Zakat Base Addition

This procedure requires consideration of the following accounting aspects: The liabilities not added to the Zakat base are reached by identifying all the Zakat payer's liabilities and excluding what have been added to the Zakat base through current liabilities or equity. The remaining after this exclusion are the current liabilities not added to the Zakat base. For example, if the total liabilities of the Zakat payer (both current and non-current) amount to 800,000 SAR, and the Zakat payer has treated 100,000 SAR of them as equity and added 200,000 SAR within liabilities required to be added, the remaining amount represents the liabilities not added to the Zakat base. This is calculated by subtracting the total added liabilities of 300,000 SAR (100,000 + 200,000) from 800,000 SAR, resulting in a remaining amount of 500,000 SAR. This amount represents the liabilities not added to the Zakat base, which should be compared with the undeducted assets. 2. The undeducted assets in the Zakat base are reached by identifying all the Zakat payer's assets and excluding what have been deducted from the base. The remaining amount is the undeducted assets from the Zakat base. For example, if the total assets of the Zakat payer (both current and non-current) amount to 600,000 SAR, and the Zakat payer has deducted 200,000 SAR from the Zakat base, the remaining amount is the undeducted assets from Zakat base. This is calculated by subtracting the deducted amount of 200,000 SAR from the total of 600,000 SAR, resulting in a remaining amount of 400,000 SAR. This amount represents the undeducted assets from the Zakat base, which should be compared with the liabilities not added to the base. If we apply this to the two previous examples, we find the following: The liabilities not added to the Zakat base amount to 500,000 SAR. The undeducted assets from the Zakat base amount to 400,000 SAR. In comparison, it appears that the liabilities not added to the Zakat base exceed the undeducted assets by 100,000 SAR. Therefore, this difference must be added to the base within the liabilities required to be added, while considering that the total added liabilities, including this difference, do not exceed the assets from which it is deducted. 3. The importance of considering the exclusion of the effects of reclassified items on assets and liabilities is significant, as the value of assets and liabilities is affected when items classified within them as equity are reclassified. This has impact on the value of undeducted assets or liabilities not added to the Zakat base. For example, if a provision classified within current liabilities, such as a Zakat provision, is reclassified as equity, this will result in adding the provision within the equity items and its equivalents and also necessitates excluding it from current liabilities. This will lead to a reduction in the amount of non-added liabilities to the Zakat base. The detailed provisions regarding the reclassification between items of liabilities and equity, as well as the resulting effects, will be presented in paragraph 6 of this guide. Treatment of the difference between non- added liabilities and undeducted assets Liabilities Assets Added liabilities Non-added liabilities Undeducted assets Deducted assets Non-added liabilities Undeducted assets Positive Negative or Zero The difference is not added to the Zakat base The difference is added to the Zakat base The difference