22Different Activities

Components of Zakat Base (Additions) The additions to the Zakat base, for the Zakat payer who maintains business books, consists of internal sources of funds (equity) and external sources of funds that have financed deductible assets. Reasons for adding to the Zakat base: ● Offsetting the deductible assets against the obligations thereto. ● Determine zakatable assets financed from internal sources of funds. Example (4): The following data is for a company as at the end of the fiscal year: Statement of Financial Position Assets Liabilities and Equity SAR SAR Current assets Current liabilities Long-term assets (property and equipment) Long-term liabilities Equity Total Total Item SAR Long-term liabilities Equity Minus: long-term assets Zakat base Define zakatable assets financed from internal sources of funds Meeting deductible assets, including the obligations it utilized External sources of funding are added to the base first, to meet them with deduction, and then internal sources of funding are added. In the above example, long-term liabilities for the entire base were added, and then equity was added. Reasons for inclusion in additions to the Zakat base A. Calculation of the base: 3.1.1 Concepts Related to Additions The Authority’s method of calculating the Zakat base is based on identifying all sources of internal funds and what has financed deductible assets from the sources of external funds. Zakat base calculation: When building the Zakat base, the obligations of the Zakat payer (external sources of finance) should be added first, assuming their priority in financing the deductible items before the internal sources of funding, in the following order: Sources of external funds (maximum limit is the value of deductible assets): 1. Obligations that are known to have financed deductible assets, such as (loans for the purchase of a fixed asset). 2. Long-term liabilities (given debt term), such as (loans with a term longer than 354 days). Example (5): The following data is for a company as at the end of the fiscal year: Statement of Financial Position Assets Liabilities and Equity SAR SAR Current assets Current liabilities Long-term assets (property and equipment) Long-term liabilities Equity Total Total Item SAR Long-term liabilities (not to exceed deductions) Equity Minus: long-term assets Zakat base External sources are added to the base first, but they must not exceed the total value of deductible assets, and then internal sources of funding are added. In the above example, long-term liabilities for the base were added up to the value of deductible assets, and then equity was added. Internal sources of funds: 1. Equity, such as (capital, reserves, retained earnings). 2. Accumulated provisions after deduction of what was used during the year, such as (end- of-service provision after deduction of what was used during the year). A. Calculation of the base: