Distilling, rectifying and blending of spirits

Qualifying · 0% eligible

Forensic Analysis

DZ requiredSubstance: HIGHAI-derived

Under the Qualifying Free Zone Person (QFZP) regime, 'Manufacturing of goods or materials' is a Qualifying Activity. However, because spirits are subject to Excise Tax, the FTA will apply the 'Substantial Transformation' test. If the process is deemed mere 'blending' without significant chemical change or value-add, it may be disqualified from the 0% rate if sold to non-Free Zone persons.

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Legal Reference

Ministerial Decision No. 229 of 2025, Article 2, Clause 1(a)

Audit Red Flag

Misclassification of 'bottling and labeling' as 'manufacturing' when it lacks substantial transformation, leading to re-characterization as an Excluded Activity (Distribution of Excisable Goods).

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