Zakat & Income Tax for Companies
Enter figures from your balance sheet and income statement, and we work out the zakat base and zakat under the 1445 AH Zakat Collection Implementing Regulations, plus income tax on a foreign partner’s share, explaining each figure and the article it comes from.
Zakat base in detail
| Item | Amount | Treatment |
|---|
How we calculate
- Base
Equity and liabilities
We start with equity at year-end, together with provisions and partners’ loans. Then we add liabilities only to the extent of the deducted assets they fund, add the difference between adjusted and book net profit, and deduct fixed and intangible assets and eligible investments.
- Limits
Minimum and maximum
The base is not less than adjusted net profit (under the conditions in Article 27), and not more than equity plus the profit difference (Article 28).
- 2.5%
The rate
2.5% for a Hijri year. For other periods it goes by days: 2.5% × days in the financial year ÷ 354, about 2.578% for a Gregorian year.
- 20%
Income tax
On the foreign partner’s share of taxable profit, after losses carried forward up to 25% of the year’s profit. Taxable profit differs from accounting profit, so enter it if it’s different.
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