On 14 January 2025, the Zakat, Tax and Customs Authority (ZATCA) issued a proposed amendment to Article No. 73 of the Zakat Collection Implementing Regulations (the Regulations) aimed at specifying the Zakat treatment of the deduction of the off-plan projects balances. The key changes are summarized below:

 

1.       Provisions for deduction of the off-plan project balances

Balances for off-plan projects licensed by the competent authority are eligible for deductions from the Zakat-base based on the following formula, when the result of this formula is more than zero:

Deduction from base = Project balance at year end - Additions during the year

•       The above formula applies to each project separately.

•       In case the off-plan projects are classified as both current and non-current, deductions are first to be applied to the balance classified as non-current asset, and the remaining amount shall be applied to the balance classified as current asset.

•       Sources of funding of the off-plan projects must align with the additions to the Zakat base rules, as stated in Chapter Three of the Regulations.

 

2.       Compliance with Article No. 25 of the Regulations

This amendment reinforces compliance with Article No. 25 of the Regulations to ensure that sources of funding for off-plan projects are appropriately added to the Zakat base. To recap, Article No. 25 of the Regulations stipulates the rules for proportion of current liabilities added to Zakat base and/or non-current liabilities excluded from the Zakat base.

 

We encourage Zakat payers to take this opportunity to provide their valuable suggestions on the proposed amendment through the public consultation platform, Istitlaa, before the abovementioned dates.

 

For detailed discussions on how the proposed amendment may impact your business, please contact our Tax team:

Riyadh Office

Tareq Al Sunaid

Head of Tax – Saudi Arabia

E: talsunaid@kpmg.com

Salam Eido

Partner, Head of Tax - Riyadh

E: seido@kpmg.com

 

Sadia Nazir

Partner, Head of Transfer Pricing and International Tax

E: sadianazir@kpmg.com

Ali Sainudheen

Partner, Domestic Tax

E: asainudheen@kpmg.com

 

Jigna Sampath

Partner, Transfer Pricing/ Tax Leader, Financial Sector

E: jignasampath@kpmg.com

Ajay Garg

Partner, Indirect Tax

E: gajay@kpmg.com

Waqas Memon

Principal, Domestic Tax

E: wmemon@kpmg.com  

Amr Alsaleh

Director, Domestic Tax

E: amralsaleh@kpmg.com

Asadullah Azmat

Director, Indirect Tax

E: aazmat@kpmg.com

Qasim Malik

Director, Domestic Tax

E:  qasimmalik@kpmg.com

 

Bilal Mansoor

Director, Transfer Pricing

E:  bilalmansoor@kpmg.com

 

 

Jeddah Office

Anan Sijini

Partner, Domestic Tax

E: asijini@kpmg.com

Jawad Inam

Director, Indirect Tax

E: jinam@kpmg.com

Khobar Office

Mohammad Kamran Sial

Partner, Head of Tax - Khobar

E: ksial@kpmg.com

Mohamed Gouda

Director, Domestic Tax

E: mohamedgouda@kpmg.com

 

Ankur Agarwal

Director, Indirect Tax

E: ankuragarwal7@kpmg.com