In plain English
FAR 52.229-7, Taxes-Fixed-Price Contracts with Foreign Governments, is a contract clause prescribed at FAR 29.402-1(b), most recently dated Feb 2013. The complete official text is reproduced below, verbatim, from GSA's published FAR source files.
Its text contains no sentence requiring insertion into subcontracts; see the flowdown section below for what that does and does not mean.
Does it flow down to subcontracts?
No flowdown mandate found in the clause text
We scanned the full clause text and found no sentence directing the contractor to insert this clause into subcontracts. That is a statement about the text, not legal advice: a prime contractor may still flow terms down contractually, an agency supplement (DFARS, VAAR, …) may add requirements, and clauses listed below (if any) may order this clause into subcontracts from the outside.
Where it's prescribed
As prescribed in 29.402-1(b), insert the following clause:
Prescribing reference: FAR 29.402-1(b).
The official text, verbatim
As prescribed in 29.402-1(b), insert the following clause:
Taxes-Fixed-Price Contracts with Foreign Governments (Feb 2013)
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(a) "Contract date," as used in this clause, means the date set for bid opening or, if this is a negotiated contract or a modification, the effective date of this contract or modification.
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(b)
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(1) The contract price, including the prices in any subcontracts under this contract, does not include any tax or duty that the Government of the United States and the Government of ______ [insert name of the foreign government] have agreed shall not apply to expenditures made by the United States in ______ [insert name of country], or any tax or duty not applicable to this contract or any subcontracts under this contract, pursuant to the laws of ______ [insert name of country]. If any such tax or duty has been included in the contract price, through error or otherwise, the contract price shall be correspondingly reduced.
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(2) Taxes imposed under 26 U.S.C. 5000 C may not be included in the contract price.
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(c) If, after the contract date, the Government of the United States and the Government of ______ [insert name of the foreign government] agree that any tax or duty included in the contract price shall not apply to expenditures by the United States in ________ [insert name of country], the contract price shall be reduced accordingly.
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(d) No adjustment shall be made in the contract price under this clause unless the amount of the adjustment exceeds $250.
(End of clause)