• The following expressions and terms shall have the meanings ascribed thereto hereunder, unless the context indicates otherwise:

  • Regulations: the Implementing Regulations for Zakat Collection by the Ministerial Decision No. (2216), Dated 07/07/1440 AH and any amendments thereto.

  • Rules: the Zakat Collection Rules for Investing in Investment Funds.

  • ZATCA: the Zakat, Tax and Customs Authority

  • Zakat Payer: A natural or legal person practicing an activity subject to zakat collection, whether an individual organization or a company, or a person practices the activity under a license issued from a specialized entity.

  • Unit Owner: the Zakat Payer who possesses a unit in the fund, which represents undivided interest in the net fund assets.

  • Fund: an investment fund or a real estate investment fund established in the Kingdom, whose units may be offered by the fund manager to investors in the Kingdom in accordance with the relevant laws and regulations applicable in the Kingdom.

  • Finance Fund: an investment fund that is established for exercising the direct or indirect financing activity in accordance with the relevant laws and regulations applicable in the Kingdom.

  • Fund Manager: the Capital Market Authority that manages the assets of the investment fund or a the real estate investment fund as well as its business, and offers its units in accordance with the relevant laws and regulations applicable in the Kingdom.

  • Zakat Year: the Zakat payer’s fiscal year, whether Hijri or Georgian, long or short, and at the beginning or end of the activity.

  • Current Asset/ Liability: any asset or liability anticipated to be achieved, redeemed or settled within a period not exceeding (365) days following the end of the zakat year, or any other asset reserved by the fund mainly for trading.

  • Fund Related-Persons: the natural or legal persons, who actually control, or controlled, by the fund or by the persons controlling the fund.

  • Transaction Among Fund Related-Persons: any transaction among the Fund RelatedPersons, including the pro forma or nominal transaction, as well as the exchange of whatever has value among each other to the extent that these transactions result in a legal effect.

• The Zakat Payer shall be subject to the zakat collection in accordance with these rules, except the following:

  • a. The unit owner in the finance fund

  • b. The unit owner who is the sole owner of the fund, whether directly or indirectly, and has submitted a consolidated zakat return with the fund.

Prior to the end of the first fiscal year as of the date of approval of its incorporation, the fund shall be registered with ZATCA for zakat purposes.

• 1. The fund must submit an information return of ZATCA within a period no exceeding (120) days as of the end of the fund zakat year, attached therewith the following:

  • a. The approved financial statements of the fund by an auditor licensed in the Kingdom

  • b. Record of transactions among the fund related-persons.

  • c. Any further information requested by ZATCA during the stage of return submission.

• 2. The fund must provide the unit owner with the information necessary for the calculation of zakat base.

• 3. The fund and the unit owner shall provide ZATCA with the requested data for returns inspection and review within (20) days as of the date of ZATCA’s request. If the fund or the unit owner failed to do so within the said period of time, ZATCA may renew such period or perform the calculation as per the available information and evidence.

• 4. If the fund’s fiscal year differs from the unit owner’s fiscal year, the fund’s fiscal year shall be considered in calculating the investment’s zakat in the fund.

• The unit owner may deduct its investment in the fund from its zakat base once the following requirements are met:

  • 1. Its investment in the fund is for purposes other than trading.
    2. He calculates the zakat of its investment in the fund, and pays it for ZATCA whether in the audited financial statements or under a certificate prepared in accordance with these rules and prepared by an auditor licensed in the Kingdom.

  • 3. The investor’s financial statements or the certificate referred to in Par.(2) of this Article must include the calculation of the unit owner’s zakat by calculating the zakat base of the fund, the number of the fund’s owned-units and the zakat due on the unit owner.

• 1. The unit owner’s zakat shall be calculated in accordance with the following equation: (Fund’s Zakat Base × Unit Owner’s shareholding in Fund × Zakat Percentage in Regulations)

• 2. The fund’s zakat base shall be calculated in accordance with the Regulations, taking into account the following:

  • a. Net assets of the unit owners shall be included in the components of the fund’s zakat base in accordance with the rules of Article (4) of the regulations in its prominent value at the end of the fund’s fiscal year.

  • b. A value equivalent discounts of the short-term assets shall be added to the short-term debits.

  • c. The fund’s investment for purposes other than trading included in the funds shall be treated as the foreign transaction in accordance with Article (5) of the Regulations.

  • d. The value of the investment for purposes other than trading shall be identified as follows:

    • 1. Total amount of subscriptions shall be deducted from total amount of procurements, and total amount of redemptions shall be deducted from total amount of sales, and the higher result shall be considered and divided by net value of investment in the fund’s shares for the same month

    • 2. Sub-paragraph (1) of this Article shall be applied every month of the year. The higher result of the year’s months shall be considered and divided by the value of investment in the shares registered in the balance of the end of fiscal year in the financial position statement of the investment fund. The result shall be classified as the trading percentage of that item, and its supplement shall be treated as an investment reserved for non-trading in accordance with Article (5) of the Regulations.

    • 3. For the application of the contents of Par. (d) of this Article, the main activity of the fund must be the investment in the local and international financial markets stocks.

  • e. The long-term real estate investments not intended for sale shall be treated as fixed assets and shall be subject to the provisions of Par. (1) of Article (5) hereof.

  • f. The difference between the net profit and loss adjusted and the net profit and loss book shall be added to the fund’s zakat base. Furthermore, the fund’s net profit and loss adjusted shall be identified in accordance with Articles (8) and (9) hereof, including, but not limited to, reservation, management, control and audit fees

  • g. When the fund desires to present its assets and liabilities using (Current and Noncurrent) classification, and deduct a current asset fulfilling the requirements of zakat base deduction, then upon the deduction of such asset from the zakat base, such asset value must be added from the current liabilities, if any.

The minimum zakat base for the unit owner shall be its share of the fund’s adjusted net profit, whether or not the profit was distributed.

Upon the expiration of fund, the fund manager shall inform ZATCA within (60) days as of such expiration.

Transaction pricing instructions issued by ZATCA’s Board Decision No. (19-1-6) dated 25/05/1440 AH and any amendments thereto shall be applied to existing transactions with the fund related-entities.