20 Rules of Zakat Collection from Investors

Introduction to the Rules for the Collection of Zakat from the Investors in the Investment Funds The investments in investment funds were not allowed as a deduction prior to Ministerial Resolution No. (29791) issued on Jumada Al-Awwal 9, 1444 AH, that approved the Rules for the Collection of Zakat from the Investors in the Investment Funds, These rules confirm and clarify the treatment of investments in investment funds for Zakat purposes in the books of the Zakat payers who voluntarily wish to declare and treat such items as deductions from the Zakat base in their declarations, provided that the conditions for deduction contained in the regulations and rules are met. Accordingly, these rules came to regulate the mechanism for the collection of Zakat on these investments for the Zakat payers who are unit holders in the investment funds according to the controls and conditions of the rules coupled with the relevant provisions of the regulations. In this Guideline, the mechanism, conditions and controls for calculating the Zakat on these investments will be discussed in detail when applying the deduction conditions for the Zakat payers who own the investments, since these funds were not registered with ZATCA, whereas such registration is one of the conditions for the deduction of the units in investment funds, in addition to other statutory requirements. 3.2. Investors in investment funds who are subject to Zakat’s provisions The rules aim to regulate the mechanism for computing and collecting the due Zakat on investors in investment funds in order for the Zakat payers who are subject to the regulations to include their investment units owned in these funds as deductions from the Zakat base in their Zakat declarations, provided that the conditions for deduction under the regulations and other controls mentioned in the rules were met. It should be noted that these rules are a mechanism for regulating the collection of Zakat from investors in investment funds only if the Zakat payer subject to the rules chooses to include these investments within the deductions from the Zakat base in his declaration. Therefore, the application of these rules is optional and not mandatory, as follows: Zakat payer ‘s action in terms of deducting the investment in the units of the investment funds Enforceability of the Rules The zakat payer deducts its investment in its Zakat declaration if the deduction conditions mentioned in the regulations apply Mandatory The Zakat payer did not deduct the investment from the Zakat base in the Zakat declaration (If the deduction conditions mentioned in the regulation were met). Not Mandatory