Zakat Transactions in the Construction&RET Sectors

Application of Zakat Collection in the Kingdom of Saudi Arabia The collection and distribution of Zakat to eligible recipients is a fundamental duty of the state, as stipulated in Article 21 of the Basic Law of Governance: «Zakat shall be collected and disbursed as prescribed by Sharia.» Article 7 also reflects the state›s commitment to Sharia duties, including the collection and distribution of Zakat, stating: «Governance in the Kingdom of Saudi Arabia derives its authority from the Quran and the Sunna of the Prophet (peace be upon him). The Quran and Sunna shall govern this Law and all the laws of the State.» Supporting this, the founding King Abdulaziz issued Royal Decree No. (17/2/28/8634) on 29/6/1370 H. April 6, 1951 ordering the collection of Zakat. This was followed by numerous reinforcing royal decrees, ministerial resolutions, explanatory and interpretive regulations, and circulars. These include Royal Decree No. (M/40) dated 2/7/1405 H. (October 31, 1884), the implementing regulations for Zakat collection issued by Ministerial Resolution No. (2082) dated 1/6/1438 H. (February 28, 2017), and the implementing regulations for Zakat collection issued by Ministerial Resolution No. (2216) dated 7/7/1440 H. (March 14, 2019), which apply to the Zakat years starting on or after January 1, 2019 for all Zakat payers, except those assessed by the presumptive method under Chapter 4 of the Regulations, which applies to their declarations submitted after December 31, 2019. Thus, the implementing regulations for Zakat collection dated 7/7/1440 H. do not apply to fiscal years before this date, as these years are governed by previous regulations and instructions. The implementing regulations for Zakat collection specifically address Zakat rules in commercial activities, the requirements for submitting Zakat declarations, and the processes for assessment, examination and payment as well as their respective timelines. The Zakat revenue collected by the Zakat, Tax and Customs Authority is deposited into the Social Security account, which handles its disbursement to the poor and needy in accordance with Royal Decree No. (61/5/1) dated 5/1/1383 H. (28 May 1963). Paragraph (1) of the decree states: «Zakat shall be fully collected from all joint stock and others companies as well as individuals subject to Zakat,» and paragraph (2) states: «All the amounts collected shall be deposited into the Social Security Fund.»