Calculation of Zakat Tax.

In Saudi Arabia, Zakat is a religious obligation that is levied on the wealth and assets of Muslim individuals and companies. The calculation of Zakat for corporates involves the following steps:

1. Determine the net assets of the company: This includes all the assets of the company, such as cash, inventory, investments, and property, minus any liabilities, such as loans and accounts payable.
2. Apply the Zakat rate: The Zakat rate for corporates in Saudi Arabia is 2.5% of the net assets.
3. Calculate the amount of Zakat payable: Multiply the net assets by the Zakat rate to get the amount of Zakat payable.

For example, if the net assets of a company are SAR 10,000,000, then the Zakat payable will be:

Zakat payable = 2.5% x SAR 10,000,000 = SAR 250,000.

The liability to pay Zakat in Saudi Arabia is based on the following criteria:

1. The company must be registered and operating in Saudi Arabia.
2. The company must have been in operation for at least one Hijri year (approximately 354 days).
3. The company must have sufficient net assets to meet the Zakat threshold, which is set by the government and may vary depending on the company’s industry and other factors.

It is important to note that Zakat is a religious obligation and not a tax, and therefore the calculation and payment of Zakat is not administered by the Zakat, Tax and Customs Authority (ZATCA). Companies are advised to seek the advice of a qualified religious scholar or Zakat consultant to ensure compliance with the Zakat regulations and to calculate and pay Zakat correctly.

• . Handling ZATCA queries.

he documents required for handling Zakat audit in Saudi Arabia will depend on the specific circumstances of the company and the requirements of the Zakat authorities. However, some of the commonly requested documents include:

1. Financial statements: This includes the balance sheet, income statement, and cash flow statement of the company.
2. Trial balance: A detailed list of all the accounts in the company’s general ledger with their corresponding debit or credit balances.
3. Tax returns: The company’s tax returns filed with the Zakat, Tax and Customs Authority (ZATCA).
4. Bank statements: The company’s bank statements for the year under review.
5. Invoices and receipts: Documentation of the company’s sales and expenses, including invoices, receipts, and purchase orders.
6. Payroll records: Records of employee salaries, wages, and benefits.
7. Contracts and agreements: Any contracts or agreements related to the company’s operations, such as lease agreements or vendor contracts.
8. Asset registers: Records of the company’s fixed assets, including property, plant, and equipment.
9. Inventory records: Records of the company’s inventory, including quantity and valuation.
10. Any other documentation related to the company’s operations and financial transactions.

It is recommended that companies keep accurate and complete records of their financial transactions and operations to facilitate the Zakat audit process and ensure compliance with the Zakat regulations in Saudi Arabia. Companies are advised to seek the advice of a qualified Zakat consultant or accountant to ensure that their records and financial statements are prepared in accordance with the Zakat regulations and to prepare for any Zakat audits that may be required.