Zakat
In one sentenceA financial obligation of 2.5% per Hijri year due on wealth that has reached the nisab and been held for a full hawl; ZATCA collects it from Saudi and GCC businesses.
Simply put
For individuals: you count your cash, gold, silver and trade goods after a full hawl has passed, and if they reach the nisab you pay 2.5% of them.
For businesses: it is calculated on the Zakat base derived from the financial statements, and an annual return is filed with the Zakat, Tax and Customs Authority (ZATCA). The rate is 2.57768% if the financial year is Gregorian.
Worked example
An individual has cash savings of 70,000 SAR held for a full Hijri year, above the nisab.
Zakatable wealth70,000 SAR
Rate for a Hijri year2.5%
Calculation70,000 × 2.5%
Zakat due1,750 SAR
Formula: Zakat = Zakatable wealth × 2.5% (or × 2.57768% for a Gregorian year)
Don't confuse it with
Income taxZakat applies to the shares of Saudi and GCC owners and is calculated on the Zakat base; income tax applies to the shares of other owners and is calculated on profit.