{"id":4559,"date":"2024-06-25T17:36:38","date_gmt":"2024-06-25T17:36:38","guid":{"rendered":"https:\/\/bpcpasa.com\/?p=4559"},"modified":"2025-04-26T15:51:08","modified_gmt":"2025-04-26T15:51:08","slug":"zakat-on-companies","status":"publish","type":"post","link":"https:\/\/bpcpasa.com\/en\/zakat-on-companies\/","title":{"rendered":"Zakat on Companies: Income Tax and Withholding Tax in Saudi Arabia"},"content":{"rendered":"\r\n<p class=\"\" dir=\"ltr\" data-start=\"143\" data-end=\"267\">Zakat on Companies, Income Tax, and Withholding Tax: An Integrated Tax System to Enhance Saudi Arabia&#8217;s National Economy<\/p>\r\n<p class=\"\" dir=\"ltr\" data-start=\"269\" data-end=\"397\">Based on this, let us explore the key information about Zakat on Companies, income tax, and withholding tax in Saudi Arabia:<\/p>\r\n<h3 class=\"\" dir=\"ltr\" data-start=\"399\" data-end=\"425\"><strong data-start=\"403\" data-end=\"425\">Zakat on Companies<\/strong><\/h3>\r\n<ol dir=\"ltr\" data-start=\"427\" data-end=\"700\">\r\n<li class=\"\" data-start=\"427\" data-end=\"663\">\r\n<p class=\"\" data-start=\"430\" data-end=\"663\"><strong data-start=\"430\" data-end=\"467\">Determining the Hawl (Zakat Year)<\/strong> Hawl refers to the completion of a full Hijri year on the wealth or assets subject to zakat. This date is essential for zakat calculation, serving as a starting point to track the year\u2019s passage.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"665\" data-end=\"700\">\r\n<p class=\"\" data-start=\"668\" data-end=\"700\"><strong data-start=\"668\" data-end=\"700\">Identifying Zakatable Assets<\/strong><\/p>\r\n<\/li>\r\n<\/ol>\r\n<p class=\"\" dir=\"ltr\" data-start=\"702\" data-end=\"727\">Zakatable assets include:<\/p>\r\n<ul dir=\"ltr\" data-start=\"728\" data-end=\"929\">\r\n<li class=\"\" data-start=\"728\" data-end=\"774\">\r\n<p class=\"\" data-start=\"730\" data-end=\"774\"><strong data-start=\"730\" data-end=\"738\">Cash<\/strong>: Funds in hand or in bank accounts.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"775\" data-end=\"818\">\r\n<p class=\"\" data-start=\"777\" data-end=\"818\"><strong data-start=\"777\" data-end=\"792\">Trade goods<\/strong>: Items intended for sale.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"819\" data-end=\"882\">\r\n<p class=\"\" data-start=\"821\" data-end=\"882\"><strong data-start=\"821\" data-end=\"838\">Raw materials<\/strong>: Materials that are yet to be manufactured.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"883\" data-end=\"929\">\r\n<p class=\"\" data-start=\"885\" data-end=\"929\"><strong data-start=\"885\" data-end=\"906\">Finished products<\/strong>: Goods ready for sale.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<p class=\"\" dir=\"ltr\" data-start=\"931\" data-end=\"962\">Excluded from zakatable assets:<\/p>\r\n<ul dir=\"ltr\" data-start=\"963\" data-end=\"1125\">\r\n<li class=\"\" data-start=\"963\" data-end=\"1125\">\r\n<p class=\"\" data-start=\"965\" data-end=\"1125\"><a href=\"https:\/\/bpcpasa.com\/en\/blog\/accounting-treatment-of-fixed-assets\/\"><strong data-start=\"965\" data-end=\"981\">Fixed assets<\/strong><\/a>: Buildings, machinery, equipment, and other production-related assets. These are considered long-term investments and are not subject to zakat.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<ol dir=\"ltr\" start=\"3\" data-start=\"1127\" data-end=\"1882\">\r\n<li class=\"\" data-start=\"1127\" data-end=\"1324\">\r\n<p class=\"\" data-start=\"1130\" data-end=\"1324\"><strong data-start=\"1130\" data-end=\"1158\">Valuing Zakatable Assets<\/strong> Zakatable assets are valued based on their market value at the end of the zakat year. Accurate market knowledge is required to determine a fair and reasonable value.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"1326\" data-end=\"1543\">\r\n<p class=\"\" data-start=\"1329\" data-end=\"1543\"><strong data-start=\"1329\" data-end=\"1349\">Debt Calculation<\/strong> Debts that the company is obligated to pay within the year are deducted from the zakatable assets. This means zakat is only applied to the net zakatable assets after liabilities are subtracted.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"1545\" data-end=\"1882\">\r\n<p class=\"\" data-start=\"1548\" data-end=\"1882\"><strong data-start=\"1548\" data-end=\"1574\">Zakat Rate Calculation<\/strong> The fixed zakat rate is 2.5% (a quarter of a tenth) of the net zakatable assets after deducting debts. This constant rate simplifies the calculation process and clarifies the financial obligations of companies.<br data-start=\"1785\" data-end=\"1788\" \/>Zakat on Companies plays a central role in financial fairness and economic responsibility.<\/p>\r\n<\/li>\r\n<\/ol>\r\n<h3 class=\"\" dir=\"ltr\" data-start=\"1889\" data-end=\"1923\"><a href=\"https:\/\/zatca.gov.sa\/ar\/HelpCenter\/guidelines\/Documents\/%D9%86%D8%B8%D8%A7%D9%85%20%D8%B6%D8%B1%D9%8A%D8%A8%D8%A9%20%D8%A7%D9%84%D8%AF%D8%AE%D9%84.pdf\"><strong data-start=\"1893\" data-end=\"1923\">Income Tax in Saudi Arabia<\/strong><\/a><\/h3>\r\n<p class=\"\" dir=\"ltr\" data-start=\"1925\" data-end=\"2096\">Income tax is levied on the income of individuals and companies in Saudi Arabia. This tax system aims to regulate government revenues and support national economic growth.<\/p>\r\n<h4 class=\"\" dir=\"ltr\" data-start=\"2098\" data-end=\"2140\"><strong data-start=\"2103\" data-end=\"2140\">Income Tax Basics in Saudi Arabia<\/strong><\/h4>\r\n<ol dir=\"ltr\" data-start=\"2142\" data-end=\"2170\">\r\n<li class=\"\" data-start=\"2142\" data-end=\"2170\">\r\n<p class=\"\" data-start=\"2145\" data-end=\"2170\"><strong data-start=\"2145\" data-end=\"2170\">Scope and Application<\/strong><\/p>\r\n<\/li>\r\n<\/ol>\r\n<ul dir=\"ltr\" data-start=\"2171\" data-end=\"2444\">\r\n<li class=\"\" data-start=\"2171\" data-end=\"2250\">\r\n<p class=\"\" data-start=\"2173\" data-end=\"2250\"><strong data-start=\"2173\" data-end=\"2188\">Individuals<\/strong>: Saudi nationals and residents are not subject to income tax.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"2251\" data-end=\"2444\">\r\n<p class=\"\" data-start=\"2253\" data-end=\"2444\"><strong data-start=\"2253\" data-end=\"2266\">Companies<\/strong>: Income tax applies to profits of foreign companies, those owned by foreigners, or those operating in the oil and gas sector. Companies owned by Saudi citizens are fully exempt.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<ol dir=\"ltr\" start=\"2\" data-start=\"2446\" data-end=\"2461\">\r\n<li class=\"\" data-start=\"2446\" data-end=\"2461\">\r\n<p class=\"\" data-start=\"2449\" data-end=\"2461\"><strong data-start=\"2449\" data-end=\"2461\">Tax Rate<\/strong><\/p>\r\n<\/li>\r\n<\/ol>\r\n<ul dir=\"ltr\" data-start=\"2462\" data-end=\"2758\">\r\n<li class=\"\" data-start=\"2462\" data-end=\"2510\">\r\n<p class=\"\" data-start=\"2464\" data-end=\"2510\"><strong data-start=\"2464\" data-end=\"2485\">Foreign companies<\/strong>: 20% tax on net profits.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"2511\" data-end=\"2758\">\r\n<p class=\"\" data-start=\"2513\" data-end=\"2578\"><strong data-start=\"2513\" data-end=\"2533\">Oil &amp; gas sector<\/strong>: Different rates apply depending on revenue:<\/p>\r\n<ul data-start=\"2581\" data-end=\"2758\">\r\n<li class=\"\" data-start=\"2581\" data-end=\"2638\">\r\n<p class=\"\" data-start=\"2583\" data-end=\"2638\">85% for companies with over SAR 375 billion in revenue.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"2641\" data-end=\"2699\">\r\n<p class=\"\" data-start=\"2643\" data-end=\"2699\">50% for companies with SAR 187.5 billion to 375 billion.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"2702\" data-end=\"2758\">\r\n<p class=\"\" data-start=\"2704\" data-end=\"2758\">75% for companies earning less than SAR 187.5 billion.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<ol dir=\"ltr\" start=\"3\" data-start=\"2760\" data-end=\"2969\">\r\n<li class=\"\" data-start=\"2760\" data-end=\"2939\">\r\n<p class=\"\" data-start=\"2763\" data-end=\"2939\"><strong data-start=\"2763\" data-end=\"2775\">Tax Base<\/strong> The taxable base is the net profit from business activity after deducting all expenses and costs. This ensures the tax applies to actual profits, not gross income.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"2941\" data-end=\"2969\">\r\n<p class=\"\" data-start=\"2944\" data-end=\"2969\"><strong data-start=\"2944\" data-end=\"2969\">Compliance Procedures<\/strong><\/p>\r\n<\/li>\r\n<\/ol>\r\n<ul dir=\"ltr\" data-start=\"2971\" data-end=\"3270\">\r\n<li class=\"\" data-start=\"2971\" data-end=\"3095\">\r\n<p class=\"\" data-start=\"2973\" data-end=\"3095\"><strong data-start=\"2973\" data-end=\"2989\">Registration<\/strong>: Foreign companies and those in oil\/gas must register with the General Authority of Zakat and Tax (GAZT).<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3096\" data-end=\"3198\">\r\n<p class=\"\" data-start=\"3098\" data-end=\"3198\"><strong data-start=\"3098\" data-end=\"3108\">Filing<\/strong>: Companies must submit annual tax returns detailing income, profit, and related expenses.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3199\" data-end=\"3270\">\r\n<p class=\"\" data-start=\"3201\" data-end=\"3270\"><strong data-start=\"3201\" data-end=\"3212\">Payment<\/strong>: Taxes must be paid on time to avoid fines and penalties.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<h3 class=\"\" dir=\"ltr\" data-start=\"3277\" data-end=\"3316\"><strong data-start=\"3281\" data-end=\"3316\">Withholding Tax in Saudi Arabia<\/strong><\/h3>\r\n<p class=\"\" dir=\"ltr\" data-start=\"3318\" data-end=\"3519\">Withholding tax is levied on amounts paid to non-residents from within Saudi Arabia. It forms part of the broader income tax system and applies to income earned by non-resident individuals or entities.<\/p>\r\n<h4 class=\"\" dir=\"ltr\" data-start=\"3521\" data-end=\"3552\"><strong data-start=\"3526\" data-end=\"3552\">Withholding Tax Basics<\/strong><\/h4>\r\n<ol dir=\"ltr\" data-start=\"3554\" data-end=\"3627\">\r\n<li class=\"\" data-start=\"3554\" data-end=\"3627\">\r\n<p class=\"\" data-start=\"3557\" data-end=\"3627\"><strong data-start=\"3557\" data-end=\"3570\">Tax Rates<\/strong> Rates range from 5% to 20% depending on the income type:<\/p>\r\n<\/li>\r\n<\/ol>\r\n<ul dir=\"ltr\" data-start=\"3628\" data-end=\"3742\">\r\n<li class=\"\" data-start=\"3628\" data-end=\"3648\">\r\n<p class=\"\" data-start=\"3630\" data-end=\"3648\"><strong data-start=\"3630\" data-end=\"3643\">Royalties<\/strong>: 15%<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3649\" data-end=\"3678\">\r\n<p class=\"\" data-start=\"3651\" data-end=\"3678\"><strong data-start=\"3651\" data-end=\"3673\">Technical services<\/strong>: 15%<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3679\" data-end=\"3697\">\r\n<p class=\"\" data-start=\"3681\" data-end=\"3697\"><strong data-start=\"3681\" data-end=\"3693\">Interest<\/strong>: 5%<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3698\" data-end=\"3722\">\r\n<p class=\"\" data-start=\"3700\" data-end=\"3722\"><strong data-start=\"3700\" data-end=\"3717\">Capital gains<\/strong>: 20%<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3723\" data-end=\"3742\">\r\n<p class=\"\" data-start=\"3725\" data-end=\"3742\"><strong data-start=\"3725\" data-end=\"3738\">Dividends<\/strong>: 5%<\/p>\r\n<\/li>\r\n<\/ul>\r\n<ol dir=\"ltr\" start=\"2\" data-start=\"3744\" data-end=\"3793\">\r\n<li class=\"\" data-start=\"3744\" data-end=\"3793\">\r\n<p class=\"\" data-start=\"3747\" data-end=\"3793\"><strong data-start=\"3747\" data-end=\"3766\">Included Income<\/strong> Includes amounts paid for:<\/p>\r\n<\/li>\r\n<\/ol>\r\n<ul dir=\"ltr\" data-start=\"3794\" data-end=\"3907\">\r\n<li class=\"\" data-start=\"3794\" data-end=\"3828\">\r\n<p class=\"\" data-start=\"3796\" data-end=\"3828\">Administrative or technical fees<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3829\" data-end=\"3849\">\r\n<p class=\"\" data-start=\"3831\" data-end=\"3849\">Technical services<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3850\" data-end=\"3861\">\r\n<p class=\"\" data-start=\"3852\" data-end=\"3861\">Royalties<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3862\" data-end=\"3872\">\r\n<p class=\"\" data-start=\"3864\" data-end=\"3872\">Interest<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3873\" data-end=\"3879\">\r\n<p class=\"\" data-start=\"3875\" data-end=\"3879\">Rent<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3880\" data-end=\"3891\">\r\n<p class=\"\" data-start=\"3882\" data-end=\"3891\">Dividends<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"3892\" data-end=\"3907\">\r\n<p class=\"\" data-start=\"3894\" data-end=\"3907\">Capital gains<\/p>\r\n<\/li>\r\n<\/ul>\r\n<ol dir=\"ltr\" start=\"3\" data-start=\"3909\" data-end=\"3926\">\r\n<li class=\"\" data-start=\"3909\" data-end=\"3926\">\r\n<p class=\"\" data-start=\"3912\" data-end=\"3926\"><strong data-start=\"3912\" data-end=\"3926\">Procedures<\/strong><\/p>\r\n<\/li>\r\n<\/ol>\r\n<ul dir=\"ltr\" data-start=\"3927\" data-end=\"4095\">\r\n<li class=\"\" data-start=\"3927\" data-end=\"4007\">\r\n<p class=\"\" data-start=\"3929\" data-end=\"4007\"><strong data-start=\"3929\" data-end=\"3954\">Withholding at source<\/strong>: Tax is deducted before payment to the non-resident.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"4008\" data-end=\"4095\">\r\n<p class=\"\" data-start=\"4010\" data-end=\"4095\"><strong data-start=\"4010\" data-end=\"4021\">Deposit<\/strong>: Tax must be deposited to GAZT within 10 days after the month of payment.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<h3 class=\"\" dir=\"ltr\" data-start=\"4102\" data-end=\"4146\"><strong data-start=\"4106\" data-end=\"4146\">Compliance Steps for Withholding Tax<\/strong><\/h3>\r\n<ul dir=\"ltr\" data-start=\"4148\" data-end=\"4380\">\r\n<li class=\"\" data-start=\"4148\" data-end=\"4209\">\r\n<p class=\"\" data-start=\"4150\" data-end=\"4209\">Identify the income type to determine the correct tax rate.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"4210\" data-end=\"4264\">\r\n<p class=\"\" data-start=\"4212\" data-end=\"4264\">Calculate the correct withholding amount accurately.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"4265\" data-end=\"4317\">\r\n<p class=\"\" data-start=\"4267\" data-end=\"4317\">Deduct the tax before payment to the non-resident.<\/p>\r\n<\/li>\r\n<li class=\"\" data-start=\"4318\" data-end=\"4380\">\r\n<p class=\"\" data-start=\"4320\" data-end=\"4380\">Deposit the withheld tax to GAZT on time to avoid penalties.<\/p>\r\n<\/li>\r\n<\/ul>\r\n<h3 class=\"\" dir=\"ltr\" data-start=\"4387\" data-end=\"4405\"><strong data-start=\"4391\" data-end=\"4405\">Conclusion<\/strong><\/h3>\r\n<p class=\"\" dir=\"ltr\" data-start=\"4407\" data-end=\"5253\">In conclusion, the zakat and tax system in Saudi Arabia is a vital part of the country\u2019s economic strategy. Through Zakat on Companies, income tax, and withholding tax, the government aims to promote social justice, organize government revenue, and stimulate economic growth.<br data-start=\"4686\" data-end=\"4689\" \/>Zakat on Companies contributes to sustainable economic development and aligns with Islamic principles of wealth redistribution.<br data-start=\"4820\" data-end=\"4823\" \/>These systems help build a resilient and sustainable economy capable of meeting future challenges and addressing citizens\u2019 needs.<br data-start=\"4952\" data-end=\"4955\" \/>Companies that properly apply Zakat on Companies can enhance transparency, strengthen corporate responsibility, and gain public trust.<br data-start=\"5093\" data-end=\"5096\" \/>Ultimately, the integration of Zakat on Companies within the broader tax framework plays a key role in Saudi Arabia\u2019s vision for economic sustainability.<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>Zakat on Companies, Income Tax, and Withholding Tax: An Integrated Tax System to Enhance Saudi Arabia&#8217;s National Economy Based on this, let us explore the key information about Zakat on Companies, income tax, and withholding tax in Saudi Arabia: Zakat on Companies Determining the Hawl (Zakat Year) Hawl refers to the completion of a full&#8230;<\/p>\n","protected":false},"author":16,"featured_media":3795,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"default","_kad_post_title":"default","_kad_post_layout":"default","_kad_post_sidebar_id":"","_kad_post_content_style":"default","_kad_post_vertical_padding":"default","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[840],"tags":[1356,1358,1357],"class_list":["post-4559","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-corporate-zakat","tag-income-tax","tag-withholding-tax"],"_links":{"self":[{"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/posts\/4559","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/comments?post=4559"}],"version-history":[{"count":4,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/posts\/4559\/revisions"}],"predecessor-version":[{"id":5226,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/posts\/4559\/revisions\/5226"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/media\/3795"}],"wp:attachment":[{"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/media?parent=4559"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/categories?post=4559"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bpcpasa.com\/en\/wp-json\/wp\/v2\/tags?post=4559"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}