On 27 February 2023, the Zakat, Tax and Customs Authority (ZATCA) published amendments to Articles No. 5, 6, 8 and 25 of the Zakat Implementing Regulations as a draft for public consultation. The deadline for receiving recommendations and comments on these amendments is March 14, 2023.
The following are the major proposed amendments:
1. Article 5: Allowable deductions from Zakat base
Staff residences owned by the Zakat payer representing part of his fixed assets (amending Article 5, adding Para 1(e) to the Zakat implementing Regulations) are eligible to be deducted from Zakat base).
2. Article 5: Allowable deductions from Zakat base
Housing loans paid to employees through the Employee Housing Support Program (amending Article 5, adding Para 1(f) to the Zakat implementing Regulations) are eligible to be deducted from Zakat base subject to certain conditions).
3. Article 6: Zakat base- other considerations
Regarding Employee Housing Support Program, the value of the housing unit borne by the employee shall not exceed its actual cost to the Zakat payer, and the employee shall not bear any additional amounts in exchange of the loan, and this includes cases in which the contract is terminated before the completion of its term (amending Article 6, adding Para 7 to the Zakat implementing Regulations) conditions for deduction from Zakat base).
4. Article 6: Zakat base: other considerations
Contributions in Sukuk and bonds, with no considerations of their classification in the financial statements (amending Article 6, adding Para 8 to the Zakat implementing Regulations) are eligible for deduction from Zakat base).
5. Article 8: Allowable expenses
Interest/finance charges on debts incurred by the Zakat payer on behalf of its employees under the Employee Housing Support Program (Amending Article 8, adding Para 8 to the Zakat implementing Regulations) are eligible as deductible expenses).
6. Article 25: Appeal procedures
To accept the appeal in form, the Zakat payer should pay an amount not less than 10% and not exceeding 25% of the amounts due on the items under objection or to provide a Bank/Financial Guarantee. ZATCA has the right to issue the necessary measures for that (amending Article 25, Para 3: Objection and Appeal Procedures).
Interested parties may register on the Public Consultation Platform to provide comments before March 14, 2023.
As KPMG in Saudi Arabia is closely involved in supporting clients with Zakat-related issues, we are building on that to submit a consolidated set of Recommendations/Comments that address both the Zakat payers’ requirements and to verify any area of ambiguity.
In this respect, we would be grateful to receive your Recommendations/Comments before March 12, 2023 – so we can consolidate and align the feedback and meet the above mentioned deadline.
You may use any of the below contacts to channel your feedback.
Get in touch
Tariq Al Sunaid
Head of Tax
Senior Director, Domestic Tax
Senior Director, Domestic Tax
Director, Head of Indirect Taxes
Stefan El Khouri
Senior Director, Head of Transfer Pricing
Director, Domestic Tax