An e-service offered by the General Authority of Zakat and Tax (GAZT) of the Kingdom of Saudi Arabia (KSA), Zakat is also a building bone in the skeletal financial structure of organizations in the GCC (Gulf Cooperation Council) region. It finds its origin in the religious beginnings of Islam and is considered one of the Five Pillars of Islam. In the modern world and simpler terms, it can be described as a wealth tax that applies to entities owned by Saudi and GCC nationals.
In this blog, we will delve deeper into the subtleties of Zakat, the rules governing it, and its significance in a digitally-driven world.
This Islamic assessment serves as a wealth tax when it comes to business entities and a form of worship when it comes to individuals who follow Islam as their religion.
For an individual, the definition and features of this Islamic assessment are as follows:
For a business entity, the features of this assessment are as follows:
In simple terms, the Zakat is calculated based on the business entity’s net worth. The technical denomination for the net worth of an organization is called “Zakat base.” As per the government norms, it equals 2.5% of the Zakat base of an organization.
Here’s a detailed account of the intricacies of this Islamic tax assessment.
What you owe is an important pawn in the Zakat calculation. Your personal liabilities include outstanding debts on the recurring annual date you have to pay the tax on. However, future debts (e.g., rent, utilities, etc.) is not included under this category. Furthermore, expenses such as mortgages and student loans are considered personal liabilities only for the next lunar year.
The formula (process) of calculating Zakat is quite simple:
A range of sub-services is laid out under this e-service offered on GAZT’s online portal. These include:
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