1First Edition | April 2024

“The Zakat Base of the Zakat payer shall not be less than the adjusted net profit for Zakat purposes in accordance with the provisions of the Regulations.” Example (13): Al-Yasmin Establishment calculated its Zakat in accordance with the provisions of the Implementing Regulations for Zakat Collection 1445H. It was found that the Zakat Base for the year 2024G amounted to SAR 3,000,000, while the Zakat payer achieved an adjusted net profit for the same year amounting to SAR 4,000,000. How shall Zakat be assessed in light of the following data: Statement: Total non-deductible assets Difference between adjusted profit and book profit Adjusted net profit for Zakat purposes Value SAR 2,000,000 SAR 600,000 SAR 4,000,000 It appears that the Zakat Base of the Zakat payer is positive and is less than the adjusted net profit. Accordingly, a comparison shall be made between the non-deductible assets plus the difference between the adjusted profit and the book profit. As shown in the above example, the value of the non-deductible assets plus the difference between the adjusted profit and the book profit amounts to SAR 2,600,000, whereas the adjusted net profit amounts to SAR 4,000,000. Accordingly, the lesser amount shall be taken, which is the value of the non-deductible assets added to the difference between the adjusted profit and the book profit: Accordingly, the minimum Zakat Base = SAR 2,600,000 2.12 Maximum Zakat Base The text of Article 28 of the Regulations provides as follows: “Maximum Zakat Base: 1. The maximum Zakat Base - in accordance with the provisions on additions to and deductions from the Zakat Base set out in Chapters 2, 3, 4, and 6 of Part 2 of the Regulations - shall be the equity and items treated as equity, based on the apparent value shown in the statement of financial position at the end of the Zakat payer’s Zakat year, plus the difference between the adjusted net profit or loss for the year and the book net profit or loss. 2. The equity referred to in Paragraph 1 of this Article shall include any item that has been reclassified to become part of equity, such as undistributed profits classified under liabilities in accordance with Article 36, partners’ loans in accordance with Article 30, and provisions in accordance with Article 24.” The Implementing Regulations for Zakat Collection clarified that the Zakat treatment of the maximum Zakat base, which may not be exceeded, is equity as shown in the statement of financial position, to which any item reclassified from liabilities to equity is added, in addition to the difference between the adjusted net profit and the book net profit. Compared to the Implementing Regulations for Zakat Collection - Issue 1440H, the previous Implementing Regulations did not provide for the existence of a maximum Zakat base. Example (14): The following data are available for Establishment (A): Zakat Base = SAR 100,000. Book net profit = SAR 10,000. Adjusted net profit = SAR 12,000. Equity as shown in the statement of financial position = SAR 95,000. Item of declared profit distributions classified under current liabilities = SAR 1,500