Saudi banks to pay zakat claims over five years: official

Saudi Arabia’s banks have agreed with the General Authority of Zakat and Tax (GAZT) to settle the Zakat claims in installments over five years, Mubarak Al Khafrah, chairman of Alawwal Bank, told Argaam.

“Some banks may have zakat claims of more than SAR 5 billion; a lumpsum payment is not the best option, as it may weigh on the lender’s financial position as well as its book value,” Al Khafrah said, adding that a settlement agreement will be the proper payment choice.

Shareholders’ equity of Alawaal bank were the least affected by the zakat claims dues, since the bank has already set aside zakat provisions since a period of time.

“Provisions are allocated to hedge against any action that may weigh on the bank’s performance, else, they will reflect directly on the entity’s profitability,” he said.

Al Khafrah expressed optimism over the expected zakat payment for 2019, given the fiscal reform program across the Kingdom. “The General Authority of Zakat and Tax (GAZT) is forecast to issue a number of measures over the next few weeks to facilitate the zakat claims payment,” he noted.

Earlier this month, banks listed on Saudi Stock Exchange (Tadawul) have agreed with the General Authority of Zakat and Tax to settle Zakat claims for the previous financial years and until the end of the fiscal year 2017.