The Minister of Finance
Chairman of the Board of Directors of the General Panel for Zakat and Income Tax
Based on the powers granted to him by law.
And based on the Council of Ministers Decision No. (163) dated 19/3/1440 AH, which stipulates that the state shall bear the Zakat and income tax resulting from investment in government bonds and securities, including the delegation of His Excellency the Minister of Finance to determine the controls for this bearing.
And after reviewing the Council of Ministers Decision No. (126) dated 30/2/1436 AH, which assigns His Excellency the Minister of Finance to issue the necessary decisions to implement the Royal Decree No. (M/40) dated 2/7/1405 AH.
And after reviewing the Income Tax Law issued by Royal Decree No. (M/1) dated 15/1/1425 AH and its Implementing Regulation issued by His Excellency the Minister of Finance Decision No. (1535) dated 11/6/1425 AH.
And after reviewing the Implementing Regulation for Zakat Collection issued by Ministerial Decision No. (2216) dated 7/7/1440 AH.
The following is decided:
First: The state shall bear the Zakat and income tax resulting from investment in the bonds and securities issued by the Ministry of Finance locally in Saudi Riyals until their due date.
Second: The state’s bearing referred to in "First" above shall be according to the following controls:
A. The holder of the bonds or securities must submit his declaration within the legal period according to the procedures of the General Panel for Zakat and Income Tax, and pay the amount due to the Panel accordingly.
B. The holder of the bonds or securities must be subject to taxation according to his financial statements in accordance with the Panel's procedures.
C. The holder of the bonds and securities must not be among the entities exempt from Zakat or income tax.
D. The state shall not bear an amount greater than what the taxpayer has paid to the Panel.
Third: The potential amount from the state for Zakat on the bonds and securities shall be calculated by considering two bases for the taxpayer, one from which the bonds and securities are deducted, and the other from which the bonds and securities are not deducted, then the difference between the two bases is taken and multiplied by the Zakat rate stipulated in the Implementing Regulation for Zakat Collection, and the result is the amount borne except for the following cases:
A. If the base reaches the minimum limit whether the investment in government bonds is deducted from the base or not, the amount borne shall be the Zakat on the annual returns of the bonds and securities, calculated according to the following equation:
(Adjusted net profit ÷ Total profit) × Returns of the bonds and securities × Zakat rate
B. If the base reaches the minimum limit when the investment in the bonds and securities is deducted, but does not reach it when not deducted, the amount borne shall be the result of the difference between the two bases minus the share of the returns of the bonds and securities from the net profit multiplied by the Zakat rate, calculated according to the following equation:
[Difference between the two bases - ((Adjusted net profit ÷ Total profit) × Returns of the bonds and securities)) × Zakat rate.
Third Repeated: The taxpayer is considered an investor in investment funds that invest in the bonds and securities covered by this decision in the same capacity as the holder of the bonds and securities, and the amount borne shall be calculated according to what is stated in item (Third) of this decision based on the Zakat base and the adjusted profit of the fund multiplied by the taxpayer's ownership percentage in the fund's assets, and the maximum limit for the state to bear the Zakat of the taxpayer invested in the fund shall be according to the following equation:
Investments of the fund in the bonds or government securities for which the state bears the Zakat × Taxpayer's ownership percentage in the fund's assets at the time of Zakat calculation × Zakat rate for the fund.Fourth: The amount borne by the state for income tax on the net returns of the bonds and securities shall be calculated according to the following equation:
(Adjusted net profit ÷ Total profit) × Returns of the bonds and securities × Tax rate.
Fifth: This bearing shall apply to financial years that begin on or after 1/1/2019, and the bearing shall cease for any government debt instruments other than the bonds issued under the bond issuance program in Saudi Riyals at the Ministry of Finance starting from 1/1/2020.
And may God grant success,
Mohammed bin Abdullah Al-Jadaan
Minister of Finance
Chairman of the Board of Directors of the General Panel for Zakat and Income Tax