Aqid ERPThe rules that apply today
The Implementing Regulations for Zakat Collection (اللائحة التنفيذية لجباية الزكاة) were issued by Minister of Finance Decision No. 1007 dated 19/8/1445H and amended by Decision No. 1248 dated 11/10/1446H. They apply to financial years beginning on or after 1 January 2024 and replaced the 1440H regulations (Decision No. 2216), which still govern the years 2019 to 2023. The new regulations bring into one text rules that used to sit in separate resolutions, including the deemed basis for small businesses without proper books.
Article numbers quoted in older guides usually refer to the 1440H text. The ones below are from the 1445H regulations; the Arabic text governs.
Who pays zakat, and who pays income tax
Zakat is due on the share of a resident company owned by Saudi nationals, and by GCC nationals, who are treated like Saudis. The share owned by non-Saudis pays corporate income tax at 20 percent instead. A company with mixed ownership files one return: zakat is computed on the Saudi and GCC share of the zakat base, income tax on the foreign share of the tax base.
The rate, and the Gregorian year
Article 15 sets zakat at 2.5 percent of the zakat base for a Hijri year. Most companies keep a Gregorian year, which is longer, so ZATCA applies the rate by days: 2.5 percent divided by the 354 days of the Hijri year, times the days in the company's own year. For a 365-day year that works out at about 2.5777 percent of the base; for a 366-day year, about 2.5847 percent. The regulation states the formula, not a rounded Gregorian rate.
| Hijri year (354 days) | 2.5% |
|---|---|
| Gregorian year of 365 days: 2.5% × 365 ÷ 354 | ≈ 2.5777% |
| Gregorian leap year of 366 days: 2.5% × 366 ÷ 354 | ≈ 2.5847% |
How the zakat base is built
The base is taken from the year-end balances in the financial statements: the items to add (Article 23) less the items to deduct (Article 26), then held between a minimum (Article 27) and a maximum (Article 28).
- Added: equity and what is treated like it (capital, reserves, retained earnings); provisions, which count as equity except the end-of-service provision, treated as a liability; the difference between adjusted and book net profit; and borrowings and other liabilities, but only up to the value of the deducted assets they finance.
- Deducted, at book value: net fixed assets and similar items such as capital work in progress and spare parts held for use; and investments in companies inside the Kingdom that are themselves registered with ZATCA and subject to zakat, so the same funds are not taxed twice. Investments abroad and in funds have their own conditions.
- Minimum (Article 27): the base may not fall below the year's adjusted net profit for zakat purposes. If the base is negative and there is no adjusted profit, no zakat is due.
- Maximum (Article 28, new in the 1445H text): the base is capped at equity and what is treated like it, plus the difference between adjusted and book net profit.
A simplified example
An illustration, not ZATCA's example: Al Noor Trading, owned entirely by Saudi partners, closes a 365-day year on 31 December 2026. Its equity is 1,200,000.00, it carries a warranty provision of 30,000.00, its adjusted net profit is 30,000.00 higher than its book profit, and it has a long-term loan of 300,000.00 used to buy fixed assets with a net book value of 650,000.00. Real returns have more lines; each one follows ZATCA's guidelines.
| Equity | 1,200,000.00 |
|---|---|
| + Provision treated as equity | 30,000.00 |
| + Adjusted profit over book profit | 30,000.00 |
| + Long-term loan (below the 650,000.00 of fixed assets it finances) | 300,000.00 |
| − Net fixed assets | 650,000.00 |
| Zakat base (above the profit floor, below the 1,260,000.00 cap) | 910,000.00 |
| Zakat: 910,000.00 × 2.5% × 365 ÷ 354 | 23,456.92 |
Filing, paying and the certificate
Article 102 requires the zakat return to be filed, and the zakat paid, within 120 days of the end of the zakat year; when the last day is an official holiday, the next working day. For a year ending 31 December 2026 that is 30 April 2027. The return is filed through ZATCA's portal and paid through SADAD. A company that is required to keep commercial books attaches financial statements audited by an accountant licensed by SOCPA.
Once the return is filed and the zakat paid, ZATCA issues a final zakat certificate, which government dealings and the final payments on contracts require; a restricted certificate allows government dealings except final payments. A return that is late or not filed lets ZATCA assess the zakat itself and keeps the year open for reassessment for longer.
What the books need to be ready for
- Provisions kept in separate accounts, so the end-of-service provision can be told apart from the rest.
- Loans and liabilities tagged by what they fund, since only the part financing deducted assets is added.
- Fixed assets and capital work in progress at book value, reconciled to the asset register.
- Investments listed with the investee's ZATCA status.
- Non-deductible expenses identified through the year, so book profit can be adjusted without a hunt in April.