22Different Activities

Definition of the Sector This sector is defined as the activity related to the connection of electricity, natural gas, steam, hot water, etc., through permanent infrastructure (pipeline network), main connections, and pipelines. The distribution of electricity, gas, steam, hot water, etc., in industrial complexes or residential buildings is also included in this sector. Zakat issues pertaining to the sector Spare parts Spare parts athat are used for the maintenance of machinery and equipment and are not intended for sale. Spare parts are non-zakatable assets deductible from the Zakat base as they are not intended for sale in their current condition, according to the Implementing Regulations. Example (27): The balance of spare parts shown in the financial statements of an electricity company as of December 31, 2019 is SAR 20,000,000. What is the amount to be deducted from the Zakat base? The balance of spare parts inventory shown in the financial statements as of 31 December 2019, amounting to SAR 20,000,000, is fully deductible from the Zakat base, as spare parts are considered non-zakatable assets because they are not intended for sale in their current condition. The Most Important Items in the Statement of Financial Position for the Transportation and Storage Sector and Their Zakat Treatment Item Item Nature Zakat Treatment Judgment Non-current assets Transmission and distribution network Representing the fixed assets of the transmission and distribution sector Deductible assets Deductible from the Zakat base because they are non- zakatable assets Current liability Recoverable subscribers’ insurance Representing the amounts paid by subscribers External sources of funds not utilized in financing deductible asset Not added to the Zakat base unless they matureafter more than 354 days Payments received from subscribers Representing payments received from subscribers to connect the service External sources of funds not utilized in financing deductible asset Not added to the Zakat base Non-current liability Government loans Representing grants whereby the government transfers cash to the entity under certain condition External sources of funds utilized in financing deductible asset Added to the Zakat base to meet deductible assets Long-term deferred revenue Representing balances earned for service performance that are amortized over the average useful lives of used equipment External sources of funds utilized in financing deductible asset Added to the Zakat base to meet deductible assets Provisions for obligations and other fees Representing provisions and obligations for expropriation cases for the public use Internal funding sources Added to the Zakat base to arrive atZakatable assets Description Opening Balance Provided During the Year Utilized During the Year Closing Balance SAR SAR SAR SAR Provision for end-of- service benefits Provision for obligations and other fees Total Movement of Provisions Zakat Calculation Item Amount Adjustment to activity result SAR Net profit before Zakat and income tax Add: Provision for end-of-service provided during the year Total adjustment to activity result 13. Water Supply, Sewage Drainage and Waste Management and Treatment Sector