Manufacture of footwear

Under MD 229 of 2025, the manufacture of footwear is classified as a Qualifying Activity. Forensic focus is on the 'Substantial Transformation' test. If the entity merely imports finished footwear and adds branding, it is disqualified from the 0% regime and treated as Excluded Activity (Trading). Auditor must verify depreciation of heavy machinery and utility consumption (power/water) consistent with industrial output.

Audit Red Flag

Re-characterization of 'Trading' as 'Manufacturing' where only minor assembly or packaging occurs without substantial transformation of raw materials.

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