Manufacture of basic pharmaceutical products and pharmaceutical preparations

Manufacturing of basic pharmaceutical products involves the chemical or biochemical transformation of substances. Forensic audit will focus on the 'substantial transformation' test. If the entity merely imports finished dosages and performs minimal processing, the income may be recharacterized as 'Trading' or 'Distribution', which is an Excluded Activity unless conducted with other Free Zone Persons.

Audit Red Flag

Classification of 'secondary packaging' or 'labeling' as 'Manufacturing' to circumvent the Excluded Activity of 'Distribution of goods in/from a Designated Zone' to non-Free Zone persons.

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