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Zakat Base Limits The term "limits of the zakat base" refers to the maximum limit of the base that cannot be exceeded when calculating the zakat base, as well as the minimum limit to which one transitions as an alternative to the zakat base when the associated condition is met. Article 27 of the regulation includes provisions for the minimum limit of the zakat base, while Article 28 covers the maximum limit of the base, a new provision in the regulation. The limits of the zakat base are as follows: Minimum limit of the Base: The transition to the minimum limit of the Zakat base occurs if the Zakat base of the Zakat Payer holding statuary accounts decreases below the adjusted net profit. The minimum limit of the base is the lower of the following: Example (14) The total un-deducted assets plus the difference between the adjusted net profit and the net book profit. 2. The adjusted net profit. Maximum limit of the Base: The maximum limit of the base is considered absolutely, and the maximum limit is the equity and its equivalents, depending on the value shown in the statement of financial position at the end of the Zakat year of the Zakat payer, plus the difference between the adjusted net profit or loss of the year and net book profit or loss. Equity includes any item reclassified to be part of Equity. Limits Of Zakat Base The Equity and its Equivalents, depending on the value shown in the statement of financial position at the end of the Zakat year of the Zakat payer, plus the difference between the adjusted net profit or loss of the year and the net book profit or loss. The Minimum limit is considered only if the Zakat base decreases below adjusted net profit. The minimum limit of the base is the lower of the following: Un-deducted assets Plus the difference between the adjusted net profit and the net book profit. The adjusted net profit. Equity and equivalent items, as reported in the statement of financial statement at the end of the Zakat year, in addition to the variance between the adjusted net income (or loss) and the book net income (or loss) for the fiscal year. Zakat Base Minimum limit of the Base Maximum limit of the Base Minimum limit of the Base The base should not fall below the minimum limit Maximum limit of the Base The base should not exceed the maximum limit The following data appeared at Al Masar Company at the end of 2024 AD: - Item Amount Items to be added to the Zakat base (Equity and its equivalents) 100,000 SAR Items to be added to the Zakat base (Liabilities) 70,000 SAR Items to be deducted from the Zakat base 50,000 SAR Un-deducted assets 10,000 SAR Difference between the adjusted net profit and the net book profit 5,000 SAR Adjusted net profit 30,000 SAR Net book profit 25,000 SAR How much is the Zakat base in this case? The solution: First: Calculating the components of the Zakat base: Addition Items (Equity and its equivalents + Liabilities + Difference between the adjusted net profit and net book profit)* 155,000 SAR (-) Deduction Items 50,000 SAR Zakat Base 105,000 SAR *Liabilities have been added to the base not exceeding the deductible assets, amounting to 50,000 SAR Example (15) Secondly: Comparing the calculated Zakat base in the previous step with the minimum and maximum limits: Minimum limit of the Base Since the calculated Zakat base is greater than the adjusted net profit, the minimum limit is not considered. Calculating the Maximum limit of the Base Equity and its equivalents 100,000 SAR ( +) Difference between net book profit and adjusted net profit 5,000 SAR Total SAR 105,000 Therefore, the maximum limit of the base is 105,000 SAR. Since the result of the Zakat base calculation in the first step is the calculated maximum limit, the Zakat base for this company is the maximum limit of 105,000 SAR.