14- Manual of Zakat Handling of Investments

Investment Funds An investment fund is defined as a joint investment program that aims to provide the opportunity for its investors to collectively participate in the program’s profits, and is managed by an investment manager for a specified fee. Also, investment funds are managed according to a specific investment strategy and objectives set by the fund manager to achieve investment benefits. Regarding the zakat handling of investments in investment funds, the deduction controls do not differ from the rest of the investments provided for in this Manual. This means that the condition for deducting such investments is based on the following: 1. Such investments shall be held for non-trading purposes. 2. Calculating and paying the Zakat on the investment in the Fund to the Authority, either within the audited financial statements or pursuant to a certificate prepared in accordance with the "Rules for Collecting Zakat from Investors in Investment Funds" issued by His Excellency the Minister of Finance’s Resolution No. (29791) dated 09/05/1444 AH, and certified by a licensed certified public accountant in the Kingdom. 3. The investor's financial statements or the certificate referred to in paragraph (2) must include the calculation of the unit holder’s Zakat. This is conducted by calculating the Zakat base of the Fund, determining the number of units owned in the Fund, and finally calculating the Zakat due thereon. 3.3 Digital Currencies These are also known as digital money or crypto-currencies. It is a type of currency available in digital form and does not have a physical existence such as coins or notes; yet it has similar properties to coins and notes. Such currencies may be used to purchase goods or services in certain communities, such as online platforms or social networks. Currently, what distinguishes this currency in some countries is: the freedom to trade and transfer them in exchange for the purchase of goods and services, while there are some restrictions on its trading in other countries for financial reasons; including: reducing the effects of, and combating, moneylaundering. In March 2019 AD, the IFRS Interpretation Committee issued a tentative agenda decision on holdings of crypto-currencies. The Committee considered crypto-currencies according to the following characteristics: 1. A crypto-currency, digital, or virtual currency registered on a distributed ledger, and secured using crypto-currency technologies. 2. A crypto-currency that is not issued by the courts or other parties. 3. Holding a crypto-currency does not create a contract between the owner and the other party.