In plain English
FAR 52.229-9, Taxes-Cost-Reimbursement Contracts with Foreign Governments, is a contract clause prescribed at FAR 29.402-2(b), most recently dated Mar 1990. 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 29.402-2(b), insert the following clause:
Prescribing reference: FAR 29.402-2(b).
The official text, verbatim
As prescribed in 29.402-2(b), insert the following clause:
Taxes-Cost-Reimbursement Contracts with Foreign Governments (Mar 1990)
-
(a) Any tax or duty from which the United States Government is exempt by agreement with the Government of ______ [insert name of the foreign government], or from which any subcontractor under this contract is exempt under the laws of ______ [insert name of country], shall not constitute an allowable cost under this contract.
-
(b) If any subcontractor obtains a foreign tax credit that reduces its Federal income tax liability under the United States Internal Revenue Code (Title26, U.S. Code) because of the payment of any tax or duty that was reimbursed under this contract, the amount of the reduction shall be paid (not credited to the contract) to the Treasurer of the United States at the time the Federal income tax return is filed.
(End of clause)