Construction of utility projects

ISIC 422 involves 'Immovable Property'. Under the updated framework, income from immovable property is only Qualifying Income if the transaction is with a Free Zone Person. Utility projects are frequently 'Excluded Activities' if they involve the distribution of water, gas, or electricity to end-users in the Mainland, or if the asset is located outside the Free Zone geographic coordinates.

Audit Red Flag

Allocation of costs and revenue for 'Linear Assets' (pipelines/cables) that traverse both Free Zone and Mainland boundaries without distinct contract partitioning.

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