What is Zakat Base?
The zakat base is the calculated amount on which the 2.5% zakat liability is assessed for Saudi and GCC-owned companies registered with ZATCA. It is derived from equity and certain liabilities, adjusted for non-zakatable assets and approved deductions.
How It Works
- Start with equity, retained earnings, and adjusted net profit.
- Add long-term liabilities and approved provisions.
- Deduct net book value of fixed assets, intangibles, and certain investments.
- Deduct accumulated losses and other approved deductions.
- The result is the zakat base; the zakat liability is 2.5% of this amount.
Saudi Context
ZATCA’s Zakat Implementing Regulations issued under the Zakat Collection Law govern the exact additions and deductions. Saudi and GCC-owned listed and unlisted companies must file an annual zakat return within 120 days of fiscal year end.
Example
A company has equity of SAR 50M, long-term loans of SAR 20M, net fixed assets of SAR 30M, and accumulated losses of SAR 5M. Zakat base = 50 + 20 − 30 − 5 = SAR 35M. Zakat = 35M × 2.5% = SAR 875,000.
