Zakat Obligations for Saudi-Owned Businesses
Written in plain language for general understanding. This is educational content, not legal advice. Based on Saudi royal decrees, regulations, and ministerial decisions.
Saudi National Law
What is this right?
Saudi-owned businesses and GCC nationals pay Zakat instead of income tax:
- Rate: Zakat is levied at 2.5% of the company's Zakat base (net assets adjusted per ZATCA rules).
- Who pays: Saudi-owned companies, Saudi shareholders in mixed companies, and GCC nationals treated as Saudis for Zakat purposes.
- Filing: Businesses must file an annual Zakat return with ZATCA within 120 days of the end of their fiscal year.
- Mixed companies: If a company has both Saudi and foreign ownership, the Saudi portion pays Zakat and the foreign portion pays income tax.
- Individuals: Zakat on personal wealth is a religious obligation but is not collected by ZATCA from individuals — only from businesses.
When does it apply?
- You own or have a stake in a Saudi-registered business.
- You are a GCC national doing business in Saudi Arabia.
- Your company has Saudi shareholders who are subject to Zakat.
What should you do?
- File your Zakat return on time — use the ZATCA online portal to submit within the 120-day deadline.
- Calculate your Zakat base carefully — include equity, retained earnings, long-term loans, and other adjustments per ZATCA rules.
- Keep accurate financial records and audited financial statements.
- If you disagree with a ZATCA assessment, file an objection within 60 days.
What should you NOT do?
- Do not file late — penalties of 1% of the unpaid Zakat per 30 days apply for late filing.
- Do not confuse personal Zakat with business Zakat — ZATCA only collects from businesses.
- Do not understate your Zakat base — ZATCA can audit and reassess with penalties.
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