Zakat Obligation Estimator

What is Zakat?

Zakat is one of the five pillars of Islam — an obligatory wealth tax of 2.5% per lunar year (354 days) on net assets above the nisab threshold. For corporations, zakat applies to the company's zakatable assets, with the obligation ultimately borne by shareholders in proportion to their ownership.

AAOIFI FAS 9 — Net Assets Method

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Financial Accounting Standard No. 9 provides two methods for calculating corporate zakat: the net assets method and the net invested funds method. This page uses the simplified net assets approach:

Zakatable Base = Total Equity - Intangible Assets - Goodwill
Estimated Zakat = Zakatable Base x 2.5%

Mandatory Corporate Zakat

Saudi Arabia mandates corporate zakat collection through the Zakat, Tax and Customs Authority (ZATCA, formerly GAZT). In other GCC states — UAE, Kuwait, Qatar, Bahrain, Oman — corporate zakat is generally voluntary, though some companies pay it as part of their Islamic governance commitments.

Why Investors Should Care

Zakat is an expense that directly affects net income and shareholder returns. In Saudi Arabia, it is a mandatory deduction. Understanding a company's zakat obligation helps investors compare effective tax/zakat burdens across GCC jurisdictions and assess the true cost structure of Saudi-listed companies versus their GCC peers.

Important Caveats

Actual zakat calculation is significantly more complex than shown here. It requires detailed asset classification, Shariah scholar review, and adjustment for items such as work-in-progress, long-term receivables, and non-zakatable investments. The figures on this page are estimates only and should not be used for zakat filing or compliance purposes.