Manufacture of articles of fur

Manufacturing of goods is a Qualifying Activity. Forensic auditors will verify the 'substantial transformation' test; if the entity only performs minor assembly or labeling of imported fur garments, the income may be recharacterized as Excluded Activity income (Trading), potentially disqualifying the QFZP status if de minimis thresholds are exceeded.

Audit Red Flag

Misclassification of 'Trading' (Excluded Activity) as 'Manufacturing' (Qualifying Activity) where no substantial transformation of the raw fur occurs on-site.

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