How is zakat calculated in Saudi Arabia?

In a Nutshell: Zakat, one of the Five Pillars of Islam, is a mandatory charitable contribution. In Saudi Arabia, Zakat is calculated on the total value of a Muslim's or business's zakatable assets (excluding certain items) at a fixed rate of 2.5% according to the Hijri calendar. The General Authority of Zakat and Tax (GAZT) oversees Zakat collection and provides guidelines to ensure accurate calculation. Table of Contents Introduction Evidences Zakat Calculation in Saudi Arabia FAQs on Zakat Calculations in Saudi Arabia Conclusion Introduction Zakat is the third pillar of Islam, a mandatory charitable contribution that purifies wealth and promotes social justice. Muslims who possess wealth above a specific threshold (nisab) for a lunar year are obligated to donate a fixed percentage (2.5%) to those in need. Fulfilling the obligation of Zakat brings blessings and purifies one's possessions. The Prophet (pbuh) said: Islam is built upon five pillars: the testimony that there is no god but Allah and that Muhammad is the Messenger of Allah, establishing the prayer, giving Zakah, Hajj for those who can afford it and fasting during Ramadan. (Sahih al-Bukhari) Saudi Arabia has a well-established Zakat system administered by the General Authority of Zakat and Tax (GAZT). GAZT provides clear guidelines and facilitates the calculation and collection of Zakat. This system ensures the proper distribution of Zakat funds to designated beneficiaries, fulfilling the religious obligation and promoting social welfare within the country. Zakat Calculation in Saudi Arabia Calculating Zakat in Saudi Arabia involves determining the zakat base and applying the fixed rate. Here's a breakdown of the key aspects: Defining the Zakat Base (Zakatable Assets and Liabilities): Included in the Zakat base are cash, tradable goods like gold and silver, inventory for businesses and investments that meet specific criteria. Debts owed to you that are likely to be recovered are also considered. Quran 9:60 lists zakatable assets: Zakah is for the poor and the needy and those employed to collect [Zakah] and for bringing hearts together [of those who embrace Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the wayfarer; a duty imposed by Allah. And Allah is Knowing, Wise. Excluded Assets (Non-Zakatable): Certain assets are excluded from the Zakat base, such as your primary residence, household items and tools used for personal needs. Machinery and equipment used for business production are also generally not included. The Zakat Rate: A Fixed Percentage (2.5%) Saudi Arabia applies a fixed Zakat rate of 2.5% on the calculated zakat base. This simplifies the calculation process and ensures consistency. The Importance of the Hijri Calendar for Zakat Calculation Zakat is calculated based on the lunar Islamic calendar (Hijri calendar). This aligns with the Islamic tradition and ensures a standardized approach across the country. FAQs on Zakat Calculation in Saudi Arabia Who is Responsible for Calculating Zakat? Every Muslim who possesses wealth exceeding the nisab for a lunar year is responsible for calculating their own Zakat. GAZT provides resources and Zakat calculators to assist taxpayers. However, the ultimate responsibility lies with the individual to ensure an accurate calculation based on their specific circumstances. How Can I File My Zakat Return in Saudi Arabia? GAZT offers multiple channels for filing Zakat returns: Online through the GAZT website (https://zatca.gov.sa/en/Pages/default.aspx) Through the GAZT mobile application Visiting a GAZT customer service center What Happens if I Cannot Pay My Zakat on Time? While timely payment of Zakat is encouraged, there may be situations where immediate payment is not possible. In such cases, it is still obligatory to calculate and eventually pay the Zakat due. Late payment does not absolve the obligation, but any potential delays should be communicated to GAZT. Can I Use Zakat Calculators Available Online? Several online Zakat calculators can be helpful tools. However, it's crucial to ensure the calculator adheres to the Zakat principles and guidelines set forth by GAZT. It's advisable to consult a scholar or reliable resources if you have any doubts about the accuracy of an online calculator. Where Can I Find More Information about Zakat in Saudi Arabia? GAZT is an excellent resource for information on Zakat calculation and regulations in Saudi Arabia. Their website offers comprehensive guidelines, FAQs and educational materials (https://zatca.gov.sa/en/Pages/default.aspx). Consulting with qualified Islamic scholars familiar with the Saudi Zakat system is also recommended for personalized guidance. Evidences Here are some of the crucial Quranic verses and Hadiths that emphasize the significance of Zakat and its calculation: Quranic Verses Surah At-Tawbah, Verse 60: Zakah expenditures are only for the poor and for the needy and for those employed to collect [zakah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveler - an obligation [imposed] by Allah. And Allah is Knowing and Wise. Surah At-Tawbah, Verse 103: Take, [O, Muhammad], from their wealth a charity by which you purify them and cause them increase and invoke [Allah's blessings] upon them. Indeed, your invocations are reassurance for them. And Allah is Hearing and Knowing. Surah Al-Baqarah, Verse 267: O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth. And do not aim toward the defective therefrom, spending [from that] while you would not take it [yourself] except with closed eyes. And know that Allah is Free of need and Praiseworthy. Hadiths The Prophet (pbuh) said: He who does not pay the Zakat, his wealth shall be transformed into a big bald snake on the Day of Judgement, which will wind round his neck like a collar, biting its sides and saying: 'I am your treasure, I am your wealth.' (Sahih al-Bukhari) The Prophet (pbuh) said: Zakat is taken from the wealthy and returned to the poor. (Sahih al-Bukhari) The Prophet (pbuh) said: Allah has made Zakat obligatory simply to purify your remaining property. (Sunan Ibn Majah) Conclusion Zakat is a pillar of Islam and a fundamental act of devotion fulfilling divine and social responsibility. Calculating Zakat with precision and paying it on time ensures spiritual purification while supporting the needs of the community. The Saudi Zakat system streamlines this process through GAZT's guidance and regulations. Understanding the components of the Zakat base, excluded assets, the fixed Zakat rate and the importance of the Hijri calendar are key aspects of an accurate calculation. Seeking guidance from Islamic scholars and using reliable resources strengthens a Muslim's knowledge and practice. Zakat is an expression of faith that goes beyond financial contribution. It strengthens community bonds, cultivates generosity and reduces social inequalities. Fulfilling this obligation brings blessings in this life and the Hereafter. References General Authority of Zakat and Tax (GAZT) Website: https://zatca.gov.sa/en/Pages/default.aspx Keypoint. Tax Alert | Calculating zakat on non-financial activities - Kingdom of Saudi Arabia: https://www.keypoint.com/media/files/Zakat-calculation.pdf Wafeq. What is zakat for businesses KSA and how is it calculated?: https://www.wafeq.com/en-sa/business-hub/for-business/what-is-zakat-for-businesses-and-how-is-it-calculated