What is Zakat on Wealth?
Zakat on wealth is the Sharia-mandated annual obligation of 2.5% on liquid wealth (cash, gold, silver, business inventory, receivables) held by a Muslim above the nisab threshold for a complete lunar year (hawl), with proceeds distributed to eligible recipients defined by Islamic law.
How It Works
- Nisab: minimum wealth threshold (≈ 85g of gold or 595g of silver in value).
- Hawl: wealth must be held for a full lunar year.
- Rate: 2.5% on qualifying liquid wealth.
- Eligible recipients: 8 categories defined in Quran 9:60.
Saudi Context
Saudi individuals pay zakat on personal wealth directly to eligible recipients or registered charitable organizations rather than to the state. Saudi businesses pay corporate zakat through ZATCA, while individuals’ personal wealth zakat sits outside the ZATCA framework but is widely facilitated through Saudi banks’ zakat calculation services and authorized charity portals.
Example
A Saudi individual holds SAR 100,000 in cash and SAR 50,000 in gold for a full lunar year, both above nisab. Annual zakat on wealth = 150,000 × 2.5% = SAR 3,750, distributed to eligible recipients.