The General Authority of Zakat and Tax (GAZT) is one of the Zakat and tax collection systems followed in Saudi Arabia that has undergone several changes since the beginning. Established during 1355 AH/ 1936 AD, GAZT is been looked after by the Minister of Finance of Saudi Arabia. As per the rules and tax regulations, the GAZT is responsible for collecting taxes and Zakat besides ensuring that they provide citizens with the best performance. They are liable for collecting taxes in the best manner while the duties are assigned to GAZT members. The basic role played by the members depends on the responsibilities they share such as legal and financial roles without jeopardizing or interfering with responsibilities and power held by other entities.
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Mission and vision of GAZT
GAZT mission is to establish a sustainable economic system and prosperity in the country for the sake of Saudi citizens. This is done by the Authority in the form of outstanding service provided for Zakat and tax collection systems.
The GAZT vision is to establish an excellent model at a global level while managing Zakat and tax collection transparently and adequately. Keeping their clients satisfied is the core intention of the GAZT.
GAZT’s role and responsibilities
- The GAZT is responsible for collecting tax and Zakat from every taxpayer as per rules, laws and state instructions.
- The GAZT is liable to provide high-quality service to their clients and help them fulfil their obligations and compliances.
- The Authority is responsible for the follow-up with taxpayers and help them frequently to ensure tax claims are settled transparently.
- The GAZT are responsible to work to raise awareness among the taxpayers and extend their voluntary participation in Zakat collection. The Authority will also see that every Zakat payer follows compliance and regulations that have been instructed by the state.
- The GAZT have to establish a cooperative experience with their international and national entities, expertise houses or organizations that are located in or outside the country.
In simple words, Zakat can be described as the third pillar of Islam. It is the financial worship that is been done by every Muslim worldwide and follows rules quoted by the holy Quran. The Allah Almighty Mentioned Zakat like a prayer in not less than 80 verses which makes it a strong pillar of Islam and a distinguished way to worship in the Muslim community. Zakat is a manifestation of Islamic legislation supremacy since it represents elements that can fight poverty or alleviate the poor. In short, Zakat is a robust medium to achieve social solidarity in the Muslim community.
How is Zakat collected by the state?
The state is obliged to calculate the Zakat of funds which is subject to Zakat collected by the payers and transfer of the same to the Social Security Agency that is responsible for the disbursement to the social security beneficiaries.
The prophet sends a message every year to every Muslim so that Zakat can be collected timely. This is the time GAZT on behalf of the state collects the same after following certain rules, regulations, laws and systems.
Who are Zakat payers?
Any legal or natural human being who carries activities that are subject to levy of Zakat, whether a company, sole proprietorship or any other carrying a business activity under the licence issued by any competent authority is the Zakat payer. It must be noted that a Zakat payer acquiring a certificate may not be subject to levy of Zakat as per the Authority procedures. The fiscal year for Zakat can be Gregoria or Hijri, long or short, at the start or the end of the activity.
Methods of Zakat Calculation for Business organizations
Zakat for every company in the state is calculated in two ways:
- Direct method or net of Zakat able assets method.
- Indirect method or sources of funds method.
The process followed by the two methods differs from one another in terms of items used during the calculation of Zakat. Though, the result of both of the methods matches in the end which makes them combinedly known as the Zakat base. If applied appropriately, both the results of the method will match.
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Implementing and follow-up of Tax law and Tax Ruling by GAZT
The laws and regulations of Income tax apply to every resident capital companies and their non-Saudi business partners, even though they are not a resident of the country. A written clarification is provided by the GAZT members to the taxpayers according to the state’s tax legislation. The Authority is also liable to accept any Ruling Request which is the formal application by the applicant to get a Ruling on a particular matter after using a pre-determined format. More specifically, the Ruling Request must be sought concerning transactions or actual activities.