Estimated Zakat Calculation and the Role of the Zakat Accountant

Today’s topic is the Estimated Zakat Calculation, which is mandatory for individuals subject to the estimated assessment system, as specified by the Zakat, Tax and Customs Authority in Saudi Arabia.

So, what is estimated zakat? And how is the Estimated Zakat Calculation done? This article will explore these questions and provide further insight into this method of zakat.

Estimated Zakat Calculation

Estimated zakat is a form of zakat imposed by the Zakat and Tax Authority on any zakat payer who does not maintain formal accounting records.

The authority has confirmed that those subject to this method are individuals or establishments without formal accounts or financial statements, and who are not required to have them—such as small grocery stores.

To perform the Estimated Zakat Calculation, follow these steps to determine your zakat due:

Use the revenue (sales) reported in VAT.
Apply a 15% profit margin.
Calculate the capital by dividing revenue by 8.
Add both results and multiply the total by 2.5%.

Formula: (Sales ÷ 8) + (Sales × 15%)

It is worth mentioning that the Saudi Zakat and Tax Authority has set the minimum zakat for estimated filers at SAR 500.

Objection to Estimated Zakat

The authority allows taxpayers to object to their Estimated Zakat Calculation if they disagree with the amount assessed.

Steps to file an objection include:

Logging in to the Zakat and Tax Authority website.
Clicking on “Declarations.”
Selecting the declaration year.
Clicking on the “Edit” button at the bottom of the screen.

Zakat for Sole Proprietorships

Sole proprietorships are among the most common types of establishments in Saudi Arabia, owned and operated by a single individual.

These establishments must be commercially registered and comply with all regulations. Zakat is also imposed on them.

Steps to calculate zakat for sole proprietorships:

Estimate asset value based on current market value.
Determine debts and financial obligations.
Calculate profits and revenues.
Subtract liabilities and expenses from the profits and revenues to find net profit.
Multiply net asset value by 2.5% (zakat rate).

Hiring a certified accountant to assess assets and calculate net profit is crucial for accurate zakat computation.

The Role of a Zakat and Tax Accountant

Performing an Estimated Zakat Calculation requires deep understanding of the regulations set by the Zakat and Tax Authority to ensure accuracy.

A licensed accountant plays a key role by:

Preparing zakat and tax returns in compliance with authority requirements and submitting them on time.
Handling final assessment procedures and issuing zakat certificates.
Filing objections on behalf of clients before primary and appellate committees.
Providing essential consultation and advice regarding zakat and tax issues.

If you need a certified zakat and tax accountant, you can rely on us at Chartered Accountants and Auditors Business Pillars Company Chartered Accountant.

We have a professional team with over 20 years of experience providing accounting and auditing services.

Our services include:

Zakat, tax, and income services.
Preparing financial statements.
Filing objections before zakat and tax committees.
Internal and external audit procedures.
Bookkeeping and accounting services.

We are committed to delivering high-quality services to help you achieve your goals and protect your business interests.

In conclusion, we have presented detailed information on the Estimated Zakat Calculation system in Saudi Arabia, including how it’s calculated.

We also covered the right to object to the estimated zakat and how to do so, as well as the important role of a professional accountant in zakat and tax matters.

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