Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 11, 2020
2020-5362

Saudi Arabia proposes penalties for zakat non-compliance

Executive summary

On 2 March 2020, Saudi Arabia’s General Authority of Zakat & Tax (GAZT) published draft Zakat Levy Regulations for public consultation.1 The draft regulations propose financial penalties for non-compliance with zakat obligations. The regulations are open for public consultation until 31 March 2020. The proposed regulations, if approved and published during 2020, will be effective from 1 January 2021.

Detailed discussion

The draft Zakat Levy Regulations propose the following financial penalties for non-compliance:

Failure to register with the GAZT

The fine shall be SAR10,000.

Delay in filing the annual zakat declaration or failure to pay zakat due

The fine shall be 2% of the zakat due, for each month or part of month for which zakat is not paid, subject to a maximum of 25% of total zakat due for the zakat year.

Filing of incorrect information or concealment of information for zakat evasion

The fine shall be 25% of the total zakat due for the zakat year, in addition to any other penalties under any other regulations.

If the proposed regulations are adopted through a Royal Order, new regulations are likely to be issued to replace the regulations currently in force under Ministerial Resolutions 2082 and 2216.2 Any new bylaws to the proposed regulations are likely to specify controls and procedures for imposing the stated penalties on zakat payers but would not be expected to change the current rules for calculating zakat.

Implications

The draft regulations aim to encourage zakat payers to comply with their annual zakat return filing and payment of zakat due in a timely fashion. If the proposed rules are adopted, businesses will need to ensure timely compliance with the zakat regulations to avoid financial penalties.

Future Alerts will report on any additional information or clarifications from the GAZT.

Endnotes

1. Refer to the draft Zakat Levy Regulations in Arabic on the GAZT’s website.

2. Refer to EY Communication: Saudi Arabia issues new Zakat Regulations on 17 March 2019.

For additional information with respect to this Alert, please contact the following:

Ernst & Young & Co (Public Accountants), Riyadh
Ernst & Young & Co (Public Accountants), Jeddah
Ernst & Young & Co (Public Accountants), Al Khobar
Ernst & Young LLP (United States), Middle East Tax Desk, New York

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct