 |
 |
|
 |
 |
 |
 |
  Zakat
Base Items, Allowed and Disallowed Deductions : Allowed
DeductionsAll expenses that are necessary and normal to the business and were spent by the taxpayer during the year of audit and contributed to the making of income subject to zakat are allowed expenses. Examples of such expenses as follows: a. Wages and Salaries : Wages, salaries and similar benefits are allowed deductions if they meet the above conditions. The taxpayer should attach a certificate by the General Organization for Social Insurance (GOSI) stating wages that are subject to social insurance system and a certificate by the taxpayer’s chartered accountant certifying wages that are not subject to social insurance system. b. Depreciation : The following conditions apply for depreciation: - The asset is a fixed asset. - The asset is owned by the entity. - The asset is of depreciable nature. - The asset is used in the entity’s business. - The straight-line method only is used. - Depreciation rates used are the legally prescribed rates (See depreciation schedule). c. School Fees : School fees paid by taxpayers to their employees’ children are deductible expenses provided that they do not exceed four children per employee and five thousand Saudi riyals per child. d. Bad Debts : Bad debts are deductible provided the following conditions are met: - Serious efforts have been exerted by the taxpayer to collect the debt with no success. - A decision was made by the taxpayer’s Board of Directors approving the write off of the debt confirmed by deleting it from the taxpayer’s records. - A certificate by the taxpayer’s chartered accountant certifying the writing off the debt from the taxpayer’s books and records. - Undertaking by the taxpayer to reinstate any written off debts if ever collected in the year of collection. e. Prior Years’ losses : Prior years’ losses are allowed expenses provided it is confirmed that they were not deducted during the loss years.     |
|
Brief Information on DZIT
