Manufacture of measuring, testing, navigating and control equipment; watches and clocks

ISIC 265 falls under 'Manufacturing of goods or materials' as a Qualifying Activity. Forensic audit focus is on the 'Substantial Transformation' test; if the entity is merely assembling imported components with minimal value-add, the FTA may reclassify the activity as 'Distribution', which requires a Designated Zone (DZ) for 0% tax eligibility.

Audit Red Flag

Embedded Intellectual Property (IP) income: The FTA will scrutinize whether income attributed to high-tech patents in measuring/navigating equipment is being improperly shielded under the 0% manufacturing rate rather than being treated as potentially non-qualifying IP income.

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