What is Corporate Zakat?
Corporate zakat is the Sharia-mandated annual obligation levied at 2.5% of the zakat base on Saudi- and GCC-owned corporate shareholders, calculated under ZATCA’s Zakat Implementing Regulations and filed annually with the audited financials.
How It Works
- Zakat base derived from shareholders’ equity plus adjustments for long-term liabilities and non-zakatable assets.
- Rate: 2.5% applied to the adjusted zakat base.
- For mixed-ownership entities, zakat applies pro rata to Saudi/GCC ownership.
- Annual return filed with ZATCA within 120 days of fiscal year-end.
Saudi Context
ZATCA’s 2019 Zakat Implementing Regulations modernized the base calculation, harmonizing treatment across industries. Major Tadawul-listed companies (Aramco, SABIC, Saudi banks) disclose effective zakat rates of 2.0% to 3.5% of net profit, reflecting the interaction between book profit and the equity-based zakat formula.
Example
A Saudi joint-stock company has 70% Saudi/GCC ownership and 30% foreign. Zakat base SAR 100,000,000. Total zakat = SAR 2,500,000. Saudi/GCC portion = 70% × 2,500,000 = SAR 1,750,000 zakat. Foreign 30% pays corporate income tax instead on its pro-rata net profit.