Taxes

Table of Contents:

• Liability

• Definitions

• Exclusions

• Withholding

Taxes

Liability

As reflected in the following exemplars, in a typical sales transaction, the responsibility is usually on the buyer or customer to pay sales taxes and other related taxes arising from the transaction:

Exemplar C70-1

All taxes (other than taxes assessed on the net income of Contractor) are the responsibility of Customer. There shall be no deduction in respect of any such taxes, or any offset against payment for any taxes; and all payments shall be grossed up to take account of any withholding taxes.

Exemplar C70-2

Customer shall be responsible for and shall pay all Taxes due under or in relation to this Agreement. All amounts payable by Customer to Vendor under or in relation to this Agreement are exclusive of any Taxes that may be assessed by any jurisdiction or governmental authority, whether based on gross revenue, the delivery, possession, use or commercial distribution of Applications or any service, or otherwise.

Exemplar C70-3

All payments made by Customer to Contractor under this Agreement will be made free and clear of any deduction or withholding, as may be required by law. If any such deduction or withholding (including but not limited to cross-border withholding taxes) is required on any payment, Customer will pay such additional amounts as are necessary so that the net amount received by Contractor is equal to the amount then due and payable under this Agreement. Contractor will provide Customer with such tax forms as are reasonably requested in order to reduce or eliminate the amount of any withholding or deduction for taxes in respect of payments made under this Agreement.

Exemplar C70-4

All prices shall be in U.S. dollars and are exclusive of foreign, U.S. federal, state, local, municipal, or other governmental taxes, duties, levies, fees, excises, or tariffs, arising as a result of or in connection with the transactions contemplated under this agreement, including any state or local sales or use taxes. In regions where value added tax or sales tax equivalent exists, all amounts payable under this Agreement shall be exclusive of such value added tax or analogous taxes (if any) which Customer shall pay at the rate applicable thereto from time to time, upon production of a valid value added tax invoice by Supplier (applicable in the country of supply). From time to time Customer may qualify for tax exemptions, in which case Customer will provide the Supplier a certificate of exemption or other appropriate documentary proof of exemption.

By contrast, rather than agreeing generally to put the burden on the customer to pay taxes and hoping for the best, the seller may wish to have more participation in and direct control over the collection and payment of such tax payments, such as the ability to charge the buyer for such payments and/or the ability to pass such payments on to the buyer:

Exemplar C70-5

Customer acknowledges that currently, and from time to time, there is uncertainty about the regulatory classification and/or treatment of some of the Services that VENDOR provides and, consequently, uncertainty regarding what fees, taxes and surcharges are payable by VENDOR and/or Customer. Customer agrees that VENDOR has the right to determine, in its discretion, what fees, taxes and surcharges are due and to collect and remit them to the relevant governmental authorities, and/or to pay and pass them through to Customer. Customer hereby waives any claims that Customer may have regarding VENDOR’s collection or remittance of such fees, taxes and surcharges. If a governmental authority later provides clarifications that indicate VENDOR’s determination was incorrect, VENDOR shall refund to Customer any such fees, taxes and surcharges that are refunded to VENDOR, to the extent such fees, taxes and surcharges were passed through to Customer.

Exemplar C70-6

Local taxes, including sales taxes, VAT taxes, and similar taxes that Supplier is obligated by law to collect, will be charged as applicable on each separate shipment invoice. Taxes will be billed as a separate line item on Supplier’s invoice and shall not be included in the award price. In countries where Supplier has a legal entity, and any withholding or deduction is required by law, Buyer agrees to perform required deductions/withholdings. Buyer also agrees to provide Supplier with any original receipts to document that the deduction/withholding was done in accordance with local laws, and properly filed and paid to the relevant authorities. If original receipts/documentation are not provided, Supplier reserves the right to collect the remaining balance due. Any fines, penalties or other assessments resulting from Buyer’s failure to properly withhold/deduct or otherwise file taxes shall be covered by Buyer. In countries where Supplier does not have a legal entity, Buyer agrees to bear the costs of any deductions, withholdings, import duties, or other costs related to purchases from Supplier.

Exemplar C70-7

Prices in a Quote or SOW do not include applicable taxes, freight or handling charges. Any Items Ordered in one country for delivery to another may be subject to value added tax or similar indirect sales related taxes that are incurred by VENDOR and for which You are responsible and agree to reimburse VENDOR. VENDOR shall have the right to recover from You, and You shall pay, the amount of any federal, state, local, or foreign fees, charges or taxes arising as a result of the Agreement that are imposed on VENDOR or VENDOR’s Services, or measured on VENDOR’s receipts, and any other costs or expenses that VENDOR is entitled under applicable Law to pass through to or otherwise charge You for Your use or receipt of the Services. Such fees or taxes shall be invoiced to You in the form of a surcharge included on Your invoice. VENDOR shall be responsible for and shall pay all taxes measured by VENDOR’s net income. You shall provide VENDOR any and all documentation substantiating a claim for exemption from taxes or fees prior to the date that Services are first provided under the Agreement. To the extent such documentation is held invalid for any reason, You shall reimburse VENDOR for any tax or fee liability, including related interest and penalties arising from such invalid documentation.

Definitions

In the following exemplars, the parties attempt to identify the specific types of taxes which the buyer or customer has the responsibility to pay to the appropriate tax authorities:

Exemplar C70-8

Customer agrees to indemnify and hold harmless Vendor from and against any liability (either directly or by way of deduction, withholding or otherwise) for any present or future taxes. For purposes of the foregoing, "Taxes" means all taxes, levies, imposts, customs, duties, fees or similar charges of any nature, including sales or use tax, excise tax, stamp tax or duty, any withholding tax or value added tax, imposed by any jurisdiction or governmental authority, except solely for those based on Vendor’s net income.

Exemplar C70-9

You shall pay all federal, state, local, and foreign taxes, government fees, charges, surcharges or similar exactions imposed on the Services and/or products that are the subject of the Agreement including but not limited to state and local sales and use taxes, telecommunications taxes, federal and state universal service fund fees and/or state and local regulatory fees, as applicable.

Exemplar C70-10

All amounts payable by Customer under this Agreement are exclusive of any applicable taxes, levies, duties, or similar governmental assessments of any nature (including value-added, sales, and use taxes, but excluding withholding taxes and taxes based on Seller’s income, property, or employees) (“Taxes”) that may arise in connection with Customer’s purchases under this Agreement. If any such Taxes arise, Customer will pay such Taxes in addition to all other amounts payable under this Agreement, unless Customer provides Seller with a valid tax exemption certificate or other documentary proof, issued by an appropriate taxing authority, that no tax should be charged. If Customer is required by law to withhold any Taxes from its payments to Seller, Customer must provide with an official tax receipt or other appropriate documentation to support such payments.

Exclusions

As reflected in the following exemplars, the parties clarify that the customer’s obligation to pay taxes does not include taxes assessed on seller’s income or other taxable assets:

Exemplar C70-11

Customer will have no liability for any taxes based on Supplier’s net income, gross income, capital, net worth, franchise, privilege, property, or any similar taxes or assessments nor shall Customer be liable for any applicable state sales and use taxes for which Customer has a valid resale certificate or other exemption.

Exemplar C70-12

Taxes means all taxes, fees, expenses and similar charges, including fees associated with the recycling of the Equipment, or other environmental or similar provisions issued by a governmental entity, which are imposed, incurred, or payable due to the sale, staging, delivery, return, use, ownership, leasing, possession or disposal of the Equipment, excepting only taxes measured solely by the net income of Lessor or any franchise tax upon Lessor measured by Lessor's capital, capital stock or net worth.

Exemplar C70-13

Taxes do not include taxes on Contractor’s income, property, or employment.

Withholding

In the following exemplars, the parties agree that where the customer withholds taxes owed per applicable law, the customer should gross up payments so that the seller receives the agreed-to payment amount net of such taxes:

Exemplar C70-14

In the event that LICENSEE’s Government requires LICENSEE to withhold a tax from the payment of the fees specified above, LICENSEE shall add such tax to the said payments and pay it to the appropriate tax authority, so that LICENSOR gets exactly the amounts specified above. LICENSOR shall be solely responsible for all taxes payable outside LICENSEE’s country of incorporation.

Exemplar C70-15

If Customer is required to withhold any Taxes from payments owing to Vendor under this Agreement: (a) the amount of the payment due will be automatically increased to totally offset such Taxes, so that the amount actually remitted to Vendor, net of all Taxes required to be withheld, equals the amounts invoiced or otherwise due; and (b) Customer shall notify Vendor within thirty (30) days in the event such payments have been assessed and/or paid.

Exemplar C70-16

If You are required by law to make any deduction or withholding from any payment due hereunder to VENDOR, then, notwithstanding anything to the contrary contained in this Agreement, the gross amount payable by You to VENDOR will be increased so that, after any such deduction or withholding for taxes, the net amount received by VENDOR will not be less than VENDOR would have received had no such deduction or withholding been required. If any taxing or governmental authority asserts that You should have made a deduction for withholding for or on account of any taxes with respect to all or a portion of any payment made hereunder, You hereby agree to indemnify VENDOR for such withholding taxes and to hold VENDOR harmless on an after-tax basis from and against any taxes, interest or penalties levied or asserted against them in connection therewith.

Exemplar C70-17

Buyer agrees to gross up, if necessary, to ensure that Supplier receives the full amount due.

In the following exemplar, by contrast, such payment gross-up by the tax-paying customer is not required:

Exemplar C70-18

In the event taxes are required to be withheld by any government on payments required hereunder, Customer may deduct such taxes from the amount owed and pay such taxes to the appropriate tax authority, with Supplier receiving the net amount after such deductions. Customer agrees to provide Supplier with the original receipt documenting any withholding tax levied.