§ 200.470 - Taxes (including Value Added Tax).

§ 200.470 Taxes (including Value Added Tax).

(a) For statesStates, local governments, and Indian tribes:Tribes.

(1) Taxes that a governmental unit is legally required to pay are allowable, except for self-assessed taxes that disproportionately affect Federal programs or changes in tax policies that disproportionately affect Federal programs.

(2) Gasoline taxes, motor vehicle fees, and other taxes that are, in effect, user fees for benefits provided to the Federal Government are allowable.

(3) This provision does not restrict the authority of the Federal awarding agency to identify taxes where Federal participation is inappropriate. Where the identification of the The cognizant agency for indirect costs may accept a reasonable approximation in circumstances where determining the amount of unallowable taxes would require an inordinate excessive amount of effort, the cognizant agency for indirect costs may accept a reasonable approximation thereof.

(b) For nonprofit organizations and IHEs:.

(1) In general, taxes which the non-Federal entity Taxes that the recipient or subrecipient is required to pay and which are paid or accrued in accordance with GAAP , and are generally allowable. These costs include payments made to local governments in lieu instead of taxes which and that are commensurate with the local government services received are allowable, except for. The following taxes are unallowable:

(i) Taxes from for which exemptions are available to the non-Federal entity recipient or subrecipient directly or which are available to the non-Federal entity recipient or subrecipient based on an exemption afforded the Federal Government and, in the latter case, when the Federal awarding agency makes available the necessary exemption certificates,;

(ii) Special assessments on land which represent capital improvements, ; and

(iii) Federal income taxes.

(2) Any refund of taxes , and any payment to the non-Federal entity of interest thereon, which were allowed as Federal award costs, will must be credited either to the Federal Government as a cost reduction or cash refund, as appropriate, to the Federal Government. However, any interest actually paid or credited to an non-Federal entity a recipient or subrecipient incident to a refund of tax, interest, and penalty will be paid or credited to the Federal Government only to the extent that such interest accrued over the period during which the non- Federal entity Government has been reimbursed by the Federal Government recipient or subrecipient for the taxes, interest, and penalties.

(c) Value Added Tax (VAT). Foreign taxes charged for the purchase of goods or services that a non-Federal entity procurement transactions that a recipient or subrecipient is legally required to pay in a country is an allowable expense under Federal awardsare allowable. Foreign tax refunds or applicable credits under Federal awards refer to receipts , or reduction of expenditures, which operate to offset or reduce expense items that are allocable to Federal awards as direct or indirect costs. To the extent that such credits accrued or received by the non-Federal entity recipient or subrecipient relate to allowable cost, these costs must be credited to the Federal awarding agency either as costs a cost reduction or cash refunds. If , as appropriate. In cases where the costs are credited back to the Federal award, the non-Federal entity recipient or subrecipient may reduce the Federal share of costs by the amount of the foreign tax reimbursement, or where Federal award has not expired, the Federal agency may allow the recipient or subrecipient to use the foreign government tax refund for approved activities under the Federal award with prior approval of the Federal awarding agency.