1. The following words and phrases shall, whenever stated in these rules, have the meanings ascribed thereto, unless the context

otherwise requires:

Rules: means Rules for Calculation of Zakat for financing activities.

Regulations: means Implementing Regulation of Zakat, issued pursuant to Minister of Finance’s Resolution No. (2216) dated 071440/07/H (142019/03/G).

Financing Activities: means Banks and financing companies licensed by the Saudi Central Bank.

Other terms and words: shall have the meaning stated in Article 1 of the Regulation.

• A Zakat Payer carrying out Financing Activities shall be subject to the provisions of these Rules and the Regulation, except for the following provisions of the Regulations with respect to the following topics:

  • 1. Article (4) with respect to funds subject to Zakat.

  • 2. Article (5) with respect to deductions from the Zakat base, unless otherwise stated in the Rules.

  • 3. Article (6) with respect to the methods and conditions for calculating the Zakat base, without prejudice to Paragraphs (2) & (3) thereof.

  • 4. Chapter (3) on the amendment of the results of an activity.

• the Zakat base for Financing Activities is the sources of Zakat Payers’ funds used in their Zakat assets. The Zakat base shall be calculated by dividing Zakat assets by the total assets, multiplied by the sources of funds, in accordance with the following formula:

• Zakat Base = sources of funds × [Zakat assets / Total assets]

• The sources of funds subject to Zakat for financing activities are limited to the following:

  • 1- Equity rights, excluding any increase in capital that arose during the Zakat year from an external source, which is determined on a proportional basis, according to the duration prior to the emergence of that increase.

  • 2- Debts owed by the taxpayer that are due for repayment, in whole or in part, after one year or more, whether referred to as short-term or long-term debts, as follows:

    • A. Financing of all types, whether through borrowing, Murabaha, leasing, or other financing contracts.

    • B. Debt instruments - such as Sukuk and bonds - issued by the taxpayer, regardless of their structure.

  • 3- The negative fair value of derivatives due after one year or more.

  • 4- The net assets belonging to the owners of units in direct and indirect financing funds.

  • 5- Excluding banks and financing companies licensed by the Saudi Central Bank, all sources of funds of the taxpayer are considered as sources of funds subject to Zakat, except for obligations due within less than one year. 

• Zakat Payers’ zakat assets shall be determined, by deducting non-zakat assets from total assets. Non-Zakat assets are limited to the following:

  • 1. Net fixed assets and any similar assets, as stated in Paragraph (1) of Article (5) of the Regulation.

  • 2. Real estate, title to which vested in the Zakat Payer due to executing a mortgage [in favor of the Zakat Payer].

  • 3. Investments in entities or ownership interests inside the Kingdom that are subject to zakat in accordance with Article 5(4) of the Regulation.

  • 4. Investments in entities or ownership interests outside the Kingdom provided that the zakat due on such investments has been paid independently by the Zakat Payer in accordance with Article 5(5) of the Regulations.

  • 5. Zakat Payers’ debt that is payable – whether in full or in part- after one year or more, regardless of whether such debt is classified as short-term or long-term debt, and that are as follows: a. Financing of any kind, whether through [conventional] borrowing, Murabaha, financial leasing, or any other form of financing agreements. b. Debt instruments of any form– such as stocks and bonds – issued by the Zakat Payer.

  • 6. Zakat Payers’ investments in government issues securities the Zakat on which is assumed by the state and that are not covered under Paragraph (5)(B) of these Rules. 7. The Positive fair value of derivatives payable after one year or more. 8. Statutory deposits at SAMA.

• 1- The values shown in the audited financial statements at the end of the zakat year are adopted at net when calculating the zakat base for financing activities, except for what is stated in paragraph (1) of item (Fourth) of these regulations, and this exception does not apply to direct and indirect financing funds.

• 2- The provisions of paragraph (2) of (Article Fifteen) of the Regulation concerning the controls for consolidating financial statements apply to financing activities.

• 3- The provisions of (Article Fourteen) of the Regulation concerning the zakat rate apply to financing activities.

• 4- The zakat base for financing activities has a maximum and minimum limit as follows:

  • أ. When the taxpayer achieves net profit:

    • 1. The minimum zakat base: Four times the net profit as at the end of the zakat year for the taxpayer, after excluding the effect of the zakat provision charged to the net profit.

    • 2. The maximum zakat base: Eight times the net profit as at the end of the zakat year for the taxpayer, after excluding the effect of the zakat provision charged to the net profit.

  • ب. When the taxpayer does not achieve net profit:

    • 1. The minimum zakat base: Four times ten percent (10%) of the total profit as at the end of the zakat year for the taxpayer.

    • 2. The maximum zakat base: Eight times ten percent (10%) of the total profit as at the end of the zakat year for the taxpayer.

    • 3. If the taxpayer does not achieve total profit at the end of the zakat year, there shall be no maximum or minimum limit for the zakat base.

• 5- When the taxpayer subject to these regulations is owned by another taxpayer - according to the controls of the accepted consolidated admission as per the regulation - the consolidation of the taxpayer subject to these regulations with another taxpayer is not accepted.