22Different Activities

Definition of the Sector This sector is defined as the activities of households that employ individuals to produce nondiscretionary goods and services for their own use. This sector includes: ● Activities of households employing individuals for domestic work (excluding the provision of services by independent service providers). ● Non-discretionary activities for the production of goods and services by private households for their own use. 19.Request for Ruling If you are not aware of how to apply zakat to a certain activity or transaction you carry out, or plan to carry out, after referring to the respective statutory provisions and Guideline, you can submit an application to ZATCA for issuing a Ruling decision according to the Implementing Regulations for Zakat Collection issued by the Ministerial Resolution No. (2216) dated 7 Rajab 1440H 20.Contact us For more information about any transaction that is subject to Zakat collection, please visit ZATCA's website zatca.gov.sa or call the number 19993. 21.Frequently Asked Questions (FAQ) 1. Is it permissible for an entity to deduct the employees’ share in regular pension funds, such as retirement pensions, social insurance, or saving funds, from the Zakat base? The employees’ share in such funds may not be deducted from the Zakat base. 2. What are the expenses that may be deducted from the Zakat base? All ordinary and necessary expenses required for the business activity, whether paid or due, are deductible to calculate the net result of the business activity, provided that the following guidelines are met: ● They must be actual expenses evidenced by supporting documents or other proof that enables the Authority to verify their validity, even if they relate to previous years. ● They must correspond to the business activity and not be related to personal expenses or other activities. ● They must not be of a capital nature. If an expense of a capital nature is included, the result of the business activity will be adjusted accordingly and the expense will be added to the fixed assets and depreciated in accordance with statutory ratios. 3. Is it permissible for an entity to deduct bad debts from the Zakat base? What are the guide- lines for that? Bad debts are considered expenses that may be deducted according to the following guidelines: ● They must have been previously reported as revenue for the entity in the year they became due. ● Bad debts should have arisen from engagement in business activities, provided that: a. The entity provides a certificate from a certified public accountant confirming that bad debts have been written off from the books by a competent officer’s decisionUpon the Authority's request for that certificate. b. The debts written off should not be owed by parties related to the Zakat payer. c. The Zakat payer must report the debts that have been written off as revenue once the debts are recovered. 4. Is it permissible for the owner of the entity to deduct his salary and allowances from the Zakat base? The salaries and allowances of the business owner, whether a sole proprietorship, a capital company, or a company of persons, as well as the remuneration paid to the chairman of the board of directors, his deputy, and board members, shall be considered expenses that may be deducted, provided that: ● The salaries and allowances of the owner are registered with social insurance. ● The remuneration should not exceed what is paid to independent persons. 5. How is the capital increase calculated when it is unknown whether it financed a deductible asset? The capital increase, when it is unknown whether it financed a deductible asset or not, will be added as a source of other funding based on the number of days. 6. How is the Zakat calculated if the fiscal year is longer than the Hijri year (354 days)? Zakat is calculated based on the actual number of days in the year by applying two and a half percent (2.5%) to the number of days in the Hijri year (354 days), multiplied by the number of actual days in the zakatable year. The adjusted net profit shall be subject to Zakat at two and a half percent (2.5%) for the year. Scan this code to view the last version and all published documents Or visit the website zatca.gov.sa