1Issue 1 | September 2024

Non-Zakatable Sources of Funds Below are examples of sources of funds not subject to Zakat for financing activities, provided by way of example and not limitation: Category Item Amount Non- Zakatable Sources of Funds Liabilities owed by the Zakat payer, the repayment of which falls due within one year or, such as Liabilities of the Zakat payer classified as short-term and their equivalents, such as deposits with no specific maturity date; balances due to banks and financial companies. Liabilities of the Zakat payer due for payment, or a portion thereof, in less than one year, such as balances due to banks and other financial institutions. Negative fair value of financial derivatives due in less than one year from the end of the Zakat payer’s fiscal year, such as financial derivatives owned by companies in the form of put and call options, swap contracts, and financial instruments acquired for hedging purposes. 3.2.4 Practical Examples of Zakatable and Non-Zakatable Sources of Funds Example 4: The following data pertains to a financial leasing company licensed by the Saudi Central Bank as of 31st December 2024G. Based on this, it is required to calculate Zakatable and non-Zakatable sources of funds in accordance with the Implementing Regulations for Zakat Collection. Statement of Financial Position As of 31st December 2024G (Amounts in SAR) Item 2024 (SAR) 2023 (SAR) Cash and cash equivalents Prepaid expenses and other assets Islamic financing receivables Property and equipment – net Intangible assets – net Total Assets Liabilities and Equity 2024 (SAR) 2023 (SAR) Liabilities Creditors Zakat provision Bank loans Provision for end-of-service benefits Total Liabilities Capital Statutory reserve General reserves Retained earnings Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity Taking into account the following information regarding the financial statements: 1. 90% of bank loans are due after more than one year (long-term loans). 2. 20% of creditors’ balances are due after one year or more. 3. The Zakat provision for 2024G will be settled within the twelve months following the end of 2024G. 4. 40% of the end-of-service benefit provision is expected to remain as a liability for more than 12 months following the end of 2024G. 5. An increase in the company’s capital from external sources occurred on 1st July 2024G. A. Identification of Zakat-Subject Sources of Funds from Financing Activities as Stated in the Regulations Group Item as stated in the Regulations Clarifications Amount (SAR) Zakat- Subject Sources of Funds Equity: At the end-of-period balance + Zakat provision according to Article 24 of the Regulations The Equity item is taken at the end-of-period balance regardless of any increase made to it during the year. Debts due from the Zakat payer where the maturity date or part thereof is after one year or more, whether called short-term or long-term debts, as follows: a. All types of financing, whether via borrowing, Murabaha/cost- plus financing, finance lease, or other financing contracts. b. Debt instruments, such as Sukuk and bonds, issued by the Zakat payer regardless of their structure. A total of the following is added: 1. 90% of the bank loans balance due after more than one year (long-term loans). 2. 20% of the outstanding balance of creditors due after one year or more 3. 40% of the period-end balance of the provision for end-of-service benefits expected to continue for more than 12 months. Negative fair value of financial derivatives due after one year or more, including derivatives held in the form of call and put options, swap contracts, and financial instruments acquired for hedging purposes Not applicable Total Zakat-Subject Sources of Funds