/zakat-global

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.
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.

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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 |

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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.

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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)

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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.

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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.

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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