Manufacture of food products

The manufacture of food products is categorized as a Qualifying Activity under 'Manufacturing or processing of goods or materials'. Forensic auditors will verify that the 'Core Income Generating Activities' (CIGA)—including raw material sourcing, recipe formulation, and physical processing—are performed within the DZ. If the entity operates via a mainland branch, the attribution of profits must strictly follow the arm's length principle under Article 34 of the Corporate Tax Law.

Audit Red Flag

Misclassification of 'Retail Sales' to mainland consumers as 'Wholesale Distribution' to maintain the 0% rate, or failing to account for the 9% tax on income derived from Intellectual Property (IP) embedded in food branding.

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