Zakat in Saudi Arabia is an annual levy of 2.5% on a business's Zakat base, collected by the Zakat, Tax and Customs Authority (ZATCA) from businesses owned by Saudi and GCC nationals. A sole proprietorship that does not keep financial statements is assessed on the estimated method, where ZATCA works out the base from your sales. A company that keeps accounts files a Zakat return and pays within 120 days of its year end, so a 31 December 2026 year end is due on 30 April 2027. A company with foreign partners pays Zakat on the Saudi and GCC share and income tax on the foreign share. This guide works through each case in SAR under the rules in force in October 2026. It is general information, not tax or religious advice; confirm your own position with ZATCA or a licensed adviser.
Which rules apply to Zakat in 2026?
The current rules are the Implementing Regulations for Zakat Collection issued by Minister of Finance Decision No. 1007 (19/08/1445 H, 2024) and amended by Decision No. 1248 (11/10/1446 H). They replaced the 2019 regulations (Decision No. 2216), so guides that quote the 2019 articles may be out of date. Article numbers below refer to the 2024 regulations.
Who has to pay Zakat in Saudi Arabia?
Article 3 of the regulations lists who is subject to Zakat. For small businesses, three cases matter:
- A resident Saudi person who practises an activity under a licence in the Kingdom. This is the sole proprietor with a commercial registration (CR).
- A one-person company owned by a Saudi person.
- A company established in the Kingdom, for the share held by Saudi partners.
"Saudi" in the regulations includes GCC nationals who receive the same treatment as Saudis. A UAE or Kuwaiti national with a Saudi company is treated like a Saudi partner for Zakat.
Persons subject to the Income Tax Law are outside the Zakat regulations (Article 6). A business owned by non-Saudi, non-GCC owners pays income tax instead. ZATCA's FAQ gives the income tax rate as 20% for resident capital companies, non-Saudi residents doing business in the Kingdom and non-residents with a permanent establishment.
The regulations apply to business activity. Personal Zakat on your own savings is a separate matter and ZATCA does not collect it.
| Owner | What the business pays |
|---|---|
| Saudi or GCC national, sole proprietorship | Zakat (estimated method or accounts method) |
| Saudi or GCC owners, company | Zakat on the whole base |
| Saudi and foreign partners, company | Zakat on the Saudi/GCC share, income tax on the foreign share |
| Foreign (non-GCC) owners only | Income tax at 20%, no Zakat |
Do freelancers pay Zakat?
The test in Article 3 is an activity under a licence. We could not confirm a single published rule for Saudi freelancers working under a Freelance Work Document, so check your account on the ZATCA portal or ask ZATCA. For invoicing and VAT, see our guide to freelancer invoicing in Saudi Arabia.
What are the two ways Zakat is calculated?
ZATCA sorts Zakat payers into two groups, and the group decides almost everything else.
| Estimated method | Accounts method | |
|---|---|---|
| Who | Zakat payers that do not keep, or are not required to issue, financial statements (typically sole proprietorships) | Zakat payers that keep books and financial statements (companies, and any sole proprietor who opts in) |
| How the base is set | ZATCA calculates it from your sales | You calculate it from your balance sheet and adjusted profit |
| Return | Calculated automatically, no return to file | Zakat return filed on the ZATCA portal |
| Rate | 2.5% of the base | 2.5% per Hijri year, adjusted for a Gregorian year |
| Minimum | SAR 500 Zakat | Base cannot fall below adjusted net profit (with exceptions) |
| When to pay | After 12 months from the CR date, then yearly | Within 120 days of the year end |
An estimated-method payer can apply to move to the accounts method before the year ends; going back needs ZATCA's approval (Article 88). ZATCA can also move you if it finds you have financial statements (Article 83).
How is Zakat calculated on the estimated method?
Article 89 sets the formula for the Zakat base:
Zakat base = (sales ÷ 8) + (sales × 15%)
Zakat is 2.5% of that base, with a minimum of SAR 500 (Article 86).
The sales figure cannot be lower than the sales in your VAT returns, including zero-rated and exempt sales. If you are not registered for VAT, ZATCA uses the highest of: average active employees in GOSI records × SAR 6,000, imports × 115%, purchases × 115%, or sales data from points of sale, Etimad, exports and contracts. If the capital in your CR or licences is higher than the formula result, the capital becomes the base.
Worked example: a sole proprietor on the estimated method
A Riyadh trading establishment owned by a Saudi national declares SAR 600,000 of sales in its VAT returns for the year.
| Step | Calculation | SAR |
|---|---|---|
| Sales ÷ 8 | 600,000 ÷ 8 | 75,000 |
| Sales × 15% | 600,000 × 15% | 90,000 |
| Zakat base | 75,000 + 90,000 | 165,000 |
| Zakat at 2.5% | 165,000 × 2.5% | 4,125 |
At SAR 100,000 of sales the base is 12,500 + 15,000 = SAR 27,500, and Zakat is SAR 687.50. At SAR 50,000 of sales the formula gives SAR 343.75, so the SAR 500 minimum applies instead.
Rule: On the estimated method, your VAT returns set the floor for the sales ZATCA uses. Under-declaring VAT sales does not lower your Zakat; it creates a VAT problem as well.
How is Zakat calculated on the accounts method?
A business that keeps books builds its Zakat base from the year-end balance sheet. In outline:
- Start with equity at the year end: capital, retained earnings, reserves and the year's profit. Owners' loans in a sole proprietorship or one-person company count as equity (Article 30).
- Add non-current liabilities, such as long-term loans, end-of-service provisions and lease liabilities (Article 29), within the limit of the assets you deduct.
- Add the difference between adjusted net profit and book profit. Adjusted profit adds back expenses ZATCA does not accept: anything not actual, not related to the activity or not backed by documents (Article 62). Provisions made during the year and Zakat or income tax paid are accepted expenses under Article 63.
- Deduct long-term assets used in the business: net fixed assets, right-of-use assets, intangible assets held for use, and qualifying investments (Article 26). Inventory held for sale is not deducted (Article 52).
- Check the minimum and maximum. If the base comes out below adjusted net profit, the base generally becomes the adjusted net profit (Article 27). The base cannot exceed equity plus the profit adjustment (Article 28).
- Apply the rate. The rate is 2.5% for a Hijri year of 354 days. For a Gregorian year, the rate is 2.5% ÷ 354 × the days in your year, about 2.578% for a 365-day year (Article 15).
Worked example: a small company on the accounts method
A Jeddah services company owned by two Saudi partners has a 31 December 2026 year end (365 days). This is a simplified illustration; a real return applies every article in the regulations.
| Item | SAR |
|---|---|
| Equity at year end (capital 200,000 + retained earnings 150,000 + profit for the year 120,000) | 470,000 |
| Add: long-term bank loan | 100,000 |
| Add: end-of-service provision | 40,000 |
| Add: undocumented expenses added back to profit (adjusted profit 130,000 − book profit 120,000) | 10,000 |
| Total additions | 620,000 |
| Less: net fixed assets | (300,000) |
| Zakat base | 320,000 |
Checks: adjusted net profit is SAR 130,000, below the base, so the minimum rule does not change it. The maximum is equity plus the adjustment, SAR 480,000, above the base.
Zakat = 320,000 × (2.5% ÷ 354 × 365) = 320,000 × 2.57768% = SAR 8,248.58. At a flat 2.5% it would be SAR 8,000, so the Gregorian adjustment adds about SAR 249.
How does Zakat work for a company with Saudi and foreign partners?
ZATCA's guidance for mixed companies: Zakat is levied on the Saudi share, and income tax is levied on the non-Saudi share of net profit. The two are calculated separately.
Take the Jeddah company above, but owned 60% by a Saudi partner and 40% by a non-GCC partner. Assume, for illustration, that taxable profit under the Income Tax Law is also SAR 130,000 (in practice it is calculated under different rules and may differ).
| Calculation | SAR | |
|---|---|---|
| Zakat on the Saudi share | 8,248.58 × 60% | 4,949.15 |
| Income tax on the foreign share | 130,000 × 40% × 20% | 10,400.00 |
| Total due to ZATCA | 15,349.15 |
Zakat follows capital; income tax follows profit. A mixed company also has income tax return and withholding obligations that are outside this guide.
When are the Zakat return and payment due?
For accounts-method payers, Article 102 sets the deadline: the return and the payment are due within 120 days of the end of the Zakat year. If the last day is an official holiday, the deadline moves to the next working day. Payment is by bank transfer through SADAD or another method ZATCA accepts.
| Financial year end | 120th day (return and payment due) |
|---|---|
| 31 December 2025 | 30 April 2026 |
| 31 March 2026 | 29 July 2026 |
| 30 June 2026 | 28 October 2026 |
| 30 September 2026 | 28 January 2027 |
| 31 December 2026 | 30 April 2027 |
Deadline: For a 31 December 2026 year end, file the Zakat return and pay by 30 April 2027. Count 120 days yourself for any other year end; in a leap year, 31 December falls due on 29 April.
Estimated-method payers do not file a return. ZATCA issues the amount due with an invoice number, and you pay it on the portal through SADAD, mada or an ATM. ZATCA's SME guide says to pay after 12 months from the date of your CR.
Other dates to know:
- Registration: before the end of your first financial year (Article 98). ZATCA's SME guide says your TIN is registered automatically when the CR is issued.
- First Zakat year: starts on the earliest of the CR date, first licence date or capital deposit date (Article 10).
- Closing the business: tell ZATCA within 60 days of stopping, or Zakat keeps running (Article 11).
- Objections: within 60 days, after paying the undisputed amount and 10% to 25% of the disputed amount or giving a guarantee (Article 116).
- Instalments: available on application (Article 118).
What happens if you file late or do not pay?
The regulations set out consequences rather than a percentage penalty:
- A late return extends ZATCA's reassessment window from 5 to 10 years (Article 106).
- If you do not file, ZATCA can assess your Zakat from the information it holds, after a warning and at least 60 days (Articles 114 and 115).
- Unpaid Zakat triggers three payment demands 30 days apart, then steps such as freezing bank balances and seizing imports (Articles 120 to 123).
- For final unpaid amounts, ZATCA can block government tenders, foreign recruitment, and CR, licence and work permit renewals (Article 125).
A current Zakat certificate is commonly requested for government contracts and renewals; check the certificate rules for your case on the ZATCA portal.
What records do you need to keep for Zakat?
Keep every document you relied on for the Zakat return inside the Kingdom for at least 10 years (Article 110). ZATCA can request documents for up to 10 years after the return, and supporting documents must be submitted in Arabic (Article 99). If ZATCA asks for information during a review, you have 20 working days to respond (Article 105).
For an accounts-method business, that means:
- Financial statements, which ZATCA's SME guide says are approved by a chartered accountant, plus the trial balance and ledger behind them.
- A fixed asset register with cost, depreciation and net book value, since net fixed assets are the main deduction.
- Loan agreements, owners' loan balances, end-of-service provisions and lease contracts.
- Invoices, bills and bank statements for the year.
- For bad debts, a chartered accountant's certificate, unless the debt is no more than 1% of revenue or a court has declared the debtor bankrupt (Article 65).
On the estimated method you still need clean sales records. ZATCA uses your VAT returns, so your invoices and VAT filings must agree. If you are moving onto Fatoora Phase 2, our guide to ZATCA Wave 25 for small businesses covers the integration dates.
From the platform: Staks does not calculate Zakat or file Zakat returns, is not ZATCA-accredited and has no Arabic interface. What it gives you is the ledger your Zakat calculation starts from. Invoices, bills, expenses and payroll post to double-entry accounts in SAR, and USD documents convert at a dated rate. On the Growth plan ($49 a month) you get the trial balance, P&L and balance sheet your accountant uses to build the Zakat base. Each bank, cash and card account has its own page with opening balance, money in and money out, so you can compare it to the bank statement. The Staks Agent can import past data from a spreadsheet and extract receipts, and asks you to confirm before it saves anything.
Frequently asked questions
What is the Zakat rate for businesses in Saudi Arabia?
2.5% of the Zakat base, not of profit, for a Hijri year of 354 days. A business with a Gregorian financial year pays 2.5% ÷ 354 × the actual days in its year, about 2.578% for 365 days. Estimated-method payers pay a flat 2.5% of the base, with a minimum of SAR 500.
Can a sole proprietor choose the accounts method?
Yes. A business on the estimated method can apply to ZATCA before the end of the Zakat year to move to the accounts method, and ZATCA decides within 30 days. It can make sense when your real assets and profits are small compared with sales, but you then need financial statements every year, and you cannot return to the estimated method without ZATCA's approval.
Is Zakat paid an accepted expense?
Yes, for Zakat purposes. Under Article 63 of the 2024 regulations, Zakat or income tax paid and provisions made during the year are accepted expenses when you calculate adjusted net profit.
Related reading
- The best accounting software in Saudi Arabia
- ZATCA Wave 25 for small businesses
- Freelancer invoicing in Saudi Arabia
- Payment terms in the UAE and Saudi Arabia
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