In Saudi Arabia, zakat is not only a religious obligation, but also a legal duty supervised by the Zakat, Tax and Customs Authority. Despite its obvious importance, many small business owners and self-employed professionals find it difficult to calculate accurately, which may expose them to fines or penalties. In this article, we will explain an easy and systematic way to calculate zakat on your business activity, with tips to avoid common mistakes.
First: Who is required to pay zakat?
Zakat applies to:
Saudi establishments wholly owned by citizens or by citizens with Gulf partners.
Commercial activities registered with the Ministry of Commerce or the competent authorities.
Individuals engaged in freelance work and professional occupations.
Second: What is the zakat base?
The zakat base is the amount on which zakat is calculated, and it consists of:
Invested capital.
Retained earnings.
Current assets (cash, goods, accounts receivable) minus current liabilities.
Third: How to calculate commercial zakat
Zakat is calculated at a rate of 2.5% of the annual zakat base.
Simplified formula:
Zakat base × 2.5% = Amount of zakat due
Practical example:
If the zakat base for your commercial activity = SAR 500,000:
500,000 × 2.5% = 12,500 Saudi riyals
This is the amount you will pay as zakat for the fiscal year.
Fourth: Common mistakes to avoid
Failure to update financial data before calculating zakat.
Omission of assets subject to zakat, such as goods ready for sale.
Not deducting allowable liabilities such as short-term debts.
Relying on inaccurate estimates instead of actual figures from accounting records.
How does Wazen help you calculate zakat easily?
At Wazen, we are a team of professional accountants who combine our expertise with modern technology tools to simplify the zakat calculation process:
Automatically prepare zakat reports in accordance with the requirements of the Zakat, Tax and Customs Authority.
Updating asset and liability data on a regular basis to ensure accurate calculations.
Providing accounting and tax consulting to help you understand your obligations and financial planning.
Linking zakat to your ERP system so that it becomes part of your daily accounting operations without any additional effort.
