General Manual of Zakat

Zakat Base Items (Deductions) The deduction items consist of the zakat base for the taxpayer who maintains commercial books, regular accounts of non-zakatable assets such as fixed assets, assets subject to zakat levy in another base, such as investments in the capital of companies subject to zakat in the KSA, or the zakat of which is paid independently by the taxpayer, and some other assets specified by the Regulations. 14 5.2.1 Deduction-related Concepts The ZATCA's method for calculating the zakat base includes deducting all non-zakatable assets, independently zakatable assets and some other items. The main items of deductions generally consist of the following: ● Non-zakatable assets, including fixed assets, such as buildings: machinery, equipment, furniture, intangible assets, etc. ● Zakatable assets, including non-trading investment in shares of Saudi companies or foreign companies that are subject to zakat independently in accordance with the controls specified in the Regulations. 14 ) Article (5), para. (9): The value of real estate under development intended for sale that is classified as non-current assets in the financial statements, to be sold after the completion of its development, unless it is offered for sale as is, or the total sales and advance payments received from customers regarding it exceeds twenty-five percent (25%) of its value shown in the financial statements of the zakat year, subject of the declaration. ZATCA may review the modification of this percentage according to the state and conditions of the market. Deducted from ZB Below are examples of items deducted from the zakat base: Item Amount Net fixed assets and the like Capital construction Non-Current Assets Investments in non-trading establishments inside and outside the KSA in accordance with the controls mentioned below. Net incorporation and pre-operating expenses and similar capital expenses Net zakat year loss adjusted for zakat purposes Adjusted net retained loss for the purposes of levying zakat in accordance with the controls specified below. Net value of real estate under development prepared for sale in accordance with the controls specified below. Statutory deposit of insurance and reinsurance companies. Inventory of agricultural inputs purchased for use in production.