• Zakat is levied on every business activity carried out with the purpose of making a profit either in the form of money or business including, but not limited to, the following:

  • 1. Commercial activities of all forms including trading commodities, goods, and services.

  • 2. Investment activities of all forms including investment in securities, whether long or short term, exported from private or government sector, or internal or external, as well as investment in commodities, services and trade shares.

  • 3. Industrial activities of all forms including factories, laboratories, and workshops.

  • 4. Service activities of all forms including financial services, freelance professions, trades, renting, leasing, brokerage and agencies activities.

  • 5. Financing activities of all forms including banking, insurance, and financing activities.

• Any person performing any of the activities prescribed for in Article one of the below classes shall be subject to the collection of Zakat:

  • 1. Resident Saudi natural persons and nationals of a member state of the Gulf Cooperation Council for the Arab States of the Gulf (“GCC”) accorded similar treatment as Saudi nationals.

  • 2. Resident Companies in respect of shares held by Saudi partners’ or citizens of a GCC member state accorded similar treatment to Saudi nationals, and of shares held by Saudi government authorities and institutions.

  • 3. A Resident person (legal or natural) shall bear the same meaning prescribed in the Income Tax Law issued by Royal Decree No. (M/1), dated 15/01/1425 H (06/03/2004 G).

• Zakat shall be levied at 2.5% of the Zakat Base.

• 1. Ordinary and necessary expenses of business activity, whether paid or due, to the net result of activity shall be deducted, if meet the following criteria:

  • a. Expenses shall be actual expenses as supported by relevant documents and other evidential matter to enable the Authority to verify the accuracy of expenses, even if related to prior years.

  • b. Expenses shall be related to Zakat Payer’s business activity rather than personal expenses or other than Zakat Payer’s own activities.

  • c. Expenses may not be of capital nature. Where a capital expenditure is included in the expenses such expenditure shall be adjusted against the result of activity added to fixed assets and accordingly depreciated as applicable.

• 2. Establishment (sole proprietorship, capital association, or partnership) owner’s salaries, allowances, and the remuneration paid to Chairman, vice-chairman and directors may be deducted, provided that the owner’s salaries and allowances are registered with General Organization of Social Insurance (GOSI).

• 3. Bad debts shall be deemed as expenses eligible for deduction, if meet the following criteria:

  • a. Debts shall have been previously declared within revenues in the year when the revenue was due.

  • b. Debts shall be derived from exercising the activity.

  • c. The Zakat Payer shall provide a certificate from a certified public accountant licensed to operate in the Kingdom, confirming that the debts are written-off by resolution of the authorized person.

  • d. The debts may not be payable by bodies associated with the Zakat Payer.

  • e. The Zakat Payer shall report the debts written off as revenue where such debts are recovered.

• 4. Donations shall be deemed as expenses eligible for deduction if proved by the supportive documents and verified.

1. Expenses not related to the business activity.

2. Expenses that the Zakat Payer fails to prove by supporting documents or other evidential matter.

3. Zakat due or settled in the Kingdom or any other state whether for the current or previous Zakat years.

4. Employee’s share in retirement, pension, social insurance and saving funds.

5. The value of materials/ services provided by parties directly related to the Zakat Payer exceeding the prices used by independent

parties.

6. The entire provisions except for the following:

a. Provisions for the doubtful debts for banks, provided that the Bank issues a certificate identifying the sum of the doubtful debts

and that the Saudi Central Bank approves thereof.

b. Provisions for unearned premiums reserve and current risk in insurance and/or reinsurance companies (technical reserves).

The same shall be returned to the Zakat Base in the following Zakat Year and determined in accordance with the standards adopted

for this particular business activity.