The GAZT or General Authority for Zakat and Income Tax (formerly the Department of Zakat and Income Tax), is one of the former Saudi government agencies that was organizationally linked to the Ministry of Finance. Currently, the General Authority for Zakat and Income Tax is a government agency responsible for the assessment and collection of Zakat and taxes including VAT in Saudi Arabia. On May 4, 2021, the Saudi Council of Ministers issued a decision merging the authority with the General Authority of Customs under the name of the Zakat, Tax and Customs Authority.
GAZT: Learn About Saudi’s Zakat and Income Tax
The General Authority of Zakat and Tax went through different stages and names, as it was established in the year 1355 AH corresponding to 1936 AD under the name of the Zakat and Income Bureau, after that it was decided to establish the “Zakat and Income Authority in the year 1370 AH, to finally settle under the name of the General Authority for Zakat and Income after the issuance of Royal Decree No. (A/133 ).
In accordance with its organization, the authority focuses on carrying out the work of levying zakat and tax collection and achieving the highest levels of commitment by those charged with the duties imposed on them.
The authority will be in accordance with best practices and with high efficiency, in addition to the legally established competencies and without prejudice to the competencies and responsibilities of other authorities, do everything necessary in order to achieve our goals.
Enable the sustainability of the economy and the prosperity of society for the sake of the Saudi citizen by developing zakat and tax systems to provide exceptional services.
For the authority to be a global model of excellence for managing zakat and taxes effectively, transparently and focusing on the customer.
The role of GAZT
The Authority aims to carry out the work of levying zakat and tax collection and achieving the highest levels of commitment by those charged with the duties imposed on them in accordance with best practices and with high efficiency. It includes:
- Collecting zakat and collecting taxes from taxpayers in accordance with the relevant laws, regulations, and guidelines.
- Providing high quality services to taxpayers, to assist them in complying with and fulfilling their duties.
- Follow up on taxpayers and take the necessary measures to ensure the collection and collection of dues.
- Work to spread awareness among taxpayers and strengthen the degree of their voluntary commitment, and ensure their compliance with the instructions and controls issued by the authority in its field of competence.
- Cooperating and exchanging the needful with regional and international bodies and organizations, and specialized expertise houses within and out of the Kingdom, in accordance to the limits of the authority’s competencies.
- Representing the Kingdom in regional and international organizations, bodies, forums and conferences related to the authority’s competencies.
History of the first zakat tax
If you’re wondering who introduced the first ever zakat tax, then it was Firoz Shah Tughlaq.
He was the cousin brother of Muhammad Bin Tughlaq, and became the ruler of Delhi on 23rd march 1351 A.D.
Firoz Shah who first imposed zakat tax, imposed only four taxes sanctioned by Islamic viz. The first being kharaj (land tax), the second being khams (1/5 of the looted property during wars), the third being Jizya (religious tax on the Hindus), and lastly Zakat (which meant 2½per cent of the income of the Muslims which was spent for the welfare of Muslim subjects and their religion). The Indian ruler imposed an irrigation tax after getting it sanctioned from the Ulema.
GAZT deposits the Zakat sums it collects on a regular basis in a special account with the Saudi Arabian Monetary Authority, or Saudi Central Bank, where the Social Security Agency at the Ministry of Labor and Social Development is responsible for disbursing it to the Zakat beneficiaries registered with the Social Security. It also deposits the taxes it collects in the state’s general revenue account with the Monetary Authority to contribute, with other revenues, to covering public expenditures in return for the many services provided by the Saudi government to citizens and residents.
The services charter between the GAZT authority and the taxpayers
The charter between the General Authority of Zakat and Tax and the taxpayers is a way to deliver information and services to build a strong and continuous partnership between the two parties. This charter defines the obligations of the concerned parties.
Obligations towards the taxpayers
- That all dealings with taxpayers be clear.
- The response in all services shall be in a timely manner, and suggestions and complaints shall be considered in accordance with the agreed service standards levels.
- Maintaining confidentiality of information and not using it illegally.
- Fairness in dealing with all taxpayers and dealing with all transactions as required by the bylaws and regulations.
- That the information is available and that the status of taxpayers is taken into account and the degree of voluntary commitment is raised by clarifying procedures and publishing developments related to zakat and taxes.
- Commitment to professionalism and assuring those in charge of their entitlement to authorize an accountant or consulting office accredited by the Authority to carry out a specific service on their behalf through the Authority’s high-quality digital channels.
Responsibilities of the taxpayers towards the GAZT authority
- Making zakat and tax obligations and procedures a priority and importance, and recording zakat and taxes according to the laws and regulations.
- Investigate accuracy in keeping documents and records regarding zakat and tax transactions, and update registration information in case of changes.
- Cooperating with representatives of the authority through all activities related to zakat and taxes and working to conduct the required field examinations as well as monitoring and reporting cases of evasion of zakat and tax.
- To be aware of all agreements, rules, regulations, instructions and guides related to zakat and taxes that have been published on the authority’s website.
- Obligation to submit zakat and tax returns and pay dues according to the specified date, according to the rules and regulations.
The state bears zakat and income tax
Based on Cabinet Resolution No. (163) dated 19/3/1440 AH, which stipulates that the state bears zakat and income tax resulting from investing in government instruments, which includes authorizing the Minister of Finance to determine the controls for this tolerance. The decision states the following:
First: The state shall bear the zakat and income tax resulting from the investment in the sukuk issued locally by the Ministry of Finance in Saudi riyals.
Second: This tolerance is formed subject to the following controls:
The sukuk or bonds are presented by the holder within the statutory period and in accordance with the procedures of the General Authority of Zakat and Income, according to which the amount due to the authority is paid.
To be the holder of sukuk or bonds who are being held accountable in accordance with his own financial statements and in accordance with the procedures of the Authority.
The holder of sukuk and bonds should not be one of the entities subject to amnesty from zakat and income tax.
The state shall not bear an amount greater than what the taxpayer paid to the authority.
Third: The amount incurred by the state for zakat on sukuk and bonds is calculated by calculating two containers for the taxpayer, provided that it is deducted from the sukuk and bonds from one of them, and not deducted from the other. Possible exceptions to this:
That the base reaches the minimum level, whether or not the investment in government sukuk is deducted from the base.
The pool must have reached the minimum level when deducting the investment in sukuk and bonds, and not reaching it when not deducting it.
Pricing includes commercial transactions that take place between related persons for the purposes of calculating the tax base and collecting the dues of the countries in which each of the parties to the transactions resides fairly and equitably.
GAZT stipulates that these transactions include those related to services, goods, loans and intangible assets (intellectual property).