11 March 2020 Saudi Arabia proposes penalties for zakat non-compliance 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. 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. 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. 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. 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.
Document ID: 2020-0536 |
