1Second Edition | April 2020

Procedures for Submitting a Request for Exemption from Zakat Collection with ZATCA by an Entity Wholly Owned by an Endowment Article Seven of the Regulations outlines the mechanism and conditions for submitting a request for an exemption from Zakat collection. From a procedural perspective, and in line with current practice applied by ZATCA, these may be summarized as follows: 1. Submitting the annual Zakat return Where an exemption is approved, an information return shall be issued, accompanied by the Zakat payer’s audited financial statements in accordance with the provisions of Article (17) of the Regulations. Zakat payers to whom the conditions for exemption apply are required to submit the Zakat return using the form prescribed by ZATCA, together with its attachments in Arabic, and attaching the Zakat payer’s audited financial statements within 120 days from the end of the fiscal year of the Zakat payer, in accordance with Article 102 of the Regulations. It should be noted that the attachments to the Zakat return must also include completion of the Zakat payer’s related-party transaction register, through the disclosure form attached to the return, in accordance with the Transfer Pricing Rules and their subsequent amendments, issued by Resolution of the Board of Directors of the General Authority of Zakat and Tax (previously) No. (19-1-6) dated 25 Jumada I 1444 AH (corresponding to 31 January 2019), and as amended by Resolution No. (23-2-8) dated 28 Sha‘ban 1444 AH (corresponding to 20 March 2023). Disclosure of related-party transactions, in accordance with the Transfer Pricing Rules, must include, inter alia: y Name of the related party. y Nature of the transaction. y Volume of the transaction. y Transfer pricing method. It should further be noted that the requirements of the Transfer Pricing Rules also apply to Zakat payers subject to Article Seven of the Implementing Regulations for Zakat Collection, issued by Ministerial Resolution No. (1007) dated 19 Sha‘ban 1445 AH (corresponding to 29 February 2024), in the same manner as they apply to other Zakat payers. 2. Completion of the Request for an Exemption from Zakat Collection The Zakat payer must complete the application using the form (as shown below) prepared by ZATCA for this purpose and submit it to ZATCA together with the Zakat return and other supporting documents. The Zakat payer must communicate with ZATCA through the approved communication channels when requesting an exemption from Zakat collection. Documents required to be submitted with the application, at a minimum, include the following: a. Copy of the Zakat return submitted on ZATCA’s website, together with the acknowledgment of receipt. b. Audited financial statements of the Zakat payer. c. Certificate of allocations to designated beneficiaries or clarification from the certified public accountant regarding such allocations, or any supporting evidence of such allocations. d. Evidence of the Zakat payer’s eligibility for an exemption, such as the endowment deed and the registration certificate issued by the General Authority for Awqaf. e. Valid commercial registration. f. Articles of Association or regulations, and any subsequent amendments thereto. g. Any other information that ZATCA may request for the purpose of assessing the application for an exemption. If the required documents are not submitted within the period specified in the notice, the review will be completed based on the documents provided. 3. Review of the application by ZATCA ZATCA will review the application and, if approved, will notify the Zakat payer through the approved communication channels. Where ZATCA approves the Zakat payer’s application, it will issue a letter confirming the exemption from Zakat collection for the fiscal year covered by the application. But if the application is rejected, the Zakat payer shall be required to pay the Zakat due under the Zakat return previously submitted.