Under the framework of MD 229 of 2025, manufacturing is a Qualifying Activity provided the Core Income Generating Activities (CIGA)—including assembly, quality control, and engineering—are physically conducted within the Designated Zone. Forensic auditors will apply the 'Substantial Transformation' test to distinguish between Qualifying Manufacturing and Excluded Trading activities.
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Legal Reference
Ministerial Decision No. 229 of 2025, Article 2, Clause 1(a)
Audit Red Flag
Artificial fragmentation of the production chain where high-value R&D or assembly is performed in the mainland while the Free Zone entity only performs packaging but claims full manufacturing tax relief.