Provisions in the Zakat base
In one sentenceHow provisions are treated when calculating Zakat: those created during the year are added back to net profit, and the remaining balance is added to the financing sources under ZATCA's rules.
Simply put
A provision is an accounting estimate, not a confirmed obligation, so it is not accepted as a Zakat expense when created, and is added back to profit when adjusted.
Its unused balance remains money held by the business, so it is added to the financing sources according to ZATCA's rules.
Worked example
A simplified example: a company's end-of-service provision is 80,000 SAR at the start of the year, 20,000 SAR of it was used during the year, and its year is Hijri.
Balance at the start of the year80,000 SAR
Used during the year20,000 SAR
Added to financing sources80,000 − 20,000 = 60,000 SAR
Effect on Zakat60,000 × 2.5%
Increase in Zakat due to the provision1,500 SAR
Don't confuse it with
Zakat provisionThe Zakat provision is the estimated Zakat itself, while here we are talking about how other provisions are treated inside the base.