GAZT will postpone the implementation of Circular on requirements by listed companies to pay Zakat and Tax based on shareholders nationalities.
On 4 December 2016, the General Authority for Zakat and Tax (GAZT) issued Circular No. 6768/16/1438 which requires Saudi companies listed on Tadawul to calculate tax and zakat based on the nationality of shareholders at year end. The Circular applies to the year ended 31 December 2016 and future years.
Due to uncertainties surrounding the mechanics for implementing the Circular, GAZT issued Letter No. 12097/16/1438 dated 19/4/1438H (Corresponding to 17/1/2017) which postpone the implementation of the Circular to the financial year ending 31 December 2017 and future years. The GAZT will also issue guidelines regarding the mechanics and the procedures for implementing the Circular.
Based on the above, listed companies on Tadawul will prepare their zakat and tax declarations for the year ended 31 December 2016 similar to previous years. Companies which already prepared their financial statements based on the Circular should consult with their auditors to determine the impact of postponing the Circular on the zakat and tax provisions calculated based on the Circular.
KPMG will continue to follow up with the GAZT on any developments and will communicate to you any guidelines or procedures issued by the GAZT in this regard.
For additional details with respect to this Alert, please contact the following:
Head of Tax
T: +966 11 874 8579
Head of International Tax, Jeddah Office
T: +966 12 698 9595
Tareq Al Sunaid
Tax, Khobar Office
T: +966 13 887 7241