The Zakat rate in Saudi Arabia is 2.5% of the Zakat base for the Hijri year, and an accounts taxpayer must file the Zakat return and pay what is due within no more than 120 days from the end of the Zakat year.
The Zakat Rate: 2.5% of the Zakat Base
The Zakat Collection Executive Regulations set the Zakat rate at 2.5% of the Zakat base for the Hijri year. If an accounts taxpayer's Zakat year differs from the Hijri year, the Zakat amount is computed on an actual-days basis, by dividing the Zakat rate by the number of days in the Hijri year and multiplying the result by the actual number of days in the taxpayer's Zakat year.
The Deadline for Filing the Zakat Return
An accounts taxpayer must file the Zakat return and pay what is due under it to the Authority within no more than 120 days from the end of the Zakat year; if the last day of this period falls on an official holiday, the due date is extended to the first working day after the holiday. The taxpayer must also register with the Authority before the end of its first financial year.
The Deadline to Request Exemption for Public-Benefit Activities
The Regulations give entities carrying out public-benefit activities, such as qualifying charitable associations, endowments, and non-profit companies, the chance to request exemption from Zakat collection, through an annual request submitted to the Authority within 120 days from the end of the Zakat year.
What Happens When a Taxpayer Stops Its Activity?
If a taxpayer permanently stops carrying on its activity, Zakat collection on it stops provided a written request is submitted to the Authority within 60 days of the date of stopping; otherwise, Zakat accounting continues until the date the request is submitted. A temporary stoppage of activity, however, does not stop Zakat collection.
Amending the Zakat Return and Consolidated Returns
If an accounts taxpayer finds an error in its Zakat return, it may apply to the Authority to amend the return, subject to the controls and deadlines set by the Regulations. A holding company and its wholly-owned subsidiaries, inside or outside the Kingdom, may also file consolidated accounts and a consolidated Zakat return, whether the ownership is direct or indirect.
Why Do These Deadlines Matter in Practice?
Complying with the 120-day deadline for filing the Zakat return and paying what is due protects the taxpayer from late-filing procedures and allows it time to complete and review its final accounts before submission to the Authority. Understanding the 2.5% rate and how it is adjusted for actual days when the Zakat year differs from the Hijri year also helps businesses estimate their Zakat liability more accurately during annual financial planning, particularly those that use the Gregorian year in their financial reporting.
Legal References
- Zakat Collection Executive Regulations 1445H (Ministerial Resolution No. 1007 dated 19/8/1445H) with Published Amendments, Article Fifteen, Article Ninety-Eight, Article One Hundred and Two, Article Seven, Article Eleven, Article One Hundred and Three, and Article Sixteen.
For questions about your specific situation, you can ask the Saudi Arabia Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.
