Saudi Business Zakat Base Calculator (ZATCA)

About the Saudi Business Zakat Base Calculator (ZATCA)

Work out the zakat of a business in Saudi Arabia that keeps statutory accounts, the way ZATCA’s Implementing Regulation for Zakat Collection 1445H sets it. The zakat base is equity and its equivalents, plus the liabilities that count (never more than the assets deducted) and the difference between the adjusted and the book net profit, less the deductible assets — fixed and intangible assets, qualifying investments, raw materials and the like. It is then held between a maximum and a minimum, and zakat is 2.5% of it for a Hijri year, or 2.5% ÷ 354 × the days of the year otherwise — 2.5777% for a Gregorian year of 365 days.

ZATCA’s own example of a company with SAR 20,000 of equity, SAR 30,000 of liabilities and SAR 40,000 of fixed assets gives a base of SAR 16,000, after the minimum. Zakat falls on the share owned by Saudi and GCC owners. For your own zakat as a person, use the zakat calculator and Zakaty. Nothing you type leaves your browser. Without a pass the page gives a free preview of your own result: the rate and the checks on the limits, with every amount hidden until you unlock it with a Premium pass.

Additions

The base adds, from the year-end statement of financial position (Regulation, Articles 23–41):

• Equity and its equivalents: capital, reserves, retained earnings with realized and unrealized profits; a loss carried forward and treasury shares reduce it. Provisions count as equity, except the end-of-service and leave provisions, which are liabilities. Partners’ loans count as equity unless they meet the regulation’s conditions to be liabilities (a listed company follows its financial statements), and profits declared but not yet paid are added; profits actually paid out are not.
• Liabilities: non-current debts, the end-of-service and leave provisions, deferred tax, contract and lease obligations and negative derivatives — but only up to the assets deducted. Current liabilities are added only when a current asset is deducted, when current liabilities exceed current assets, or when a current debt is really a non-current one renewed with the same creditor.
• The difference between the adjusted and the book net profit after zakat and tax, positive or negative.

Deductions

The base takes away (Articles 26 and 31): investments in establishments inside and outside the Kingdom and in investment funds that meet the regulation’s conditions, net fixed assets and their equivalents, intangible assets, raw materials and materials not held for sale, investments in registered financing funds, bonds treated as capital by their issuer, statutory deposits, deferred tax assets and qualifying partners’ debit loans.

The maximum and the minimum

• Maximum (Article 28): the base never exceeds equity and its equivalents plus the difference between the adjusted and the book net profit.
• Minimum (Article 27): when the base is below the adjusted net profit, the base becomes the lower of (the assets not deducted plus that difference) and the adjusted net profit.
• A negative base with no adjusted net profit means no zakat for the year; a positive base with an adjusted loss is used as it is.

ZATCA’s guideline works through each case: example 15 stops at the maximum, example 16 rises to the minimum, example 17 owes nothing (zakat general guideline).

The rate

Zakat is 2.5% of the base for a Hijri zakat year. For any other zakat year the rate is 2.5% ÷ 354 × the actual days of the year (Article 15): 2.5777% for 365 days, 2.5847% for 366 days, 3.0085% for a first year of 426 days. A first period shorter than 354 days at the start of the activity is still subject to zakat; a last period shorter than 354 days, when the activity ends, is not.

Who pays, and when

Zakat is collected from Saudi persons carrying on an activity, and from the share of Saudi partners and shareholders in resident companies; nationals of the other GCC states are treated as Saudis. The share of other owners in a resident company falls under the Income Tax Law instead — except non-Saudi, non-founding shareholders of companies listed on the Saudi Exchange, whose shares are subject to zakat. A business that keeps accounts files its zakat return and pays within 120 days after the end of the zakat year through ZATCA’s online services (Article 102).

Limitations

• Works from the totals you enter: the detailed conditions for each item — which investments, fixed assets and provisions qualify, and how Article 25 places liabilities against assets that are not deducted — are for you or your accountant to apply.
• Financing activities, investment funds, holding companies with consolidated returns, estimated (deemed) assessments and businesses without statutory accounts follow other chapters of the regulation.
• Follows the 1445H regulation; financial years before it follow the 1440H regulation, which ZATCA keeps among its previous rules.
• Income tax on the share of non-Saudi owners is not worked out.
• Exemptions for entities that carry out public-benefit activities, granted on an annual request to ZATCA, are not applied.

Privacy

Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.