22Different Activities

Definition of the Sector This sector is defined as the exploitation of natural plant and animal resources and consists of crop cultivation, animal breeding, and the collection of timber, other plants, animals, or animal products from a farm or its natural habitats. This sector also includes: ● Crop production, livestock production, hunting, and related services. ● Forestry and logging. ● Fishing and aquaculture. Zakat issues pertaining to the sector Agricultural inputs: Agricultural inputs are defined as the materials used in agricultural production, including raw materials such as seeds, fertilizers, and pesticides, which are stored and purchased for use in production by the Zakat payer engaged in agricultural activity. Agricultural inputs are non- zakatable assets that can be deducted from the Zakat base because they are not intended for sale but for use in agricultural activity. Biological assets: Biological assets include agricultural and animal biological assets, as well as aquaculture: a. Agricultural biological assets are not cultivated or sold as they are, but provide additional associated benefits while they survive, such as fruit trees and trees from which heating wood is harvested while maintaining the tree itself. These carrying biological assets are not agricul- tural crops but are self-growing assets. b. Animal biological assets are not sold as they are, but provide additional associated benefits while they survive, such as live animals that produce milk or laying hens. These carrying assets are self-growing assets, not for sale or direct consumption. c. Aquaculture refers to fish farming, the operation of hatchery ponds, and ornamental fish farming. Example(24): A company engaged in agricultural production has the following balances of agricultural and animal biological assets, as shown in the financial statements as of December 31, 2019: ● Agricultural biological assets: SAR 1,000,000 ● Animal biological assets: SAR 1,200,000 What is the amount to be deducted from the Zakat base? Agricultural and animal biological assets are deducted by SAR 1,000,000 and SAR 1,200,000, respectively, from the Zakat base because they are non-zakatable assets. These assets are fixed assets and are not intended for sale but for use in the business activity. The Most Important Items in the Statement of Financial Position for the Administrative and Support Sector and Their Zakat Treatment Item Item Nature Zakat Treatment Judgment Current assets Inventories of fish and shrimp products and food products (vegetables, fruits and trees) Representing an inventory for sale Non-deductible assets Not deductible from the base as they are Zakatable assets Inventories of Biological assets held for sale Representing goods for sale Non-deductible assets Not deductible from the base as they are Zakatable assets Non-current assets Agricultural land Representing an inventory for sale Non-deductible assets Not deductible from the base as they are Zakatable assets. Representing land that can be plowed and used for growing crops Deductible assets Deductible from the Zakat base because they are non- zakatable assets Wells and irrigation systems Representing land irrigation and well drilling systems for the development of agricultural wealth Deductible assets Deductible from the Zakat base because they are non- zakatable assets Silos Representing fixed assets of buildings equipped for storage, loading and unloading of grain prior to sale or use Deductible assets Deductible from the Zakat base because they are non- zakatable assets Agricultural machinery and equipment Representing machines used in agricultural or farmland to speed up work and improve production Deductible assets Deductible from the Zakat base because they are non zakatable assets Boats and fishing equipment Representing fixed assets used for fishing in various water surfaces Deductible assets Deductible from the Zakat base because they are non zakatable assets Fruit trees and plants (mature) ● Used in the production or supply of agricultural products ● Expected to fruit more than once during the period ● Have a remote possibility of being sold as an agricultural product Deductible assets Deductible from the Zakat base because they are non- zakatable assets Biological assets Representing livestock, agricultural crops and biological assets used in production Deductible assets Deductible from the Zakat base because they are non- zakatable assets Apiaries Representing biological assets used to produce honey Deductible assets Deductible from the Zakat base because they are non- zakatable assets