▶️Navigating Zakat Filing 2025: A Guide to the New Saudi Calculation Framework
As the 2025 fiscal year concludes, businesses in Saudi Arabia must prepare for their upcoming Zakat obligations. Under the updated Implementing Regulations, the filing process has become more structured, utilizing audited closing balances and specific "Safety Cap" rules to ensure accuracy and fairness
▪️Key Deadlines to Remember
To avoid heavy penalties, mark these dates on your calendar:
Fiscal Year 2025 Deadline: April 30, 2026.
Final Filing Cut-off: June 30, 2026.
▪️The 5-Step Calculation Framework
The Zakat filing for 2025 follows a clear, five-step path to determine your final liability:
Additions: Gather all relevant equity components, including Capital, Statutory Reserves, Retained Earnings, and Long-term Liabilities.
Deductions: Identify allowable deductions such as Net Fixed Assets, Long-term Investments, and Spare Parts not intended for sale.
Zakat Base: Calculate your preliminary base by subtracting Total Deductions from Total Additions.
Adjusted Profit: Determine your Net Book Profit, adjusted for all Zakat-allowable expenses.
Final Base: Identify the final taxable amount, which is generally the higher of the Zakat Base or the Adjusted Profit, subject to the Safety Caps defined in Articles 27 and 28.
▪️Understanding the Safety Caps: Articles 27 & 28
The updated regulations introduce a "corridor" for your Zakat base, ensuring it remains within reasonable bounds of your company's actual performance and value.
Article 27 (The Floor): Your Zakat base cannot be lower than your Adjusted Net Profit. This ensures that even if deductions are significant, Zakat is still paid on actual earnings.
Article 28 (The Ceiling): Your Zakat base is capped at Total Equity. This protects shareholders from paying Zakat on a base that exceeds their actual ownership stake.
The Corridor Formula: Adjusted Profit $\le$ Zakat Base $\le$ Total Equity
Once your base is confirmed within this range, a 2.578% Gregorian rate is applied to determine the Zakat due.
▪️Calculation Example (SAR)
Consider a company with the following 2025 year-end figures:
Total Additions: 2,000,000
Total Deductions: 1,500,000
Adjusted Net Profit: 400,000
Total Equity: 1,200,000
Step-by-Step Result:
Preliminary Base: 2,000,000 - 1,500,000 = SAR 500,000
Floor Check (Art. 27): 500,000 ≥ 400,000 (Satisfied).
Ceiling Check (Art. 28): 500,000 ≤ 1,200,000 (Satisfied).
Zakat Due: 500,000 x 2.578% = SAR 12,890
▪️Professional Assistance
Managing Zakat compliance requires precision and up-to-date knowledge of Saudi regulations.
▶️Need Expert Assistance?
Navigating these changes can be complex. MF Khan & Associates is here to assist you with expert chartered accountancy services in both the UAE and India.
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