Authority’s Method to Calculate Zakat Base

شركة ركائز الأعمال محاسبون ومراجعون قانونيون

Authority’s Method to Calculate Zakat Base

 

The Authority uses the indirect method (sources of funds method) to reach the zakat base. This
method is based on two basic procedures:

Add: External sources equivalent to the deductible assets
Deduct: The value of non-Zakatable assets and the value of the Zakatable assets.


Zakat base = Add – Deduct

● Reasons for adding to the Zakat base
– The deductible component, including obligations.
– Access to zakat assets financed through internal funds.

● Estimation of Zakat base
The obligations of the Zakat payer (external sources of financing) must be added at the Zakat base; assuming its priority in funding the items settled before internal sources of funding, in the following order:


1- External sources of funds (up to the maximum value of the assets settled).
2- Internal sources of funds.


Add:
> Capital.
> Advanced Revenue and Payments.
> First Year Reserves.
> Adjusted Net Profit / Net Fixed Assets.
> Any item taken at discounted rate.
> Retained Earnings.
> First Year Allocation.
> Profit Under Distribution.
> Change in Fair Value.
> Long-term obligations (maximum sum deducted from the zakat base).


Deduct:
> Net Fixed Assets.
> Capital Work in Progress.
> Intangible assets.
> Zakat Investments/ Investments in entities inside and outside the Kingdom for non-trading in accordance with the rules mentioned below.
> Net Value of Properties Under Development.
> Net Incorporation.
> Statutory Deposit of Insurance and Reinsurance Companies.
> Adjusted Net Loss Adjusted carry-over loss or as per the lists, whichever is less.
> Agricultural Inputs.

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