General Manual of Zakat

Deductible Expenses The following expenses may be deducted to determine the activity result for the purposes of zakat: Expense Conditions to be met in the expense Normal and necessary expenses necessary for the business The expense shall be actual and supported by documents and evidence that are acceptable to ZATCA and verifiable, even if they are related to previous years. It shall be related to the taxpayer's activity, not related to personal expenses or other activities not pertaining to the taxpayer. It shall not be of a capital nature. In the event that an expense of a capital nature is included in the expenses, the activity result is modified by it, and it is included in the fixed assets and depreciated within the depreciation of the asset. 16 ) Article (8), which is the activity result, the Executive Regulations. Expense Conditions to be met in the expense Salaries and allowances of the owner or partner The expense related to the difference in salaries and wages that exceeds the amount registered in the certificate issued by the General Organization for Social Insurance (GOSI) may be educted, provided that it is supported by documentary evidence. Remunerations paid to the Chairman, his Deputy and Board Members from among the owners or partners. They may be deducted within the limits of remunerations paid to independent persons. Bad Debts The revenues that resulted from said obligations have been previously declared within the taxpayer’s revenues in the year of the repayment entitlement. The taxpayer shall submit a certificate certified by a chartered accountant licensed in the Kingdom of Saudi Arabia, stating that the cancellation of said obligations was carried out by a decision of the authorized person, upon the Authority’s request for that certificate. The obligations shall not be on parties associated withthetaxpayer. The taxpayer shall declare what will be collected from those debts in the future. Annual depreciation installment of fixed assets The assets are to be owned. The assets shall be intended for use in the activity, as recorded in the taxpayer's commercial books. The depreciation installment shall be reasonable notexcessive. Expense Conditions to be met in the expense Donations: They shall be paid to the entities authorized to receive donations inside the KSA and supported by supporting documents. The accrual during the year from the unearned installment reserve, and from the reserve for existing risks, in insurance (and/or) reinsurance companies (for more details refer to the insurance activity GUIDELINE) They shall be returned to the zakat base in the following year. They shall be determined in accordance with the professional standards used in this type of activity and in accordance with the applicable laws, regulations and rules related to the above-mentioned activity. School tuitions paid to the children of the taxpayer's employees Payments to a licensed educational establishment within the KSA. They shall be explicitly provided for in the employee's employment contract or in the bylaws of the company for which he works. These expenses shall be supported by payment vouchers acceptable to ZATCA.