Zakat on companies in Saudi Arabia
Zakat is levied on the Saudi- and GCC-owned share of a resident company at 2.5% of the Zakat base for a Hijri year (2.5778% where the accounts follow a Gregorian year). The base is built from the sources of funds that finance zakatable assets, and is subject to the minimum-base test in Article 27 of the regulations, which compares the computed base with adjusted net profit. New Zakat Implementing Regulations apply to fiscal years beginning on or after 1 January 2024.
Key facts
| Rate | 2.5% of the Zakat base (2.5778% for a Gregorian year) |
|---|---|
| Who pays | Saudi and GCC nationals' share of resident companies; the foreign share pays income tax |
| Minimum base | Article 27 alternate base applies where the computed base falls below adjusted net profit |
| Current rules | Zakat Implementing Regulations, fiscal years from 1 January 2024 |
| Return | Within 120 days of the fiscal year end |
| Authority | Zakat, Tax and Customs Authority (ZATCA) |
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How the Zakat base is computed
The base starts from equity and the long-term funding that finances the business, adds back provisions and adjusted net profit, and deducts assets that are not zakatable in the payer's hands, such as fixed assets, long-term investments in other Zakat payers and certain long-term receivables, each subject to conditions in the regulations. Whether a receivable from a shareholder or a subsidiary is deductible turns on those conditions, which is why the article-by-article text matters.
The assistant is often asked what a specific article of the regulations says. It quotes the article and the ZATCA guidance on it rather than paraphrasing from memory.
Losses and the closing balance rule
Provisions enter the base at their closing balance. Carried-forward losses reduce the adjusted profit only within the limits the regulations set, and a missing year in the loss history changes the result, so the return preparer needs the full history of assessed losses.
Frequently asked questions
- What is the Zakat rate for companies in Saudi Arabia?
- 2.5% of the Zakat base for a Hijri year, or 2.5778% where the fiscal year is Gregorian.
- Which regulations apply?
- The Zakat Implementing Regulations issued in 2024 apply to fiscal years beginning on or after 1 January 2024; earlier years follow the previous regulations.
Primary sources
Related guides
Disclaimer: This page provides general tax information based on publicly available primary sources, reviewed on the date shown. Rules are conditional and change; the page may not reflect a change made after that date, and it is not a substitute for advice from a qualified tax professional on your specific situation.