Zakat is a mandatory Islamic levy in Saudi Arabia, administered by the Zakat, Tax, and Customs Authority (ZATCA) and governed by the Implementing Regulations for Zakat Collection. Resident companies with Saudi or GCC ownership are subject to Zakat, typically assessed at 2.5 percent of the Zakat base, with updated rules under Ministerial Resolution No. 1007 applying to fiscal years starting on or after 1 January 2024.
Businesses must file an annual Zakat return and pay the due amount within 120 days of their fiscal year-end to avoid audit scrutiny. Starting in 2024, transfer pricing requirements also apply to Zakat payers, including the submission of documentation such as the disclosure form for controlled transactions (DFCT) and a signed affidavit alongside the Zakat return. Given the evolving regulations and documentation requirements, expert tax guidance can ensure accurate filings, manage risks, and maintain compliance.
