Ministerial Resolution 1007 approved a new Zakat Implementing Regulation, applying to financial years beginning on or after 1 January 2024. It is now well past the point of being news, and yet we still open books every month that are being kept as though nothing changed.
The structural change
The base is now built from year-end closing balances as shown in the financial statements, with additions and deductions matched between assets and liabilities. Put simply: you add the Zakat items and deduct the non-Zakat items, and the two sides have to correspond.
The rate is unchanged — 2.5% for a Hijri financial year, approximately 2.578% for a Gregorian one. What changed is the number the rate is applied to.
Deductions worth checking against your own balance sheet
Several items may now reduce the base, most of them subject to conditions:
- deferred tax assets
- shareholder debit loans
- amounts owed by government
- investments in companies not themselves subject to Zakat
- non-current properties not registered in the payer's name
- raw materials, employee housing loans, and sukuk or bonds
Non-current liabilities are added to the base, but only to the extent of the deductible assets they finance. That symmetry is the point of the redesign: financing a deductible asset should not enlarge your Zakat.
Property under development becomes deductible when classified as non-current — unless it is available for immediate sale, or development costs exceed 25% of its annual value.
Two changes that reclassify whole taxpayers
A permanent establishment of a non-resident is no longer subject to Zakat. If you have been filing a PE on the Zakat side out of habit, that is now the wrong return.
Charities and non-profits providing public benefit services gain exemptions under stated conditions.
Neither of these is a calculation adjustment. They change which regime a taxpayer sits in, which is the kind of error that runs for years before anyone questions it.
Why this shows up as a bookkeeping problem
The regulation leans on classifications in your financial statements — current versus non-current, registered in whose name, what a property is held for. If your chart of accounts does not carry those distinctions, the Zakat computation cannot be built from your books. It has to be reconstructed by hand every year, which is slow, expensive and exactly where errors enter.
The companies that find Zakat season painless are the ones whose books were set up to answer these questions all year. That is not sophistication. It is a chart of accounts that matches the return you have to file.
What to do
Have last year's computation reviewed against the current regulation rather than against last year's working paper. Carried-forward templates are how an outdated treatment survives.
Check your classification before anything else. Zakat or income tax, or both apportioned by ownership — and if you have a permanent establishment, whether it belongs on the Zakat return at all.
Fix the chart of accounts once. Every year you postpone it, you pay for the reconstruction again.
If you would like us to look at your last filed Zakat return against the current rules, send it with the financial statements it was built from. We will tell you plainly whether it needs amending, including when the answer is that it does not.
This is general information, not tax advice on your specific position. Zakat rules and their application change; confirm with us or with ZATCA before acting.
Question about this?
Call us and we will answer directly, with no obligation.