Manufacture of leather and related products

Under ISIC 15, the activity must involve the transformation of hides into leather or leather into products. Forensic auditors will verify electricity consumption logs and waste disposal records to ensure actual manufacturing occurs on-site. Revenue from mainland consumers must be segregated as it may trigger the 9% rate if it exceeds the de minimis threshold or fails the 'Qualifying Activity' test for B2B sales.

Audit Red Flag

Outsourcing the 'substantial transformation' process to a mainland sub-contractor while retaining the 'Manufacturer' title in the Free Zone to claim 0% tax.

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