec. 301(a)(1), Jan. 2, 2011,
    124 Stat. 3666.)

-MISC1

EFFECTIVE DATE                          
      Pub. L. 111-347, title III, Sec. 301(a)(3), Jan. 2, 2011, 124
    Stat. 3666, provided that: "The amendments made by this subsection
    [enacting this section] shall apply to payments received pursuant
    to contracts entered into on and after the date of the enactment of
    this Act [Jan. 2, 2011]."

                   PROHIBITION ON REIMBURSEMENT OF FEES               
      Pub. L. 111-347, title III, Sec. 301(b), Jan. 2, 2011, 124 Stat.
    3666, provided that:
      "(1) In general. - The head of each executive agency shall take
    any and all measures necessary to ensure that no funds are
    disbursed to any foreign contractor in order to reimburse the tax
    imposed under section 5000C of the Internal Revenue Code of 1986.
      "(2) Annual review. - The Administrator for Federal Procurement
    Policy shall annually review the contracting activities of each
    executive agency to monitor compliance with the requirements of
    paragraph (1).
      "(3) Executive agency. - For purposes of this subsection, the
    term 'executive agency' has the meaning given the term in section 4
    of the Office of Federal Procurement Policy Act ([former] 41 U.S.C.
    403) [see 41 U.S.C. 133]."

                                APPLICATION                            
      Pub. L. 111-347, title III, Sec. 301(c), Jan. 2, 2011, 124 Stat.
    3666, provided that: "This section [enacting this section and
    provisions set out as notes under this section] and the amendments
    made by this section shall be applied in a manner consistent with
    United States obligations under international agreements."