The Rules for Calculating Zakat on a Deemed Basis

In the realm of Zakat compliance, clarity and adherence to regulations are crucial. Ministerial Resolution No. 852 provides a comprehensive framework for calculating Zakat on a deemed basis, offering distinct rules and exceptions that businesses must navigate. Here’s a breakdown of the key aspects of this resolution: 

Key Provisions and Exceptions 

Ministerial Resolution No. 852 outlines specific provisions for deemed-based Zakat payers, highlighting notable exceptions to general regulations. These exceptions include: 

1. Funds Subject to Zakat: Exempting Article Four, which covers the determination of funds subject to Zakat. 
2. Zakat Base Deductions: Article Five’s rules on deductions from the Zakat base are not applicable. 
3. Calculation Methodology: Article Six, with exceptions of Paragraphs (2 & 3), on the method and controls for calculating the Zakat base. 
4. Business Activity Amendments: Section Three on amending business activity results is excluded. 
5. Accounting Treatment: Article Twelve’s guidance on approved accounting treatments is not applicable. 
6. Zakat Percentage Calculation: Article Fourteen’s specifics on calculating the Zakat percentage are exempt. 
7. Holding Companies and Affiliates: Article Fifteen’s treatment of holding companies and affiliates does not apply. 
8. Declaration and Record-Keeping: Articles Seventeen and Eighteen regarding the submission of declarations and maintenance of accounting records are excluded. 

Evaluation of Zakat Base 

• The Zakat base for deemed-based Zakat payers is evaluated using the following formula:

  • Zakat Base=(Sales/8)+(Sales×15%) 

• This calculation ensures that the Zakat base reflects the capital appropriate to the Zakat payer’s activity size, as per commercial registration or other relevant documents. 

Sales Evaluation Criteria 

For Zakat calculation, sales must align with VAT return disclosures or, if unavailable, be evaluated using the following criteria: 

1. Personnel Number: The number of working personnel multiplied by SAR 6,000. 
2. Imports Value: Imports value multiplied by 115%. 
3. Procurement Value: Procurement value multiplied by 115%. 
4. Gross Sales: Sales data from points of sale, Etimad Platform, exports, and private contracts. 
5. Alternative Standards: Any other criteria reflecting the actual sales, as deemed appropriate by the Authority. 

Zakat Calculation Rules 

1. Zakat Rate: Calculated at 2.5% of the Zakat base. 
2. Short Financial Periods: Zakat does not apply to periods shorter than 354 days. 
3. Minimum Zakat Amount: The Zakat per payer must be no less than SAR 500. 

Authority’s Rights and Payer’s Options 

1. Recalculation Rights: The Authority can recalculate sales if higher figures are found and may exclude payers from these rules if they maintain proper accounting records. 
2. Transition to Transaction-Based Calculation: Zakat payers can switch from deemed-based calculation to transaction-based calculation, subject to approval. Once transitioned, reverting to deemed-based calculation requires the Governor’s approval. 

Conclusion 

Ministerial Resolution No. 852 sets forth a structured approach for calculating Zakat on a deemed basis, with clear exceptions and guidelines. Businesses must be diligent in adhering to these rules to ensure compliance and optimize their Zakat obligations. Understanding these provisions helps in effective Zakat management and avoids potential discrepancies with regulatory authorities.