Regulatory Alerts2017-04-10
Accounting for Zakat and Income Tax
The Saudi Arabian Monetary Authority (SAMA) has issued new regulatory guidance requiring all banks, insurance companies, and finance companies to replace domestic accounting standards with IFRS as of January 1, 2017, while establishing a dedicated framework for Zakat and income tax. Since IFRS does not cover Zakat, the directive mandates a standalone compliance annexure to standardize the accounting treatment and financial statement presentation of these obligations across the entire financial sector. Institutions must apply this uniform methodology consistently, utilizing the specified guidance to accurately calculate, account for, and disclose Zakat and income tax liabilities.
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