Tax & ZakatZakat Rate
Synonyms: Zakat Percentage، Zakat Levy Rate، One-Fortieth Rate
Last updated: 2026-09-25
Short Definition
The zakat rate is the percentage applied to the zakat base to determine the zakat due.
Overview
The zakat rate is the percentage applied to the zakat base to determine the zakat due. In Saudi Arabia it is 2.5% of the zakat base for a full Hijri year, adjusted for the number of days in the payer's financial year when that year is not Hijri. The same rate applies to all payers covered by the regulations, whether individuals or entities; what differs is how the base is calculated.
Article 15 of the Implementing Regulations for Zakat Collection (1445H) provides that zakat is levied at 2.5% of the base for a Hijri year, and that where the financial year differs from the Hijri year the rate is applied on actual days using the formula (2.5% ÷ days in the Hijri year) × days in the financial year. A company with a Gregorian year of 365 days therefore pays about 2.578% when the Hijri year has 354 days. A short financial period at the start of an activity is subject to zakat, while a period of less than 354 days at the end of an activity is not. Payers assessed on an estimated basis pay 2.5% of the estimated base, with a minimum of SAR 500.
A common misunderstanding needs correcting: ZATCA does not collect 2.5% on individuals' personal wealth such as their homes and savings. The regulations apply to resident Saudis carrying on a licensed activity and to the establishments and companies they own. An individual's zakat on private wealth, including property bought with the intention of trading outside a licensed business, is a religious duty they discharge themselves. The zakat return must be filed and zakat paid within 120 days of the end of the zakat year.
⚖️ Legal Basis
The zakat rate is set by Article 15 of the Implementing Regulations for Zakat Collection issued by Minister of Finance Decision No. (1007) dated 19/8/1445H, as amended. Articles 84 and 86 set the rate and the SAR 500 minimum for payers assessed on an estimated basis, and Article 102 requires the return to be filed and zakat paid within 120 days of the end of the zakat year. ZATCA is responsible for collection.
💡 Practical Example
A Saudi real estate company's Gregorian financial year ends on 31 December 2025 and its zakat base is SAR 8,000,000. Applying 2.5% directly would give SAR 200,000, but its year has 365 days, so zakat is 8,000,000 × (2.5% ÷ 354) × 365 ≈ SAR 206,215 (assuming a 354-day Hijri year), a difference of about SAR 6,215 that ZATCA could claim on assessment. The company must file and pay by 30 April 2026 (120 days after year-end). A small property management establishment assessed on an estimated basis with sales of SAR 400,000 has an estimated base of (400,000 ÷ 8) + (400,000 × 15%) = SAR 110,000, and its zakat at 2.5% is SAR 2,750.
⚠️ Common Mistakes
- ✗Applying a flat 2.5% to a Gregorian financial year without the day-count adjustment, which understates zakat.
- ✗Believing ZATCA collects 2.5% on an individual's home or personal savings, when the regulations cover licensed activities and their establishments.
- ✗Applying the rate to net profit instead of the zakat base calculated under the regulations.
- ✗Assuming a short first year is exempt, when a short period at the start of an activity is subject to zakat.
- ✗Missing the 120-day deadline for filing and payment, which exposes the payer to penalties and estimated assessment.
🌍 International Differences
The 2.5% rate (one-fortieth) is settled in Islamic jurisprudence for zakat on money and trade goods and is used by most zakat bodies worldwide. Saudi Arabia, however, is one of the few countries where a government authority collects zakat compulsorily from businesses, with an official formula adjusting the rate to the length of the financial year. In countries such as Malaysia, individuals can offset zakat paid against income tax, while in the UAE, Egypt and Turkey zakat is voluntary and companies pay tax on profits instead.
FAQs
What is the zakat rate for companies in Saudi Arabia?▾
2.5% of the zakat base for a full Hijri year, adjusted for day count if the financial year is not Hijri. The same rate applies to all payers covered by the Implementing Regulations for Zakat Collection.
What is the zakat rate for a Gregorian financial year?▾
It is calculated as (2.5% ÷ days in the Hijri year) × days in the financial year, which gives about 2.578% for a 365-day Gregorian year against a 354-day Hijri year.
Does ZATCA collect zakat from individuals on their personal property?▾
No. The regulations apply to Saudis carrying on a licensed activity and to the establishments they own. An individual's zakat on private wealth is a religious duty they pay themselves, outside the statutory collection system.
Is there a minimum zakat for small businesses?▾
Yes. A payer assessed on an estimated basis pays 2.5% of its estimated base, with a minimum of SAR 500; the base is estimated as (sales ÷ 8) + (sales × 15%).
When must zakat be paid to ZATCA?▾
Within 120 days of the end of the zakat year, together with the electronic zakat return. If the deadline falls on an official holiday, it moves to the next working day.
