prohibition on taxation of united states assistance

prohibition on taxation of united states assistanceSec. 579. (a) Prohibition on Taxation.—None of the funds appropriated by this Act may be made available to provide assistance for a foreign country under a new bilateral agreement governing the terms and conditions under which such assistance is to be provided unless such agreement includes a provision stating that assistance provided by the United States shall be exempt from taxation, or reimbursed, by the foreign government, and the Secretary of State shall expeditiously seek to negotiate amendments to existing bilateral agreements, as necessary, to conform with this requirement.(b) Reimbursement of Foreign Taxes.—An amount equivalent to 200 percent of the total taxes assessed during fiscal year 2003 by a foreign government or entity against commodities financed under United States assistance programs for which funds are appropriated by this Act, either directly or through grantees, contractors and subcontractors, as of the date of the enactment of this Act, shall be withheld from obligation from funds appropriated for assistance for fiscal year 2004 and allocated for the central government of such country and for the West Bank and Gaza Program to the extent that the Secretary of State certifies and reports in writing to the Committees on Appropriations that such taxes have not been reimbursed to the Government of the United States.(c) De Minimis Exception.—Foreign taxes of a de minimis nature shall not be subject to the provisions of subsection (b).(d) Refund to the Treasury and Reprogramming of Funds.—Of the funds withheld from obligation for each country or entity pursuant to subsection (b), one-half may become available for reprogramming for other purposes (pursuant to section 515 117 STAT. 213 of this Act and consistent with the purposes for which such funds were originally appropriated) and one-half shall be deposited in the General Fund of the Treasury on, or within 5 days after, September 1, 2004, pursuant to the certification required under subsection (b).(e) Implementation.—The Secretary of State shall issue rules, regulations, or policy guidance, as appropriate, to implement the prohibition against the taxation of assistance contained in this section.(f) Report.—Not later than February 1, 2004, the Comptroller General of the United States shall submit a report to the Committees on Appropriations which assesses the following—(1) the extent to which existing bilateral agreements provide exemption from taxation;(2) the status of negotiations of new framework bilateral agreements or modifications of existing framework bilateral agreements;(3) the reasons why new framework bilateral agreements or modifications of existing bilateral agreements, entered into within the previous 5 years, have (as appropriate) failed to include exemption from taxation; and (4) the administrative procedures that foreign governments use to ensure that United States assistance commodities are not taxed or, if they are, that such taxes are reimbursed to the United States Government, and the adequacy of those procedures.(g) Definitions.—As used in this section—(1) the terms “taxes” and “taxation” refer to value added taxes and customs duties imposed on commodities financed with United States assistance for programs for which funds are appropriated by this Act; and(2) the term “bilateral agreement” refers to a framework bilateral agreement between the Government of the United States and the government of the country receiving assistance that describes the privileges and immunities applicable to United States foreign assistance for such country generally, or an individual agreement between the Government of the United States and such government that describes, among other things, the treatment for tax purposes that will be accorded the United States assistance provided under that agreement.