Manufacture of wearing apparel

Manufacturing of wearing apparel falls under 'Manufacturing of goods or materials'. Forensic focus is on verifying that Core Income Generating Activities (CIGA), specifically the cutting and assembly stages, occur within the Designated Zone to satisfy the 0% tax rate requirements. If the entity merely performs packaging or labeling, it fails the 'substantial transformation' test.

Audit Red Flag

Outsourcing the 'Substantial Transformation' process to mainland third-party factories while booking the full revenue under the Free Zone entity.

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