Manufacture of electric motors, generators, transformers and electricity distribution and control apparatus

Manufacturing is a Qualifying Activity. Forensic auditors will verify the 'Substantial Transformation' test. If the process is deemed mere packaging or minor assembly, it may be reclassified as Trading, which requires a different nexus (Designated Zone) for 0% treatment. Furthermore, any income from sales to end-consumers (Retail) must be monitored against the 5% de minimis limit.

Audit Red Flag

Misclassifying 'simple assembly' of imported components as 'manufacturing' to bypass the substantial transformation requirement or exceeding the de minimis threshold via ancillary maintenance services.

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