Saudi Arabia Sets New Rules To Raise Islamic Tax On Banks

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Saudi Arabia set out new rules to raise Islamic tax on banks that’ll result in them paying between 10% to 20% of net profit.

Saudi General Authority of Zakat and Tax has introduced new regulatory amendments to improve zakat collection, the authority said in a statement released by the government communication office on Friday.

The General Authority of Zakat & Tax set limits for the taxable asset base of between four times and eight times net profit, according to a statement on its website.

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Most of the kingdom’s major banks will end up paying the lower limit, he wrote in a note.

Saudi Arabia was in talks with local banks to increase the tax rate to as high as 20% of net income, Bloomberg News reported this month, citing people with knowledge of the matter.

The tax authority denied it had plans to raise the levy. The current rate is 10% after deducting returns on government bonds.

Major banks in Saudi Arabia reached settlements worth a combined 16.7 billion riyals ($4.5 billion) with the tax authority in December, ending a dispute over accounts stretching back as far as 2002 in some cases.

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Source: Gulf News