Manufacture of other food products

Manufacturing is a Qualifying Activity under the Free Zone regime. Forensic auditors will verify the 'substantial transformation' threshold to ensure the activity is not a masked 'Excluded Activity' (e.g., distribution to mainland). If the entity operates in a non-Designated Zone, income from the sale of these food products to mainland persons will be taxed at 9% unless the 'De Minimis' rule applies.

Audit Red Flag

Misclassification of 'Trading' or 'Distribution' as 'Manufacturing' where only minor assembly or repackaging occurs without substantial transformation of raw materials.

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