It is one of the main pillars that distinguishes a Muslim community from others, and an expression of the supremacy of Islamic law. It represents a successful way to combat poverty and alleviate the suffering of the needy, leading to the achievement of social solidarity. The collection of Zakat and its disbursement to the beneficiaries is one of the basic functions of the state, as stipulated in the Basic Law of Governance in Article 21 (Zakat shall be collected and disbursed through its disbursement channels).
In confirmation of the above, during the reign of the founding king Abdul-Aziz - may God have mercy on him - royal decree no. The mentioned royal decree was followed by many royal decrees which confirmed it, as well as executive ones. ministerial resolutions, in addition to regulations and circulars, including: Royal Decree no. M/40) dated Rajab 2.1405 A.H. and Executive Regulations for the collection of zakat, promulgated by Ministerial Resolution no. 2082) dated Jumada Al-Thani 1, 1438 AH corresponding to (February 28, 2017 AD) and the Executive Regulations for the Collection of Zakat promulgated by Ministerial Resolution No. 2216) dated 7 Rajab, 1440 AH corresponding to (14 March 2019 AD) used for zakat years. (ZY) with effect from January 1, 2019 AD for all taxpayers, except those treated under the discretionary method under Chapter Four of the Rules, for which the Rules apply to their reports. It was established in accordance with Ministerial Resolution no. 394), dated AH, as one of the government persons attached to the Ministry of Finance and entrusted with the task of collecting zakat.
Subsequently, the Executive Regulation of Royal Decree No. M/40 was issued under Ministerial Resolution No. At AH, the General Authority for Zakat and Taxes was merged with the General Authority for Customs under the name of Zakat, Taxes and Customs. Authority (ZATCA). This manual constitutes the concept and interpretation of ZATCA regarding the implementation of the Implementing Regulations for the Collection of Zakat issued to AH and the Rules for Calculating Estimated Zakat Taxpayers issued by Resolution No.
It is worth noting that this Manual is not a legal document, and its content is of a guiding nature only, and it does not aim to contain all relevant provisions of the Implementing Regulations for the Levy of Zakat.
ZAKAT CONCEPTS, TERMS, AND CALCULATION METHODS
The “Regulations”
The “Rules”
The “Estimated Zakat Taxpayers”
The “GOSI”
The “Points of Sale Data”
The “Etimad Platform”
The “Zakat Year/ZY”
Collection of Zakat
Methods of Calculating Zakat for Companies
- External sources of funds exhausted in deductible component of ZB, which include long-term liabilities, and liabilities that are known to have financed a deductible item; as such obligations
- SHARIA-BASED RULING FOR THE RULES OF CALCULATING ESTIMATED ZAKAT TAXPAYERS
- Determining ZB for Estimated Zakat Taxpayers
- Taxpayers Subject to the Rules of Calculating Estimated Zakat Taxpayers
- Estimated Capital and Profit
- Estimating ZB for Estimated Zakat Taxpayers
- Method of Calculating Sales (Revenues)
- Method of calculating Zakat
- Zakat Year
- Minimum Threshold of Estimated Zakat Taxpayers
- Recalculation of the Taxpayer’s Sales
- Calculating Zakat for Taxpayers Based on Commercial Books (Accounts)
- Shift of Calculation from the Estimated Zakat Taxpayers Method to Commercial Books of Accounts)
- Deeming Estimate a Zakat Amount
- Final Amendment to Tax Statements
- UNIQUE NUMBER CONSOLIDATION
- ILLUSTRATIVE EXAMPLES
- Calculation of ZB Based on the Sales Disclosed in the VAT Declaration
- Calculating ZB if the Taxpayer does not have Sales Registered in VAT
The correlation between facilitating the calculation of the estimated Zakat taxpayers compared to Al-Khars is that the calculation of zakat for the estimated Zakat taxpayers, according to the procedures of ZATCA, is based on the application of tools that contain all taxpayers, and their implementation entails the publication of the zakatable assets for ZATCA. ZB for estimated Zakat taxpayers is estimated based on determining a capital commensurate with the size of the taxpayer's activity. Example 1: The total sales disclosed to one of the taxpayers covered by the rules for calculating the estimated Zakat taxpayers who do not maintain regular accounts within VAT for 1441 AH amounted to SAR 1,000. 000.
Example 2: If ZATCA assesses the zakat of one of the assessed zakat taxpayers on AD, what exactly does this depend on when determining the sale. It uses the taxpayer's turnover in accordance with the VAT returns submitted by the taxpayer during ZY and tax data on the disposal of real estate. Accordingly, the plant will not be subject to zakat for the first financial period of the start of activity, as it is shorter than 354 days.
The zakat of a taxpayer who is subject to the rules for calculating zakat under the method of the prescribed zakat taxpayers must not be less than SAR 500. Example 6: ZATCA has issued a zakat assessment to one of the taxpayers who is subject to the assessed zakat taxpayer method. ZATCA has the right to enforce the liability of the taxpayer in accordance with the rules for calculating the estimated zakat on the basis of calculations, if it finds that the taxpayer keeps business books.
Example 7: ZATCA has identified that one of the taxpayers to whom the estimated Zakat taxpayers apply has issued financial statements and submitted them to a financing company to obtain financing. In this case, upon acceptance of the shift, the taxpayer may not subsequently switch back to estimated Zakat taxpayers except with the approval of the Governor of ZATCA. Example 8: ZATCA estimated and issued the zakat for one of the taxpayers subject to the Estimated Zakat Taxpayers method.
The taxpayer shall pay the said amount within (60) days from the date of his/her notification of the estimated assessment by ZATCA, which is the period specified for filing the objection with ZATCA. The taxpayer is covered by these rules based on the unique number, regardless of the number of registrations or licenses covered by the number, so that all commercial registrations are accounted for as one taxpayer as long as they are under the same unique number. Based on considering the taxpayer's unique number under which a number of sub-registers belong as one taxpayer; zakat must be calculated.
Example 13: The volume of imports of one of the factories operating in the plastic industry, based on the import data obtained by the Customs Authority for 1441 AH, amounted to SAR 110,000, while sales through export data amounted to SAR 140,000. Example 14: Sales of one of the taxpayers made through POS amounted to SAR 160,000, while the average number of employees registered with GOSI reached 24 employees.
The volume of imports of one of the factories working in the field of plastics industry, based on the import data obtained through the Customs Authority for 1441 AH, amounted to SAR
- Comprehensive Example
- CALCULATING ZAKAT AND ISSUING ASSESSMENT DECISION BY ZATCA
- Objection and Appeal Procedures
- Submitting an Objection
- Controls for Accepting Objections
- Submitting an Objection within the Statutory Period
- Non-Objectionable Items
- Objectionable Items
- Partially Accept the Objection: ZATCA shall then issue a new assessment in place of the first assessment, and notify the taxpayer of the same
- Fully Reject the Objection: ZACTA shall notify the taxpayer of the rejection of his/her objection to the previous assessment
- CONNECT US
Since the value of zakat is less than 500 SAR, zakat is calculated according to the minimum amount of zakat, which is 500 SAR, based on the rules of Estimated Zakat Payers. A comparison is made between the capital recorded in the registers and the estimated capital of the activity. Example 24: ZATCA has issued a zakat assessment for one of the Assessed Zakat Taxpayers based on VAT data, and the taxpayer has not consented to this, and has submitted his/her objection, within the legal period, to the assessment .
The taxable person has the right to inquire with ZATCA and obtain a detailed overview of the calculation mechanism based on the sales reported by the taxable person in his/her VAT return submitted therewith, which has been approved by ZATCA, in support of the calculation method of ZB. Based on the data and information available to ZATCA through the VAT return and other previously mentioned sources, ZATCA calculates the taxpayer's zakat and issues an assessment decision for the taxpayer at the end of the financial year that includes the calculation mechanism. During the statutory objection period, the taxpayer will pay part of the amounts due on the objectionable items, with a maximum of twenty-five percent (25%) of the amounts due on the objectionable items.
The Department of Review and Objections conducts the internal review of the assessment contested by the taxpayer and responds to the objection within 90 days. Accept the objection in full: ZATCA will then issue a new assessment in lieu of the first objectionable assessment and notify the taxpayer of the same. Accept the objection in part: ZATCA will then issue a new assessment in lieu of the first assessment and notify the taxpayer of the same.
Completely reject the objection: ZACTA must notify the taxpayer of the rejection of his/her objection against the previous assessment. The conciliation committee is responsible for resolving the dispute between ZATCA and the taxpayer. The taxpayer may submit a request to the committee to review the decision issued by ZATCA's audit department.
When ZATCA is not satisfied with the reasons for the taxpayer's objection, it shall notify the taxpayer of the rejection of his/her request to issue a settlement decision. When the taxpayer rejects the settlement decision or does not give written notice to ZATCA of approval of the settlement decision. Assessment Committee procedures Decision made by the Assessment Committee ZATCA or the taxpayer files an official appeal.
ZATCA, based on the data and information it has, issues the zakat declaration immediately after the end of the fiscal year without the need to submit the zakat declaration from the taxpayer. The taxpayer has the right to contest the ZATCA assessment within 60 days of the due date.
