Finance Minister approves new edition of executive regulations for Zakat collection

The Minister of Finance has approved the executive regulations for the collection of Zakat (the 1445 H edition), which clarify all procedures related to Zakat collection, facilitate collection procedures in all business sectors, and contribute to raising the level of voluntary compliance among taxpayers.

The new executive regulations consist of 128 articles, which help provide detailed explanations for many provisions, with details to raise awareness of Zakat procedures, and address challenges that taxpayers may face.

The regulations include all rules related to Zakat collection, issued by ministerial decisions independent of the regulations. These rules are for estimating Zakat for estimators, rules for calculating Zakat on financing activities, rules for Zakat collection from investors in investment funds, rules for exempting taxpayers who own trusts from Zakat collection, and rules for exempting associations, civil institutions, and training units from Zakat collection.

The new regulations allocate separate chapters for sectors with specific Zakat treatments to accommodate the diversity of business activities, such as insurance and financing sectors. Further, a separate section is included to address taxpayers' rights, such as the right to determine the start of activity and the right to amend the Zakat return, among others.

The new executive regulations also specify a model for notifying taxpayers of Zakat obligations, including the basis for calculating Zakat obligations, the amount of Zakat due, the date of Zakat payment, and the taxpayer's right to object to Zakat obligations.

Among the notable amendments to the executive regulations for Zakat collection are the development of the minimum Zakat threshold, setting a maximum Zakat threshold to ensure taxpayers' rights against increased Zakat costs, clarification of procedures for overdue government receivables, regular deposits, and the Zakat impact of treasury shares. These also covered cases where taxpayers are unable to calculate investment Zakat outside the kingdom. The new amendments also include adding specific criteria for requesting documents from taxpayers while allowing for amending Zakat returns.

The decision states that the regulations will apply to fiscal years starting on Jan. 1, 2024, with the deadline for submitting returns during the year 2025, according to the specified conditions and regulations.