| name | zakat-global |
| description | Activate for: zakat, zakatable assets, nisab, zakat calculation, institutional zakat, ZATCA zakat, zakat and ushr, sadaqah, non-Shariah income purification, charity payable Islamic, zakat on bank accounts, zakat disclosure, zakat journal entry.
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| metadata | {"version":"1.0","author":"Panaversity — The AI Agent Factory","standard":"AAOIFI FAS 9 (Zakah), ZATCA Regulations (KSA)"} |
THE GLOBAL ZAKAT LANDSCAPE
Zakat is the obligatory Islamic alms payment — 2.5% of qualifying wealth above the nisab threshold,
calculated on a lunar year basis (354 days). Its treatment for Islamic financial institutions
varies significantly by jurisdiction.
JURISDICTION SUMMARY TABLE
| Jurisdiction | Mandatory? | Formula | Rate | Payer | Filing |
|---|
| Saudi Arabia | Mandatory (ZATCA) | ZATCA equity-based formula | 2.5% p.a. | IFI pays to ZATCA | Annual ZATCA return |
| Pakistan | Mandatory (deduction at source) | Deduction on savings accounts | 2.5% on qualifying accounts | Bank deducts as agent | 1st Ramadan each year |
| Bahrain | Voluntary (institutional) | AAOIFI GS9 / Hanafi | 2.5% p.a. | IFI may pay on behalf of shareholders | Annual disclosure |
| Malaysia | Voluntary | AAOIFI GS9 / Hanafi or Shafi'i | 2.5% p.a. | IFI voluntary; disclose | Annual disclosure |
| UAE | Voluntary | AAOIFI GS9 | 2.5% p.a. | IFI voluntary; disclose | Annual disclosure |
| UK | Not applicable | N/A | N/A | Individual obligation only | N/A |
| Nigeria | Voluntary | AAOIFI GS9 | 2.5% p.a. | Voluntary | Annual disclosure |
THE NISAB THRESHOLD
The nisab is the minimum wealth threshold above which zakat becomes obligatory.
Two measures, take the lower (traditionally silver nisab is used for financial assets):
Gold nisab: Equivalent of 87.48 grams of gold (at current gold price)
Silver nisab: Equivalent of 612.36 grams of silver (at current silver price)
Check the current gold/silver price to calculate the nisab in local currency.
For Islamic banks with large balance sheets: the nisab is almost always exceeded.
Still check and document the check annually.
Lunar year minimum balance rule:
Zakat is payable on the MINIMUM BALANCE of zakatable wealth
maintained continuously throughout the lunar year — not the year-end balance.
If wealth fell below nisab at any point during the year, recalculate from that point.
FORMULA 1: HANAFI / AAOIFI GS9 (MOST JURISDICTIONS)
Step 1 — Identify zakatable assets:
ZAKATABLE (trade wealth and liquid assets):
- Cash and near-cash
- Trade receivables (murabaha receivables, DM receivables net of provisions)
- Inventory / commodities held for trade
- Short-term investments and sukuk classified as trading / short-term
- Mudaraba and musharaka investments intended for profit
- Salam receivables
NOT ZAKATABLE (productive fixed assets / long-term investments):
- Fixed assets (property, plant, equipment used in operations)
- Ijarah assets on IFI's books (productive, not trade goods)
- Long-term strategic investments
- Goodwill and intangibles
Step 2 — Identify current liabilities due within the lunar year:
- Payables to suppliers
- Short-term borrowings
- Dividends payable
- Tax payable
Step 3 — Calculate Zakat Base:
Zakat Base = Zakatable Assets - Current Liabilities
Step 4 — Apply nisab check and calculate zakat:
If Zakat Base > Nisab: Zakat = Zakat Base x 2.5%
If Zakat Base <= Nisab: No zakat payable (unlikely for a bank)
FORMULA 2: ZATCA (SAUDI ARABIA)
Saudi Arabia's Zakat, Tax and Customs Authority uses a different formula:
Zakat Base = Share Capital + Retained Earnings + Statutory Reserves + Other Reserves
- Fixed Assets - Long-term Investments - Unamortised Expenses
This is an EQUITY-BASED formula — it starts from equity, not from liquid assets.
Apply the Saudi jurisdiction overlay for ZATCA-specific line-item mapping.
Note: For Saudi IFIs, ZATCA zakat REPLACES income tax for Saudi-owned companies.
Foreign-owned portions of the bank pay income tax; Saudi-owned portions pay zakat.
Ensure correct proportional calculation if the bank has mixed Saudi/foreign ownership.
FORMULA 3: PAKISTAN — ZAKAT AND USHR ORDINANCE 1980
Pakistan's Zakat and Ushr Ordinance requires banks to DEDUCT ZAKAT AT SOURCE:
From which accounts: Savings accounts, Profit and Loss Sharing (PLS) accounts,
and other qualifying deposit accounts.
When: On the first day of Ramadan each lunar year.
Rate: 2.5% of the account balance on that date (if balance >= nisab threshold).
Exemptions: Account holders may claim exemption by submitting a declaration form.
The bank's role: The bank is an AGENT (wakeel) for the Central Zakat Administration.
The bank deducts zakat from each qualifying account and remits it to the Zakat Fund.
Journal entry in bank's books:
On deduction date:
Dr: Depositor's Account [Zakat amount]
Cr: Zakat Payable — Central Zakat Administration [Zakat amount]
On remittance to Zakat Fund:
Dr: Zakat Payable — Central Zakat Administration [Zakat amount]
Cr: Cash / Remittance Account [Zakat amount]
Note: This is NOT the IFI's own zakat — it is a DEDUCTION ON BEHALF OF depositors.
Do not recognise as the IFI's expense. Merely a pass-through.
NON-SHARIAH INCOME PURIFICATION (ALL JURISDICTIONS)
When an IFI receives income from non-Shariah-compliant sources:
Examples: penalty charges that cannot be retained, inadvertent interest income,
conventional bank income during conversion, dividend from a company with >5% non-halal income.
This income CANNOT be retained by the IFI.
It must be donated to charity (sadaqah) — it is not a deductible expense for zakat purposes.
Journal entry:
Dr: Non-Shariah Income Received [Amount]
Cr: Charity Payable — Purification [Amount]
On payment to charity:
Dr: Charity Payable — Purification [Amount]
Cr: Cash [Amount]
In the income statement: Show as a separate line "Purification / Charity Donation"
NOT as operating income of the IFI.
In AAOIFI disclosures: Mandatory disclosure of non-Shariah income amount and
the charity to which it was donated, confirmed by SSB review.
MANDATORY DISCLOSURES
- Whether zakat is paid by the institution or is the individual obligation of shareholders
- The calculation basis adopted (ZATCA / Hanafi / Shafi'i / other) — per SSB fatwa
- Zakat base amount
- Zakat paid (or accrued if not yet paid)
- Non-Shariah income received and purification amount donated
- Charity / sadaqah paid — recipient and amount
For ZATCA (Saudi Arabia): zakat return filing reference number.
For Pakistan: aggregate zakat deducted from depositors and remitted.
