1Second Edition | April 2020

Other Considerations Regarding the Submission of Requests for Exemption from Zakat Collection under the Regulations If an endowment has more than one Zakat payer, or if a Zakat payer owned by an endowment wholly owns another Zakat payer, each Zakat payer must submit a separate request for an exemption from a Zakat collection. Example: Endowment (X) is established in the Kingdom of Saudi Arabia and duly documented in accordance with the applicable laws. Endowment (x) wholly owns Zakat payers (Y) and (Z), both of which are limited liability companies engaged in licensed commercial activities in the Kingdom. The fiscal years of the above-mentioned companies begin on 1 January and end on 31 December Question: How should requests for an exemption from Zakat collection be filled under the Regulations for the fiscal year ending 31 December 2023 by Zakat payers (Y) and (Z)? Solution: The Regulations apply to Zakat payers (Y) and (Z), since they are wholly owned directly by Endowment (X). However, pursuant to the provisions of the Regulations, each of the companies (Y) and (Z) must independently file its own request for an exemption from Zakat collection. A consolidated request is not permitted. Example: Endowment (X) is established in the Kingdom of Saudi Arabia and duly documented in accordance with the applicable laws. Endowment (X) wholly owns Company (Y). Company (Y), in turn, owns 50% of the shares of Company (Z), while the remaining ownership is held directly by Endowment (X). Both Company (Y) and Company (Z) are limited liability companies engaged in licensed commercial activities in the Kingdom, and both qualify as “Zakat payers” under the Regulations. The fiscal years of the above-mentioned companies begin on 1 January and end on 31 December Question: How should requests for an exemption from Zakat collection be filled under the Regulations for the fiscal year ending 31 December 2023? Solution: The conditions for the exemption apply to Zakat payers (Company Y) and (Company Z), since both are wholly owned by Endowment (X), as follows: y Endowment (X) directly owns 100% of the shares of Company (Y). y Endowment (X) owns 100% of the shares of Company (Z), through 50% indirect ownership via its full ownership of Company (Y), and 50% direct ownership. However, each of the companies (Y) and (Z) must independently file their own request for an exemption from Zakat collection. A consolidated request is not permitted.