#Zakat Liability Calculation

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BMS Auditing provides expert Zakat Impact Analysis to help businesses assess liabilities, reduce risks, and ensure compliance with ZATCA regulations in Saudi Arabia.

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The Importance of Zakat: A Pillar of Social Responsibility

Zakat, one of the five fundamental pillars of Islam, is a form of obligatory charity that plays a vital role in promoting economic justice and social welfare. It is not merely a charitable donation but a compulsory act of worship that purifies wealth and helps bridge the gap between the rich and the poor. Here are some key tips to ensure that your Zakat is calculated and distributed correctly, maximizing its impact on both your spiritual life and the community.

1. Accurately Calculate Your Zakat

The amount of Zakat is typically 2.5% of your qualifying assets, including savings, gold, investments, and business income, after deducting liabilities. It is important to accurately calculate your wealth to ensure you are fulfilling this obligation correctly. Utilize Zakat calculators or seek advice from knowledgeable scholars if you’re unsure about the process. Remember, the calculation should be based on the lunar Islamic year.

2. Identify Eligible Recipients

Zakat must be distributed to those who are eligible to receive it, as defined in the Quran (Surah At-Tawbah 9:60). These categories include the poor, the needy, those employed to collect Zakat, recent converts, individuals in debt, those striving in the cause of Allah, and stranded travelers. Make sure your Zakat reaches those who are truly deserving and in need of support.

3. Intend Sincerely for Allah’s Pleasure

The intention behind giving Zakat is crucial. It should be given solely for the sake of Allah, to purify your wealth and fulfill a religious duty. Avoid the temptation of seeking praise or recognition for your generosity. A sincere intention enhances the spiritual benefits of Zakat and aligns your heart with the principles of Islam.

4. Pay Zakat Promptly

Zakat is due once a year when your wealth has reached the Nisab threshold and a lunar year has passed. Delaying payment without a valid reason can be sinful, so prioritize paying your Zakat on time. This ensures that the needy receive timely assistance and that you fulfill your obligation punctually.

5. Maximize the Impact of Your Zakat

Consider the broader impact of your Zakat. Supporting sustainable development projects, education initiatives, or healthcare programs can create lasting change in the lives of recipients. Partnering with reputable charities or organizations that focus on long-term empowerment can amplify the benefits of your Zakat, helping to lift individuals and communities out of poverty.

Paying Zakat is not just a personal obligation but a powerful tool for social change. By giving Zakat thoughtfully and sincerely, you contribute to a more just and compassionate society while purifying your own wealth and soul.

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How to Calculate Your Zakat in Canada: A Simple Guide for 2025

Zakat is more than just a charitable act—it is a religious obligation and one of the Five Pillars of Islam. Each year, Canadian Muslims contribute millions of dollars in Zakat to support vulnerable communities around the world. Yet, understanding how to accurately calculate and distribute Zakat can be challenging.

At Penny Appeal Canada, we are committed to simplifying the process for you. With our 100% Zakat Policy and dedicated support, you can fulfill your obligation with confidence and clarity. This guide offers a step-by-step overview on how to calculate your Zakat in 2025.

What is Zakat? Zakat is an annual payment made by eligible Muslims to assist those in need. It represents 2.5% of one’s qualifying wealth and must be paid once a full lunar year has passed since the wealth exceeded a certain threshold, known as the Nisab.

As a form of purification, Zakat cleanses wealth and fosters social equity by uplifting impoverished individuals and communities.

Understanding the Nisab Threshold for 2025 Nisab is the minimum amount of wealth a Muslim must possess before they are obligated to pay Zakat. The threshold is based on the current value of: - 87.48 grams of gold, or - 612.36 grams of silver

In most cases, the silver value is lower, making it the more widely recommended benchmark to ensure more people are contributing and more people are helped.

How to Calculate Your Zakat in Canada: Step-by-Step Step 1: Determine Your Zakatable Assets Include all applicable assets held for one full lunar year: - Cash on hand or in bank accounts - Gold, silver, and precious metals - Pensions and savings - Stocks, shares, and investment portfolios - Business inventory - Rental income (excluding your primary residence)

Step 2: Deduct Your Immediate Liabilities You may subtract short-term debts and obligations, such as: - Outstanding utility bills - Due rent or mortgage payments (within the current month) - Credit card balances - Business-related debts

Step 3: Calculate 2.5% of the Net Total If your net assets exceed the Nisab, multiply the remaining total by 2.5%. This is your Zakat amount due for the year.

Use Our Online Zakat Calculator We understand that calculating your Zakat can be complex. That’s why we offer a Zakat Calculator to guide you through the process in minutes. It is Shariah-compliant and tailored for Canadian Muslims.

Need personal support? Call us toll-free at 1-855-880-4141 Or email info@pennyappeal.ca to speak with an Islamic scholar.

Why Choose Penny Appeal Canada for Your Zakat? 100% Zakat Policy Penny Appeal Canada is proud to operate a 100% Zakat Policy, ensuring your full contribution reaches those in need without any administrative deductions.

Dedicated Interest-Free Zakat Account Zakat donations are held in a dedicated, interest-free account and disbursed only to eligible beneficiaries, following thorough due diligence.

0% Admin Fees We do not deduct any administrative fees in Canada from your Zakat contribution.

Eligibility Verified Our team conducts rigorous checks to ensure every recipient is Zakat-eligible as per Islamic guidelines.

Maximum 10% to Field Partners A maximum of 10% of your Zakat may be allocated to our trusted field partners, in accordance with the Qur’anic allowance for Zakat collectors (Al-‘Amilina ‘Alayha).

Annual Impact Reporting We provide transparent annual reports on how your Zakat has been used, so you can see the direct impact of your contribution.

Zakat-Eligible Programs You Can Support When you donate Zakat through Penny Appeal Canada, you are directly helping to transform lives through impactful projects:

Feed Our World Provides nutritious meals to families suffering from hunger across Asia, Africa, and the Middle East. - Feed a Family: $120

OrphanKind Supports orphans with food, shelter, education, and healthcare for approximately $2 per day. - Monthly orphan sponsorship: $60

Emergency Response Delivers urgent aid, including hygiene kits, to families affected by conflict, displacement, and natural disasters. - Hygiene Kit: $150

You can also choose a custom donation amount or make your Zakat a monthly contribution for lasting impact.

When Should You Pay Your Zakat? Zakat is due once every lunar year on the wealth that has remained above the Nisab threshold. While you may choose any time of year, many Muslims prefer paying during Ramadan for increased blessings.

Zakat can also be paid in installments, but it is recommended to complete payment within the same lunar year.

Is Zakat Tax-Deductible in Canada? Yes. Zakat donations made to registered Canadian charities like Penny Appeal Canada are generally tax-deductible. Ensure you obtain a valid tax receipt for your records.

Fulfill Your Obligation Today Fulfilling your Zakat is an act of devotion and a powerful means of uplifting communities in need. With Penny Appeal Canada, your contribution is secure, impactful, and handled with integrity.

Use Our Zakat Calculator and Donate Today

Have Questions? We’re Here to Help. 1-855-880-4141info@pennyappeal.caLet your Zakat be the reason someone smiles today. Give generously. Give with confidence.

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The Ultimate Guide to Understanding and Giving Zakat with Penny Appeal USA

What is Zakat?

Definition and Meaning

Zakat, one of the Five Pillars of Islam, is a mandatory charitable contribution, typically 2.5% of a Muslim’s qualifying wealth annually. The term “Zakat” means purification, and it is a way to purify wealth by sharing blessings with those in need.

The Spiritual Importance of Zakat

Beyond being a financial obligation, Zakat cleanses the soul from greed and selfishness, fostering empathy, gratitude, and a sense of responsibility toward the Ummah. It strengthens community ties and ensures wealth circulates rather than being hoarded.

Zakat vs. Sadaqah: Key Differences

While Zakat is obligatory and calculated based on specific assets, Sadaqah is a voluntary charity that can be given at any time in any amount. Zakat has strict guidelines on distribution, while Sadaqah is flexible, including small acts of kindness.

Why Zakat is Obligatory in Islam

Quranic Verses About Zakat

Allah commands in the Quran:

“And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.” (Quran 2:110)

These commands emphasize the spiritual and communal importance of Zakat as an act of worship.

The Role of Zakat in Purifying Wealth

Zakat ensures that the wealth in society is not stagnant and that those in need have opportunities to thrive, balancing economic inequality and promoting social justice.

Who is Eligible to Receive Zakat?

The Eight Categories of Recipients

The Quran outlines eight categories eligible for Zakat, including the poor, the needy, and those in debt. This system ensures Zakat reaches those genuinely in need.

How Zakat Helps in Poverty Alleviation

Zakat is a powerful tool to reduce poverty, empower marginalized communities, and provide essentials such as food, water, and education to the less fortunate.

How to Calculate Your Zakat

Understanding Nisab

Nisab is the minimum threshold of wealth one must have before Zakat becomes obligatory. It is equivalent to the value of 87.48 grams of gold or 612.36 grams of silver.

Zakat Calculation for Cash, Gold, and Investments

Zakat applies to cash savings, gold, silver, business assets, and investments held for over one lunar year. Calculate 2.5% of your qualifying wealth after deducting liabilities.

Zakat Calculator: Making it Easy

Penny Appeal USA provides a free Zakat Calculator, simplifying your calculations and ensuring accurate Zakat payment. You can try it here: Zakat Calculator.

Why Choose Penny Appeal USA for Your Zakat

Transparent Use of Funds

Penny Appeal USA ensures your Zakat is used responsibly, transparently reporting the impact and distribution of your donations.

Supporting Sustainable Projects Globally

Your Zakat through Penny Appeal USA supports projects like food distribution, orphan care, clean water, and emergency relief, creating long-term, sustainable change.

Testimonials from Donors

Donors share how they feel fulfilled knowing their Zakat has fed families during Ramadan, provided water to drought-hit villages, and offered hope to orphans.

Zakat Projects by Penny Appeal USA

Feeding the Hungry

Your Zakat feeds vulnerable families worldwide, ensuring children and adults have nutritious meals.

Supporting Orphans

Zakat funds provide education, healthcare, and emotional support to orphans, giving them hope and opportunities.

Providing Clean Water

Penny Appeal USA builds wells and water systems, using Zakat to bring clean water to communities suffering from water scarcity.

Emergency Relief Projects

In times of crisis, your Zakat funds emergency aid, including shelter, food, and medical care, for communities hit by disasters.

How to Give Your Zakat Through Penny Appeal USA

Online Zakat Portal

You can easily pay your Zakat through Penny Appeal USA’s secure online platform here: Give Your Zakat.

Setting Up Automated Zakat Payments

Set up monthly Zakat contributions to simplify your giving while ensuring consistent support for those in need.

Tax Benefits of Zakat in the USA

Your Zakat donations to Penny Appeal USA are tax-deductible, allowing you to maximize your giving while receiving tax benefits.

Common Misconceptions About Zakat

Zakat is Only for Ramadan

While many choose to pay Zakat during Ramadan for increased rewards, it is due annually, not limited to Ramadan.

Zakat on Business Assets

Zakat is also due on business inventory and profits, ensuring all qualifying wealth contributes to societal welfare.

Paying Zakat Locally vs. Globally

While you can pay Zakat locally, Penny Appeal USA ensures your Zakat reaches the most vulnerable globally, amplifying your impact.

Conclusion

Zakat is not just a pillar of Islam but a pillar of hope for millions worldwide. By giving your Zakat through Penny Appeal USA, you transform lives, fight poverty, and gain spiritual rewards. The process is straightforward, the impact is powerful, and the blessings are countless.

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Net Worth Zakat What It Is and How to Calculate It

Zakat is a fundamental pillar of Islam, emphasizing the importance of charity and social justice. One key concept in Zakat calculation is the net worth, which determines how much a person owes based on their wealth after liabilities. Understanding net worth Zakat is essential for accurate and fair fulfillment of this religious obligation.

What Is Net Worth in Zakat?

Net worth refers to the total value of a person’s zakatable assets minus their immediate debts and liabilities. It represents the actual amount on which Zakat is calculated. Simply put, it’s your wealth after subtracting what you owe others.

Why Is Net Worth Important for Zakat?

Zakat is due only if your net worth exceeds the Nisab—the minimum threshold of wealth required to be eligible for Zakat. Calculating your net worth ensures you pay Zakat only when obligated and on the correct amount. This prevents undue financial burden and aligns with Islamic principles of fairness.

Components of Net Worth for Zakat

Assets included:

Cash and savings (bank accounts, physical cash)

Gold and silver

Investments, stocks, and shares

Business inventory

Rental income and receivables

Agricultural produce (under specific conditions)

Liabilities deducted:

Immediate debts (loans due, bills to pay)

Outstanding expenses or payments

Personal items like your home, car for personal use, clothing, and furniture are excluded from zakatable assets.

How to Calculate Net Worth Zakat

Add all zakatable assets: Combine the current market value of all your eligible assets.

Subtract liabilities: Deduct any immediate debts or payments owed.

Compare to Nisab: Ensure the net worth exceeds the Nisab threshold (equivalent to roughly 87.48 grams of gold or 612.36 grams of silver).

Calculate 2.5%: If above Nisab, multiply the net worth by 2.5% to find your Zakat amount.

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Claim Foreign Tax Credit in UAE

Background 

In case the company have global operations, it may earn income from multiple countries. If you are a resident taxable person in the UAE, you will be subject to taxation on income earned both in the UAE and on the income which is generated from another country. To avoid double taxation on the same income, the UAE allows you to claim a foreign tax credit for taxes paid in other countries when filing your corporate tax return. This credit reduces your UAE Corporate Tax liability by the amount of tax already paid abroad, thereby preventing double taxation.

Let's discuss in detail when foreign tax credit could be claimed

 

Which Foreign Taxes can be claimed in the UAE as Corporate Tax Credit?

To be eligible for a Foreign Tax Credit in the UAE, the foreign tax should be similar to Corporate Tax and meet these conditions:

1. It must be imposed by a foreign government (federal or state).

2. Payment of the foreign tax is mandatory and enforced by the tax laws in that foreign country.

3. The tax should be on profit or net income (income minus deductions). Foreign tax withholding also counts.

It is always important to consider the Double Taxation Agreement (DTAA) to figure out which foreign taxes can be used for the Foreign Tax Credit. 

 

Foreign Taxes which cannot be claimed for UAE Corporate Tax Credit

Any tax which is a consumption-based tax, import taxes/duties, any transaction taxes, property and wealth taxes which are levied on assets in another country, not income, estate or inheritance taxes.

Tax Credit of Income as well as non-income elements

In some cases, there could be some taxes which are similar to corporate tax and have taxes based on both income and non-income factors (such as Zakat in KSA, levied on the equity, retained earnings, and net income). In certain cases, if it is in the nature of income tax and splitting of the non-income factor is difficult, it can still qualify for the UAE Foreign Tax Credit, provided all the amounts meet all the conditions mentioned. 

Foreign Tax Credit should specifically not include - Payments like interest, fines, or penalties to a foreign government are not considered income taxes and do not qualify for the UAE Foreign Tax Credit.

When is Foreign Tax Considered "Paid"?

For the UAE Foreign Tax Credit, you can claim it for foreign tax 'paid,' which means either the amount has been paid to the respective foreign tax authorities or the amount is payable to authorities, i.e. you owe them, not yet paid, but it's committed. But the tax amount is not considered as 'paid' if the tax liability in the foreign country is uncertain, or the tax paid has been refunded or it is confirmed refundable.

What if the Foreign Tax paid outside the UAE is refunded after claiming credit in the UAE

If Foreign Tax Credit has been claimed but later receives a refund for such tax in the foreign jurisdiction, or the available Foreign Tax Credit is reduced. A voluntary disclosure to the FTA would be required based on the change in the amount of Corporate Tax Payable. In case a change in FTA increases the tax liability by more than AED 10,000, the person should submit a voluntary disclosure to the FTA within 20 business days from the date of becoming aware of the foreign tax repayment. 

If the increase in tax liability is AED 10,000 or less, the person should correct the Foreign Tax Credit claim either in the Tax Return due for a previous period or in the Tax Return for the period in which the foreign tax is refunded.  On the other side, if the foreign tax paid increases after claiming foreign tax credit, then the person can submit a Voluntary Disclosure along with a Corporate Tax refund application, and the FTA will assess the impact on the person's corporate tax position.

Calculating Foreign Tax Credit

The Foreign Tax Credit in the UAE cannot exceed the Corporate Tax due on the relevant foreign income. It's calculated as the lower of the actual tax paid in the foreign jurisdiction and the Corporate Tax due on the foreign source income.  Tax Credit doesn't apply to exempt income like foreign dividends under the UAE's Participation Exemption, even if foreign taxes were withheld. It's also not available if the taxpayer is in a loss position according to the UAE's Corporate Tax Law. In the UAE, where there are two Corporate Tax rates (0% and 9%), the tax on foreign income is calculated using a weighted average formula: i.e.

Corporate Tax on foreign income = (Corporate Tax on total income before any Foreign Tax Credit) * (Relevant foreign income) / (Total income).

Unused Foreign Tax Credit

Unused Foreign Tax Credit in the UAE cannot be carried over to future tax periods or applied to earlier ones; it simply expires. Additionally, there's no option to deduct the unutilized Foreign Tax Credit from taxable profits. Once it's not used in the relevant period, it cannot be reclaimed or offset against future or past tax liabilities.

Multiple Foreign Credits

The Foreign Tax Credit is specific to each "relevant" foreign income, calculated separately for each income source. Excess Foreign Tax Credit from one source cannot offset Corporate Tax due on another source.

 

When is Foreign Tax Credit Not Available?

No Foreign Tax Credit if no Corporate Tax is payable due to Small Business Relief election or turnover below AED 1 million.

Similarly, no Foreign Tax Credit if foreign source income is from a Qualifying Free Zone Person (subject to 0% Corporate Tax).

If a taxpayer incurs a loss (negative Taxable Income), and no Corporate Tax is payable, no Foreign Tax Credit is available even if foreign tax was paid on the income

Documents Required for Claiming Foreign Tax Credit

A Taxable Person is required to maintain all necessary records for the purpose of claiming a Foreign Tax Credit. The records maintained by

The Taxable Person should include all of the following details:

Foreign income taxed abroad (in foreign currency)

The exchange rate used to convert income to AED

Financial year of the income

Nature and amount of foreign tax paid

Date of foreign tax payment

Acceptable evidence of foreign tax payment includes:

Official receipt from the foreign tax authority

Withholding tax certificate from the foreign authority

Filed tax return with income and tax calculations

Confirmation letter from the foreign tax authority stating that all taxes have been paid

To learn more about How to Claim Foreign Tax Credit in UAE?, book a free consultation with one of the Flyingcolour team advisors.

Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions or for any actions taken based on the information contained in this blog.

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Navigating Complex Tax Landscapes: Why Tax Consultants in Kuwait Are Essential for Business

In a fast-evolving regulatory and economic landscape, businesses in Kuwait are facing increasing pressure to comply with tax laws, manage financial reporting accurately, and maintain transparency in all fiscal operations. Whether you’re a multinational corporation, a growing SME, or an entrepreneur launching a new venture, working with experienced tax consultants in Kuwait is no longer optional—it’s a strategic necessity.

As tax laws continue to evolve globally and within the GCC, the demand for expert guidance has surged. One of the top firms at the forefront of this transformation is BDO Kuwait, offering comprehensive tax advisory and accounting services tailored to Kuwait’s business environment.

This article explores the vital role tax consultants play in ensuring financial compliance, optimizing tax structures, and enabling businesses to thrive in a competitive marketplace.

Why Businesses Need Tax Consultants in Kuwait

Kuwait has made significant progress in strengthening its regulatory and tax frameworks. While the country still does not impose personal income tax, the government has introduced several corporate taxation measures—especially for foreign entities—and is actively participating in regional and international initiatives for tax transparency and fair reporting.

Here’s why engaging with tax consultants in Kuwait is more important than ever:

1. Complex Regulatory Landscape

Kuwait’s tax system is unique. Foreign companies are subject to income tax, while local entities may be liable under other frameworks such as the National Labor Support Tax (NLST), Zakat, or the Kuwait Foundation for the Advancement of Sciences (KFAS). Navigating this system requires technical expertise and up-to-date knowledge.

Tax consultants help:

Identify applicable taxes based on entity type and ownership structure

Interpret ambiguous tax rules and apply them accurately

Prepare and file tax returns in compliance with local law

2. Avoiding Penalties and Legal Risks

Incorrect filings, non-compliance, or late submissions can result in financial penalties, audits, or legal consequences. Tax consultants ensure timely and accurate reporting, minimizing the risk of violations and protecting your organization from avoidable liabilities.

3. Optimizing Tax Liabilities

One of the key benefits of working with a professional tax consultant is strategic tax planning. By structuring business operations efficiently, identifying allowable deductions, and leveraging available exemptions, tax advisors help reduce the overall tax burden—legally and ethically.

4. Support During Tax Audits

If your company is selected for a tax audit by the Kuwait Tax Authority (KTA), having a knowledgeable consultant on your side can be invaluable. Consultants assist in documentation, communication, and resolution—ensuring a smooth and stress-free audit process.

BDO Kuwait: Leading Tax Consultants in Kuwait

BDO Kuwait has established itself as one of the leading providers of tax advisory and accounting services in the country. As part of the global BDO Network—operating in over 160 countries—BDO brings international tax expertise and a deep understanding of local business and regulatory environments.

With a dedicated team of tax professionals, BDO offers tailored solutions that help businesses navigate tax laws, minimize risk, and make informed financial decisions.

Core Tax Services Offered by BDO Kuwait

Let’s explore the wide range of tax-related services that make BDO one of the most trusted tax consultants in Kuwait:

1. Corporate Tax Compliance and Planning

BDO helps clients determine tax liabilities and ensure compliance with Kuwait’s Income Tax Law for foreign entities. Services include:

Tax registration and filings

Preparation and submission of corporate income tax returns

Calculation of tax provisions and deferred taxes

Representation before the KTA in case of queries or disputes

BDO also advises on tax-efficient structures for business operations, transactions, and cross-border investments.

2. Indirect Tax Advisory (Including GCC VAT)

Although Kuwait has not yet implemented Value Added Tax (VAT), it is expected to follow the GCC-wide VAT framework. BDO prepares clients for VAT readiness through:

VAT impact assessments

System and process adjustments

Staff training and knowledge sessions

Ongoing advisory for indirect tax compliance once introduced

Being proactive in VAT readiness can give businesses a competitive edge and ensure seamless compliance when the tax is implemented.

3. Withholding Tax Advisory

Kuwait’s tax regime includes withholding taxes on payments to non-residents for services, royalties, and other forms of income. BDO assists clients with:

Accurate application of withholding tax rules

Filing of forms and certificates

Tax treaty analysis and benefits under double tax agreements (DTAs)

This ensures proper compliance and avoidance of double taxation.

4. Zakat, NLST, and KFAS Advisory

BDO helps companies determine their obligations under:

Zakat (for companies listed on the Kuwait Stock Exchange)

National Labor Support Tax (NLST)

KFAS contributions

Consultants help in calculating accurate dues, preparing required reports, and aligning contributions with organizational strategies.

5. Transfer Pricing

As international scrutiny of transfer pricing practices increases, BDO provides:

Transfer pricing documentation and benchmarking

Intercompany transaction analysis

Compliance with OECD guidelines and local regulations

Risk assessments and audit support

This helps multinational companies mitigate risk and demonstrate transparency in cross-border dealings.

6. Tax Due Diligence and M&A Support

For businesses involved in mergers, acquisitions, or restructuring, BDO conducts thorough tax due diligence to uncover hidden liabilities and optimize deal structures. Services include:

Target entity tax reviews

Analysis of contingent tax exposures

Post-deal integration and compliance support

Industries Served

BDO Kuwait’s tax consultants have deep experience across a broad spectrum of industries, including:

Oil & Gas

Real Estate and Construction

Financial Services

Retail and E-commerce

Manufacturing and Trading

Healthcare and Pharmaceuticals

Each sector faces unique challenges, and BDO tailors its approach to suit the financial and operational specifics of each client.

Technology-Enabled Tax Services

In the digital age, effective tax management goes hand-in-hand with technology. BDO integrates cutting-edge tools and platforms to:

Automate tax calculations

Digitize record-keeping and audit trails

Generate real-time compliance dashboards

Improve data accuracy and reduce human error

This makes tax processes more efficient, scalable, and transparent.

Why Choose BDO as Your Tax Consultant in Kuwait?

Here’s what sets BDO apart from other tax consultants in Kuwait:

Experienced Team: BDO employs professionals with certifications like CPA, ACCA, and CTA who bring local and international experience.

Customized Advice: No two businesses are the same—BDO offers bespoke tax solutions based on your industry, size, and goals.

Global Reach: As part of BDO International, clients benefit from a seamless network of global tax professionals.

Client-Focused Approach: BDO emphasizes proactive communication, clarity, and responsiveness in all engagements.

Ethical and Compliant: All services are delivered with the highest standards of integrity and in full compliance with Kuwait’s laws.

Final Thoughts

Taxation is one of the most critical, yet complex, components of business management. As regulations grow stricter and financial scrutiny intensifies, the need for expert tax consultants in Kuwait has never been greater.

With its unmatched expertise, tailored strategies, and commitment to client success, BDO Kuwait continues to be a trusted advisor for businesses navigating Kuwait’s tax environment.

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JUST A FRIENDLY REMINDER!

Zakat  

INTRODUCTION

Zakat, one of the five pillars of Islam, is a mandatory annual charity for Muslims who meet certain criteria, requiring them to donate 2.5% of their surplus wealth to those in need. 

Here's a more detailed explanation:

What is Zakat?

Definition: Zakat is a form of almsgiving or charity that is obligatory for Muslims who meet specific conditions. 

Meaning: The word "Zakat" in Arabic means "purification," "growth," and "blessing". 

Purpose: Zakat is intended to purify wealth, help the needy, and foster social justice within the Muslim community. 

Obligation: It is considered a religious duty in Islam, ranked second in importance only to prayer (Salah). 

Who is Eligible to Pay Zakat?

Conditions: To be eligible, a Muslim must be of sound mind, an adult, and own wealth exceeding a minimum threshold (known as the Nisab) for a full lunar year (Hawl). 

Nisaab: The Nisab is the minimum amount of wealth that must be owned for Zakat to become obligatory. It is typically calculated based on the value of 85 grams of gold or 595 grams of silver. 

Zakatable Assets: Zakat is payable on assets like cash, savings, investments, gold, silver, and business assets that have been owned for a full lunar year. 

How to Calculate Zakat?

Percentage: Zakat is calculated at 2.5% of the total value of zakatable assets that exceed the Nisab threshold. 

Deductions: Before calculating Zakat, outstanding debts and immediate liabilities can be deducted. 

Annual Obligation Zakat is an annual obligation, meaning it is due once a lunar year has passed since reaching the Nisab threshold. 

Who Receives Zakat?

Eligible Recipients: 

The Holy Qur’an outlines specific categories of people who are eligible to receive Zakat, including the poor (Fuqaraa), the needy (Masaakeen), those employed to collect Zakat, those whose hearts are to be won over to Islam, those in debt, those fighting for the cause of Allah (Subhanahu wa Ta’ala), and travelers in need. 

Zakat vs. Sadaqah

Zakat: is a mandatory charity, while Sadaqah is a voluntary act of charity.

Zakat al-Fitr: is a separate mandatory donation made ahead of Eid al-Fitr, and should not be confused with Zakat. 

Why is Zakat Important?

Purification of Wealth: Muslims believe that paying Zakat purifies their wealth and increases blessings. 

Social Justice: Zakat helps to address poverty and inequality within the Muslim community. 

Fulfilling Religious Duty: Paying Zakat is seen as a way of fulfilling one's duty as a servant of Allah (Subhanahu wa Ta’ala). 

DETAILS

Zakat (or Zakāh) is one of the five pillars of Islam. Zakat is the Arabic word for "Giving to Charity" or "Giving to the Needy,” Zakat is a form of almsgiving, often collected by the Muslim Ummah. It is considered in Islam a religious obligation, and by Qur’anic ranking, is next after prayer (Salat) in importance.[6] Eight heads of zakat are mentioned in the Holy Quran.

As one of the Five (5) Pillars of Islam, is a religious duty for all Muslims who meet the necessary criteria of wealth to help the needy. It is a mandatory charitable contribution, often considered to be a tax. The payment and disputes on Zakat have played a major role in the history of Islam, notably during the Ridda wars.

Zakat on wealth is based on the value of all of one's possessions. It is customarily 2.5% (or 1⁄40) of a Muslim's total savings and wealth above a minimum amount known as Nisab each lunar year, but Islamic scholars differ on how much nisab is and other aspects of Zakat. According to Islamic doctrine, the collected amount should be paid to the poor and the needy, Zakat collectors, orphans, widows, those to be freed from slavery, the aged who cannot work to feed themselves, those in debt, in the cause of God Almighty and to benefit the stranded traveller.

Today, in most Muslim-majority countries, Zakat contributions are voluntary, while in Libya, Malaysia, Pakistan, Saudi Arabia, Sudan and Yemen, Zakat is mandated and collected by the state (as of 2015).

Shi’ahs, unlike Sunnis, have traditionally regarded zakat as a private action, and they give zakat to Imam-sponsored rather than state-sponsored collectors, but it is also obligatory for them.

Etymology

It came from Arabic root z-k-w (ز ك و), meaning to purify.[1] Zakat is considered a way to purify one's income and wealth from sometimes worldly, impure ways of acquisition. According to Sachiko Murata and William Chittick, "Just as ablutions purify the body and Salat purifies the soul (in Islam), so zakat purifies possessions and makes them pleasing to God Almighty."

Doctrine 

Holy Qur’an

The Holy Qur’an discusses charity in many verses, some of which relate to Zakat. The word Zakat, with the meaning used in Islam now, is found, for example, in Surahs: 7:156, 9:60, 19:31, 19:55, 21:73, 23:4, 27:3, 30:39, 31:4, and 41:7. Zakat is found in the early Medinan suras and described as obligatory for Muslims. 

It is given for the sake of salvation. Muslims believe those who give zakat can expect reward from God Almighty in the afterlife, while neglecting to give zakat can result in damnation. Zakat is considered part of the covenant between God Almighty and a Muslim.

Verse 2:177 (the Clear Qur'an translation) sums up the Qur’anic view of charity and almsgiving (another name for zakat is the poor due):

Righteousness is not in turning your faces towards the east or the west. Rather, the righteous are those who believe in Allah (Subhanahu wa Ta’ala), the Last Day, the angels, the Books, and the prophets; who give charity out of their cherished wealth to relatives, orphans, the poor, ˹needy˺ travelers, beggars, and for freeing captives; who establish prayer, pay alms-tax, and keep the pledges they make; and who are patient in times of suffering, adversity, and in ˹the heat of˺ battle. It is they who are true ˹in faith˺, and it is they who are mindful ˹of Allah˺. – 2:177

According to Yusuf al-Qaradawi, Verse 9.5 of the Holy Qur’an makes. Zakat one of three prerequisites for pagans to become Muslims: "but if they repent, establish prayers, and practice zakat they are your brethren in faith".

The Holy Qur’an also lists who should receive the benefits of zakat, discussed in more detail below.

Hadith

Each of the most trusted Hadith collections in Islam have a book dedicated to Zakat. Sahih Bukhari's Book 24, Sahih Muslim's Book 12, and Sunan Abu-Dawud's Book 9 discuss various aspects of Zakat, including who must pay, how much, when and what. The 2.5% rate is also mentioned in the Hadiths.

The Hadiths admonish those who do not give the Zakat. According to the Hadith, refusal to pay or mockery of those who pay Zakat is a sign of hypocrisy, and God Almighty will not accept the prayers of such people. The Sunnah also describes God's punishment for those who refuse or fail to pay Zakat. On the day of Judgment, those who did not give the Zakat will be held accountable and punished.

The Hadith contain advice on the state-authorized collection of the Zakat. The collectors are required not to take more than what is due, and those who are paying the Zakat are asked not to evade payment. The Hadith also warn of punishment for those who take Zakat when they are not eligible to receive it (see Distribution below).

Amount[

The amount of Zakat to be paid by an individual depends on the amount of money and the type of assets the individual possesses. The Holy Qur’an does not provide specific guidelines on which types of wealth are taxable under the Zakat, nor does it specify percentages to be given. However, it clearly indicates to donate the "surplus" of one's income. 

But the customary practice in the Islamic world has been that the amount of zakat paid on capital assets (e.g. money) is 2.5% (1⁄40). Zakat is additionally payable on agricultural goods, precious metals, minerals, and livestock at a rate varying between 2.5% and 20% (1/5), depending on the type of goods.

Zakat is usually payable on assets continuously owned over one lunar year that are in excess of the Nisab, a minimum monetary value. However, Islamic scholars have disagreed on this issue. For example, Abu Hanifah did not regard the Nisab limit to be a pre-requisite for Zakat, in the case of land crops, fruits and minerals. Other differences between Islamic scholars on Zakat and Nisab are acknowledged as follows by Yusuf al-Qaradawi.

Unlike prayers, we observe that even the ratio, the exemption, the kinds of wealth that are zakatable are subject to differences among scholars. Such differences have serious implications for Muslims at large when it comes to their application of the Islamic obligation of zakat. For example, some scholars consider the wealth of children and insane individuals zakatable, others don't. Some scholars consider all agricultural products zakatable, others restrict zakat to specific kinds only. Some consider debts zakatable, others don't. Similar differences exist for business assets and women's jewelry. Some require certain minimum (nisab) for zakatability, some don't. etc. The same kind of differences also exist about the disbursement of Zakat.  – Shiekh Mahmud Shaltut.

Failure To Pay

A slot for giving zakat at the Zaouia Moulay Idriss II in Fez, Morocco.

The consequence of failure to pay Zakat has been a subject of extensive legal debate in traditional Islamic jurisprudence, particularly when a Muslim is willing to pay zakat but refuses to pay it to a certain group or the state. 

According to classical jurists, if the collector is unjust in the collection of zakat but just in its distribution, the concealment of property from him is allowed. If, on the other hand, the collector is just in the collection but unjust in the distribution, the concealment of property from him is an obligation (Wajib).

Furthermore, if the zakat is concealed from a just collector because the property owner wanted to pay his Zakat to the poor himself, they held that he should not be punished for it. If collection of zakat by force was not possible, use of military force to extract it was seen as justified, as was done by Abu Bakr (RadiyAllahu ‘anhu) during the Ridda Wars, on the argument that refusing to submit to just orders is a form of treason.However, Abu Hanifah, the founder of the Hanafi school, disapproved of fighting when the property owners undertake to distribute the Zakat to the poor themselves,

Some classical jurists held the view that any Muslim who consciously refuses to pay zakat is an apostate, since the failure to believe that it is a religious duty (Fard) is a form of unbelief (Kufr), and should be killed. However, prevailing opinion among classical jurists prescribed sanctions such as fines, imprisonment or corporal punishment.

Some classical and contemporary scholars such as Ishaq Ibn Rahwayh and Yusuf al-Qaradawi have stated that the person who fails to pay Zakat should have the payment taken from them, along with half of his wealth. Additionally, those who failed to pay the Zakat would face God's punishment in the afterlife on the day of Judgment.

In modern states where Zakat payment is compulsory, failure to pay is regulated by state law similarly to tax evasion.

Distribution

According to the Holy Qur’an's Surah Al-Tawba, there are eight (8) categories of people (Asnaf) who qualify to benefit from Zakat funds.

Alms-tax is only for the poor and the needy, for those employed to administer it, for those whose hearts are attracted ˹to the faith˺, for ˹freeing˺ slaves, for those in debt, for Allah's cause, and for ˹needy˺ travellers. ˹This is˺ an obligation from Allah. And Allah is All-Knowing, All-Wise.

— Surah At-Tawbah 9:60

Islamic scholars have traditionally interpreted this verse as identifying the following eight categories of Muslim causes to be the proper recipients of Zakat:

Those living without means of livelihood (Al-Fuqarā’), the poor

Those who cannot meet their basic needs (Al-Masākīn),the needy

To Zakat collectors (Al-Āmilīyn 'Alihā)

To persuade those sympathetic to or expected to convert to Islam (Al-Mu'allafatu Qulūbuhum), recent converts to Islam, and potential allies in the cause of Islam

To free from slavery or servitude (Fir-Riqāb), slaves of Muslims who have or intend to free from their master by means of a Kitabah contract

Those who have incurred overwhelming debts while attempting to satisfy their basic needs (Al-Ghārimīn),debtors who in pursuit of a worthy goal incurred a debt

Those fighting for a religious cause or a cause of God (Fī Sabīlillāh), or for Jihad in the way of Allah (Subhanahu wa Ta’ala) by means of pen, word, or sword, or for Islamic warriors who fight against the unbelievers but are not salaried soldiers.

Wayfarers, stranded travellers (Ibnu Al-Sabīl), travellers who are traveling with a worthy goal but cannot reach their destination without financial assistance.

Zakat should not be given to one's own parents, grandparents, children, grandchildren, spouses or the descendants of Muhammad (SallAllahu ‘alaihi wa Sallam).

Neither the Holy Qur’an nor the Hadiths specify the relative division of zakat into the above eight categories. According to the Reliance of the Traveller, the Shafi'i school requires Zakat is to be distributed equally among the eight categories of recipients, while the Hanafi school permits zakat to be distributed to all the categories, some of them, or just one of them. 

Classical schools of Islamic law, including Shafi'i, are unanimous that collectors of zakat are to be paid first, with the balance to be distributed equally amongst the remaining seven categories of recipients, even in cases where one group's need is more demanding.

Muslim scholars disagree whether zakat recipients can include non-Muslims. Islamic scholarship, historically, has taught that only Muslims can be recipients of Zakat. In recent times, some state that zakat may be paid to non-Muslims after the needs of Muslims have been met, finding nothing in the Holy Qur’an or Sunnah to indicate that Zakat should be paid to Muslims only.

Additionally, the Zakat funds may be spent on the administration of a centralized Zakat collection system. Representatives of the Salafi movement include propagation of Islam and any struggle in righteous cause among permissible ways of spending, while others argue that Zakat funds should be spent on social welfare and economic development projects, or science and technology education.

Some hold spending them for defense to be permissible if a Muslim country is under attack. Also, it is forbidden to disburse Zakat funds into investments instead of being given to one of the above eight categories of recipients.

Role In Society[

The Zakat is considered by Muslims to be an act of piety through which one expresses concern for the well-being of fellow Muslims, as well as preserving social harmony between the wealthy and the poor. Zakat promotes a more equitable redistribution of wealth and fosters a sense of solidarity amongst members of the Ummah.

Historical practice staying under the name of Islam which was considered apostasy and led ultimately, to the Ridda wars.

The second and third caliphs, Umar ibn al-Khattab (RadiyAllahu ‘anhu) and Uthman ibn Affan (RadiyAllahu ‘anhu) continued Abu Bakr's codification of the Zakat. Uthman (RadiyAllahu ‘anhu) also modified the Zakat collection protocol by decreeing that only "apparent" wealth was taxable, which had the effect of limiting Zakat to mostly being paid on agricultural land and produce. 

During the reign of (RadiyAllahu ‘anhu), the issue of Zakat was tied to legitimacy of his government. After Ali (RadiyAllahu ‘anhu), his supporters refused to pay Zakat to Mu’awiyah (RadiyAllahu ‘anhu) as they did not recognize his legitimacy.

The practice of Islamic state-administered zakat was short-lived in Madinah. During the reign of Umar bin Abdul Aziz (717–720 CE), it is reported that no one in Madinah needed the Zakat. After him, Zakat came more to be considered as an individual responsibility. 

This view changed over Islamic history. Sunni Muslims and rulers, for example, considered collection and disbursement of Zakat as one of the functions of an Islamic state; this view has continued in modern Islamic countries.

Zakat is one of the five (5) pillars of Islam, and in various Islamic polities of the past was expected to be paid by all practicing Muslims who have the financial means (Nisab). In addition to their zakat obligations, Muslims were encouraged to make voluntary contributions (Sadaqah). The Zakat was not collected from non-Muslims, although they were required to pay the Jizyah tax.

Depending on the region, the dominant portion of zakat went typically to ‘Amil (the Zakat collectors) or Sabīlillāh (those fighting for religious cause, the caretaker of local mosque, or those working in the cause of God Almighty such as proselytizing non-Muslims to convert to Islam).

Contemporary practice[

According to the researcher Russell Powell in 2010, zakat was mandatory by state law in Libya, Malaysia, Pakistan, Saudi Arabia, Sudan, and Yemen. There were government-run voluntary zakat contribution programs in Bahrain, Bangladesh, Egypt, Indonesia, Iran, Jordan, Kuwait, Lebanon, Maldives and the United Arab Emirates.

In a 2019 study conducted by the Institute for Social Policy and Understanding that examined philanthropy for American Muslims in comparison to other faith and non-faith groups, it was found that for American Muslims, Zakat was an important driver of charitable giving. 

This results in American Muslims being the most likely faith group studied to be motivated to donate based on a believed religious obligation (Zakat), and a "feeling that those with more should help those with less", referencing again the concept and religious imperative behind Zakat

REFERENCES

ARTICLES:

100% Transparency Zakat

Ramadan 2025 | Zakat Foundation of America

PayZakat

What is Zakat?

Zakat | Who Is Eligible | When Is Payment Due?

Zakat: The Basic Rules for One of the Five Pillars of Islam

What Is Zakat?

Zakat, FAQ

Zakat Purifies Your Wealth - 100% Transparency Zakat

[innercomputerthing]

Zakat Al Mal: Understanding the Obligation of Wealth Purification

Zakat Al Mal is a fundamental pillar of Islam, requiring Muslims to give a portion of their wealth to those in need. It serves as a means of wealth purification, ensuring economic balance and social justice within the community.

What is Zakat Al Mal?

Zakat Al Mal refers to the obligatory charity given from accumulated wealth, including savings, gold, business profits, and other financial assets. It is due once a year when an individual’s wealth surpasses the Nisab (minimum threshold) and has been held for a lunar year.

Who Must Pay Zakat Al Mal?

Every Muslim who possesses wealth above the Nisab for a full Islamic lunar year is obligated to pay Zakat Al Mal. The Nisab is typically calculated based on the value of gold or silver.

How to Calculate Zakat Al Mal?

The standard rate for Zakat Al Mal is 2.5% of one’s qualifying wealth. Here’s a simple way to calculate:

Assess all eligible assets (cash, gold, investments, etc.).

Deduct any liabilities (debts or expenses).

If the remaining amount meets or exceeds the Nisab, multiply it by 2.5% to determine the due Zakat Al Mal.

Who Benefits from Zakat Al Mal?

According to Islamic teachings, Zakat Al Mal must be distributed to eligible recipients, including:

The poor and needy

Orphans and widows

Those in debt

Refugees and displaced families

Individuals striving in the cause of Allah

Donate Zakat Al Mal Online

With modern technology, you can easily fulfill your obligation by donating Zakat Al Mal online. Organizations like Africa Relief ensure your contributions reach the most deserving beneficiaries efficiently and transparently.

Start your Zakat donation today: Zakat Al Mal

[mohidusa]

What is a Zakat Management System?

Managing Zakat effectively is essential for fulfilling Islamic obligations and supporting those in need. A Zakat management system is a digital solution designed to simplify the collection, distribution, and tracking of Zakat funds. This system ensures transparency, efficiency, and compliance with Islamic principles, making it an invaluable tool for masjids, Islamic organizations, and charities.

This article explores the key features, benefits, and significance of a Zakat management system and why it’s essential for modern-day Zakat administration.

Why is a Zakat Management System Important?

Efficient Collection Automate the process of collecting Zakat funds through secure online payment methods.

Accurate Calculation Provide tools to help individuals calculate their Zakat accurately based on their income, assets, and liabilities.

Transparent Distribution Ensure funds are distributed to the rightful recipients in accordance with Islamic guidelines.

Streamlined Operations Save time and reduce administrative efforts with centralized tracking and reporting tools.

Key Features of a Zakat Management System

Online Zakat Payment Gateway Offer donors a seamless and secure way to pay Zakat online via multiple payment options.

Zakat Calculator Include a user-friendly calculator to guide users in determining their Zakat contributions.

Recipient Database Maintain a database of eligible Zakat recipients to ensure funds are distributed fairly and effectively.

Automated Record Keeping Keep track of all transactions, donor contributions, and recipient distributions with minimal manual effort.

Customizable Fund Allocation Allow masjids or organizations to categorize and allocate Zakat for specific purposes, such as education, healthcare, or disaster relief.

Real-Time Reporting and Analytics Generate detailed reports to maintain transparency with donors and ensure compliance with Islamic principles.

Multilingual Support Serve diverse communities by offering the system in multiple languages for accessibility.

Benefits of Using a Zakat Management System

Simplified Administration Automate complex processes, reducing the workload for masjid staff and volunteers.

Increased Trust and Transparency Build donor confidence with clear reports and transparent fund management.

Enhanced Donor Engagement Keep donors informed through updates on fund allocation and the impact of their contributions.

Scalability Adapt to the growing needs of your masjid or organization as your donor base and community expand.

Compliance with Islamic Guidelines Ensure every step of Zakat collection and distribution aligns with Shariah principles.

Who Can Benefit from a Zakat Management System?

Masjids Manage Zakat funds and distribute them efficiently within the local community.

Islamic Charities Streamline large-scale Zakat collection and allocation for humanitarian projects.

Islamic Financial Institutions Offer Zakat services to clients as part of their financial portfolio.

Individual Donors Benefit from easy calculation, payment, and tracking of Zakat contributions.

How to Choose the Right Zakat Management System

User-Friendly Interface: Ensure the system is simple for both administrators and donors to use.

Customization Options: Look for features that can be tailored to your specific requirements.

Integration Capabilities: Ensure compatibility with existing tools like donation platforms or accounting software.

Cost-Effectiveness: Balance pricing with features to maximize value.

Security: Opt for a system with robust data protection and secure payment processing.

Conclusion

A Zakat management system is a powerful solution that modernizes how Zakat is collected, managed, and distributed. By leveraging this technology, Islamic organizations can ensure greater transparency, efficiency, and impact while staying true to Islamic principles.

Ready to enhance your Zakat operations? Invest in a Zakat management system and make a difference in your community today.

[majalatsalsabil]

Comprehensive Auditing to Enhance Financial Trust

Financial auditing and reviewing accounts are critical factors contributing to the success of any company or organization. With the ever-changing economic environment and increasing regulatory requirements, relying on **External Auditors**, **Zakat Experts**, and **VAT Experts** has become essential to ensure compliance with local and international standards. **ASAS Alarqam Company**, as one of the leading firms in providing **financial consulting** and auditing services, offers comprehensive solutions for companies in Saudi Arabia.

Auditing: The Importance of Transparency and Accuracy

**Auditing** is the process of analyzing and evaluating a company’s financial statements to ensure they comply with accounting standards and applicable laws. External auditing services provided by **External Auditors** help companies enhance transparency and build trust with investors and stakeholders.

Benefits of Auditing:

1. **Increased Trust**: Auditing boosts investor and shareholder confidence by providing reliable and accurate reports.

2. **Error Detection**: Audits help identify potential errors or fraud within financial data.

3. **Compliance**: Auditing ensures that the company adheres to local and international accounting standards and laws.

Accounts Review: Ensuring Compliance and Efficiency

**Accounts review** is the periodic examination and analysis of a company’s financial statements to ensure their accuracy and compliance with accounting standards. **ASAS Alarqam** offers comprehensive review services that help businesses improve their financial practices and ensure compliance with legal requirements.

Objectives of Accounts Review:

- **Improving Efficiency**: Reviewing financial operations enables companies to optimize their operational efficiency.

- **Ensuring Compliance**: Account reviews help ensure the company complies with tax and Zakat regulations.

- **Risk Reduction**: By reviewing accounts, financial risks can be identified and mitigated before they negatively impact the company.

Financial Statements: The Cornerstone of Decision-Making

**Financial statements** are essential tools that managers and investors rely on when making financial decisions. These statements include the balance sheet, income statement, and cash flow statement, which provide a comprehensive view of a company’s financial position.

Why Are Financial Statements Important?

- **Assessing Financial Performance**: Financial statements help assess a company’s financial performance over a specific period.

- **Decision-Making**: Managers and investors rely on financial statements to make strategic, data-driven decisions.

- **Future Planning**: Financial statements assist in planning the company's future based on past performance.

Zakat and Tax Experts: Compliance and Maximizing Benefits

**ASAS Alarqam Company** provides specialized Zakat and tax services, backed by a team of **Zakat Experts** and **VAT Experts**. These services help companies comply with local Zakat and VAT regulations, ensuring they avoid penalties and achieve full compliance.

Zakat and Tax Services:

- **Zakat Calculation**: Zakat experts at **ASAS Alarqam** offer precise solutions for calculating Zakat in accordance with Islamic laws.

- **Tax Planning**: VAT experts help improve the company’s tax position through optimal planning and reducing tax liabilities.

Financial Consulting: Supporting Strategic Decision-Making

**Financial consulting** is a vital service offered by **ASAS Alarqam**. These consultations help companies improve their financial performance and تدقيق حسابات make strategic decisions based on data and financial analysis.

Benefits of Financial Consulting:

1. **Financial Planning**: Proper financial planning helps guide the company toward achieving its financial goals.

2. **Risk Management**: Specialized financial consulting helps reduce financial risks and improve overall performance.

3. **Performance Analysis**: Financial consulting aids in analyzing the company’s financial performance and provides recommendations for improvement.

**ASAS Alarqam Company** offers a wide range of specialized financial services, including **auditing**, **accounts review**, preparation of **financial statements**, as well as **Zakat and tax experts** services, and **financial consulting**. These services help companies improve their financial performance and ensure compliance with legal and regulatory standards. If you're looking for a trusted financial partner, **ASAS Alarqam** is the ideal choice to ensure the success of your business.

For more information about **ASAS Alarqam** services, you can visit their website at ASAS Alarqam Company.

[capitalinternationalgroup]

Understanding the Legal Framework for Business Setup in Saudi Arabia

Setting up a business in Saudi Arabia has become increasingly appealing for international investors due to the Kingdom’s evolving economic landscape. With Vision 2030 driving economic diversification, Saudi Arabia is creating ample opportunities for businesses across various industries. However, navigating the legal framework for business setup in the Kingdom requires a clear understanding of local regulations and procedures.

At Capital International Group (CIG), we specialize in providing comprehensive support for entrepreneurs and investors looking to establish their businesses in Saudi Arabia. In this blog, we’ll break down the key legal elements and steps involved in the process of setting up a business in the Kingdom.

1. Types of Legal Entities in Saudi Arabia

Choosing the right legal structure is the first crucial step. Saudi Arabia offers several types of business entities:

Limited Liability Company (LLC): This is the most common business structure for foreign investors. It requires at least one shareholder and offers protection against personal liability.

Joint Stock Company (JSC): Suitable for larger companies, a JSC requires at least two shareholders and provides the ability to raise capital through public shares.

Branch Office: Foreign companies can establish a branch office to operate under the parent company’s name in Saudi Arabia, without creating a separate legal entity.

Representative Office: This entity is for foreign companies wanting to explore market opportunities without engaging in commercial activities.

At CIG, we help you select the best business structure based on your specific goals and business type.

2. Foreign Investment Regulations

Saudi Arabia’s Ministry of Investment (MISA), formerly known as SAGIA, plays a critical role in regulating foreign investments. For a foreign investor to operate legally in Saudi Arabia, they must obtain a Foreign Investment License from MISA.

Key conditions for foreign ownership include:

Ownership Rights: Foreign investors can hold up to 100% ownership in most industries, though some sectors, such as oil exploration and real estate in Mecca and Medina, have restrictions.

Minimum Capital Requirement: Depending on the business sector, there may be specific capital requirements to meet.

The Saudi Arabian General Investment Authority (SAGIA) has simplified procedures for foreign investors, but it’s still essential to ensure compliance with regulatory requirements.

3. Commercial Registration and Licenses

Once the appropriate foreign investment license is secured, the next step is obtaining a Commercial Registration from the Ministry of Commerce and Industry (MCI). This involves:

· Registering the company’s trade name.

· Obtaining the required permits for your specific industry.

· Registering the company for VAT with the General Authority of Zakat and Tax (GAZT).

At Capital International Group, we streamline the registration process, ensuring that all documents are filed correctly and on time to avoid delays.

4. Labor Laws and Saudization

The Saudi Labor Law governs the hiring practices in the country, and businesses must adhere to Saudization requirements. Saudization, also known as the Nitaqat Program, is a national policy aimed at increasing the employment of Saudi nationals in the private sector.

The percentage of Saudi nationals required varies based on the industry and the size of the company. Failure to comply with Saudization quotas may result in penalties, including restrictions on visa issuance.

5. Taxation and Financial Regulations

Saudi Arabia offers a favorable tax regime for foreign investors. Key tax considerations include:

· Corporate Income Tax: Foreign-owned businesses are subject to a corporate tax rate of 20%.

· Zakat: Saudi-owned companies and GCC nationals pay Zakat instead of corporate income tax, calculated at 2.5% of the company’s capital.

· Value Added Tax (VAT): Saudi Arabia introduced a 15% VAT rate applicable on goods and services.

Proper tax planning and compliance with financial reporting standards are essential. CIG can provide expert tax advisory services, helping you navigate these requirements smoothly.

6. Intellectual Property Protection

Saudi Arabia has taken significant strides in improving its Intellectual Property (IP) regulations. The Saudi Authority for Intellectual Property (SAIP) oversees trademarks, patents, and copyrights. Registering your IP is crucial for safeguarding your business assets.

By working with Capital International Group, we help ensure your intellectual property is adequately protected in the Saudi market.

7. Legal and Regulatory Compliance

Compliance with Saudi Arabia’s legal framework requires businesses to stay updated with the latest regulations and amendments. This includes:

· Regular updates to labor laws.

· Adherence to environmental and safety standards.

· Compliance with anti-corruption laws, which is critical to maintaining business integrity in the Kingdom.

At CIG, we provide ongoing legal and regulatory compliance support, ensuring that your business operates seamlessly within the Saudi framework.

Conclusion

Setting up a business in Saudi Arabia presents a wealth of opportunities, but navigating the legal framework can be challenging without expert guidance. At Capital International Group, we are dedicated to helping businesses successfully establish themselves in the Saudi market by offering tailored support at every stage — from entity selection to legal compliance.

[alwajeeztech]

Business Zakat Calculation in ALZERP Cloud ERP Software

Benefits of Using ALZERP for Zakat Calculation

ZATCA Compliant Software: ALZERP is designed to meet all ZATCA requirements, ensuring that Zakat calculations are accurate and compliant with Saudi tax regulations.

Efficient VAT Management: In addition to Zakat, ALZERP manages VAT reporting and compliance, providing an all-in-one solution for tax management.

Zakat Calculation Software: The built-in Zakat calculator simplifies the complex process of determining Zakat obligations, reducing errors and ensuring timely submissions.

Automated Tax Compliance: The software automates the tax compliance process, from calculation to submission, minimizing manual intervention and the risk of errors.

Zakat and Tax Automation: ALZERP integrates Zakat and tax processes, automating calculations, reporting, and compliance tasks.

Real-Time VAT Reporting KSA: The system offers real-time reporting, allowing businesses to stay up-to-date with their tax liabilities.

Saudi Tax Compliance Software: Tailored specifically for the Saudi market, ALZERP ensures businesses meet all local tax and Zakat obligations.

Tax Optimization Tool: By providing insights into Zakat and tax liabilities, ALZERP helps businesses optimize their financial strategies.

VAT Fraud Detection: The system includes features to detect and prevent VAT fraud, ensuring the integrity of financial transactions.

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Calculate Your Zakat with Penny Appeal Canada

Zakat, one of the Five Pillars of Islam, is a mandatory act of charity designed to purify wealth and assist those in need. For Canadian Muslims, understanding and calculating Zakat can sometimes be complex due to various assets and liabilities. Penny Appeal Canada offers a comprehensive guide and tools to help you accurately calculate your Zakat and ensure it reaches those who need it…

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Zakat and Tax Services in Saudi Arabia

Understanding Zakat in Saudi Arabia

Zakat is one of the Five Pillars of Islam. It is a mandatory charitable contribution. Every Muslim must pay Zakat annually. The amount is typically 2.5% of their savings. In Saudi Arabia, Zakat is regulated by the Zakat, Tax, and Customs Authority (ZATCA).

Taxation in Saudi Arabia

Saudi Arabia has a well-structured tax system. It includes various forms of taxes. These taxes are imposed on businesses and individuals. The main types are Value Added Tax (VAT), corporate tax, and excise tax. The introduction of VAT in 2018 marked a significant change.

Zakat vs. Tax: Key Differences

Zakat is a religious obligation. It is distinct from conventional taxes. Taxes, on the other hand, are government-imposed. Both serve different purposes. Zakat funds are used for social welfare. Tax revenues are utilized for public services and infrastructure.

Importance of Compliance

Compliance with Zakat and tax regulations is crucial. Non-compliance can lead to penalties. Businesses must ensure accurate calculation and timely payment. This ensures smooth operations and avoids legal issues.

Zakat Calculation

Calculating Zakat involves assessing the net wealth. This includes savings, investments, and other assets. The rate is fixed at 2.5%. It is essential to follow the guidelines set by ZATCA.

Tax Calculation

Tax calculation varies. It depends on the type of tax. VAT is a percentage of the sales price. Corporate tax is based on the company’s profit. Accurate record-keeping is vital. It ensures correct tax liability and prevents disputes.

Filing and Payment Process

Both Zakat and taxes require proper filing. ZATCA provides online services for this purpose. Businesses and individuals can file returns electronically. Payments can also be made online. This process is efficient and user-friendly.

Professional Assistance

Many businesses seek professional assistance. This helps in ensuring compliance. Tax advisors and accountants offer valuable services. They assist in accurate calculation, filing, and payment. This reduces the risk of errors and penalties.

Conclusion

Zakat and tax services in Saudi Arabia are well-regulated. Understanding the differences and complying with the regulations is essential. Proper calculation and timely payment are crucial. Professional assistance can be beneficial. This ensures smooth operations and legal compliance.

[yasmmeen]

Understanding Zakat and Income Tax: The Role of Zakat and Tax Consultancy Firms in Ensuring Compliance

Zakat and income tax are two distinct financial obligations that individuals and businesses may encounter, each serving different purposes within society. While zakat is a form of obligatory charity in Islam aimed at wealth redistribution and social welfare, income tax is a mandatory contribution to government revenue used for public services and infrastructure development. In navigating these financial responsibilities, individuals and businesses may seek guidance from zakat and tax consultancy firms to ensure compliance and maximize efficiency. Let's delve into the concepts of zakat and income tax, and the role of consultancy firms in providing expert advice and assistance:

Understanding Zakat and Income Tax:

translated from :الزكاة وضريبة الدخل

Zakat: Zakat is one of the five pillars of Islam and is obligatory for Muslims who meet certain wealth criteria. It involves giving a portion of one's wealth, typically 2.5%, to support the less fortunate and promote social justice. Zakat is calculated based on specific assets, including savings, investments, and business profits, and is distributed to eligible recipients, such as the poor, needy, and those in debt.

Income Tax: Income tax is a financial levy imposed by governments on individuals and businesses based on their income and profits. It is a primary source of government revenue used to fund public services, infrastructure projects, and social welfare programs. Income tax rates and regulations vary by jurisdiction, with taxpayers required to report their income, deductions, and credits accurately to calculate their tax liability.

Role of Zakat and Tax Consultancy Firms:

translated from : مكتب استشارات زكاة وضريبة

Zakat and tax consultancy firms play a crucial role in assisting individuals and businesses in meeting their zakat and tax obligations. Here's how they can help:

Compliance Assistance: Consultancy firms provide expert guidance on zakat and income tax regulations, helping clients understand their obligations and navigate complex tax laws. They ensure compliance with zakat and tax requirements, helping clients avoid penalties and legal consequences for non-compliance.

Zakat Calculation: Zakat consultancy firms assist individuals and businesses in accurately calculating their zakat obligations based on their assets and income. They take into account various factors, such as zakatable assets, exemptions, and deductions, to determine the correct amount of zakat due.

Tax Planning: Tax consultancy firms offer tax planning services to minimize tax liabilities and maximize tax efficiency for individuals and businesses. They analyze clients' financial situations, identify tax-saving opportunities, and develop strategies to optimize their tax positions while remaining compliant with tax laws.

Audit and Review: Consultancy firms conduct audits and reviews of clients' zakat and tax records to ensure accuracy and completeness. They verify the accuracy of financial data, identify any discrepancies or errors, and recommend corrective actions to address any issues identified during the audit process.

Query Handling: Zakat and tax consultancy firms assist clients in handling queries and inquiries from tax authorities or zakat committees. They act as intermediaries between clients and government agencies, providing timely and accurate responses to inquiries and resolving any disputes or issues that may arise.

استعلام عن مستحقات الزكاة والدخل

In conclusion, zakat and income tax are important financial obligations that individuals and businesses must fulfill in accordance with religious and legal requirements. Zakat and tax consultancy firms play a vital role in supporting clients in meeting these obligations, providing expert advice, compliance assistance, and audit services to ensure accuracy, efficiency, and adherence to zakat and tax laws. By partnering with consultancy firms, individuals and businesses can navigate the complexities of zakat and income tax with confidence and peace of mind.