Equity in the Zakat base
In one sentenceThe equity items added to the financing sources in the Zakat base, such as capital, reserves, retained earnings and the year's net profit.
Simply put
Equity is usually the largest part of the financing sources in the base, so take its balances accurately from the statement of financial position.
Its balances are added as the regulations specify, and the year's net profit is added after adjusting it for items the Zakat rules do not accept.
Worked example
A company has capital of 500,000 SAR, reserves of 50,000 SAR, retained earnings of 150,000 SAR, and adjusted net profit for the year of 100,000 SAR.
Capital500,000 SAR
Reserves50,000 SAR
Retained earnings150,000 SAR
Adjusted net profit for the year100,000 SAR
Total500,000 + 50,000 + 150,000 + 100,000
Equity added to the base800,000 SAR
Don't confuse it with
EquityEquity in the statements is an accounting figure, while in the base some of its items are adjusted before being added.