Saudi Arabia Sets New Rules To Raise Islamic Tax On Banks

Islamic tax law

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