Zakat and Tax Services
HHAB helps entities manage their zakat and tax obligations by linking returns to the accounting records, the financial statements, and the supporting documents, analysing the treatments that affect them, and preparing clear files that can be referred to during an examination or a request for information. The services cover the preparation of zakat returns and income tax, withholding tax, and VAT returns, refund applications, objections before the Zakat, Tax and Customs Authority, Real Estate Transaction Tax compliance support on the sale of real estate or the transfer of its ownership, and zakat and tax planning services for non-audit clients.
When Does an Entity Need Specialized Support?
The service may be appropriate where one or more of the following situations exist:
- Differences between the returns and the financial statements or the general ledger.
- Repeated amendments to returns after filing.
- Accumulated VAT credit balances.
- Unusual transactions or contracts with non-resident parties.
- Inconsistencies in the classification of supplies or in the deductibility of input tax.
- An assessment or reassessment that does not agree with the entity's records.
- Penalties whose causes and supporting documents need to be studied.
- A request for information or an examination from the Zakat, Tax and Customs Authority.
- A transaction or restructuring whose impact needs to be assessed before execution.
- A real estate transaction that needs, before completion, an assessment of whether it is subject to the Real Estate Transaction Tax or qualifies for an exemption.
- Weakness in the file supporting the computations submitted in the return.
From Returns to Objections and Planning
The services cover the obligations imposed in Saudi Arabia that apply to the entity, from zakat, income tax, and withholding tax to VAT, the Real Estate Transaction Tax, and excise tax. Treatments are based on the laws and regulations in force, including the Implementing Regulation for Zakat Collection, the Income Tax Law, the VAT Law, and the Real Estate Transaction Tax Law, and the final scope and deliverables are defined in the engagement letter.
Annual returns are prepared from the financial statements and the accounting records, with the zakat and tax adjustments analysed and linked to the relevant documents. Depending on the engagement scope, the service includes:
- Analysis of the ownership structure and determination of the applicable zakat and tax treatment.
- Reconciliation of the return data with the financial statements and the trial balance.
- Analysis of additions, deductions, and adjustments to the results of the activity.
- Preparation of the computations and supporting schedules.
- Review of the disclosures and the transfer pricing form, where applicable.
- Completion of the return and its preparation for review and approval.
- Filing of the return through the Authority's portal under an authorization from the taxpayer.
- Preparation of a file of the documents and computations supporting the return.
Payments to non-resident parties are analysed, the appropriate tax treatment is determined, and the related monthly and annual returns are prepared. The service may include:
- Identification of the payments and contracts with non-residents.
- Classification of the nature of each payment.
- Study of the treatment under the Income Tax Law and the relevant tax treaties.
- Reconciliation of the return with the accounts and bank transfers.
- Preparation of the returns and supporting schedules.
- Follow-up on payment, amendment, or information request cases.
The return is not treated as a form separate from the accounting system; the work begins by reconciling sales, purchases, invoices, and credit and debit notes with the accounts and the prior returns. The service includes:
- Reconciliation of sales with the general ledger and e-invoicing data.
- Examination of the classification of supplies and the tax rates applied.
- Analysis of input tax and its deductibility.
- Review of adjustments and credit and debit notes.
- Analysis of differences from prior returns.
- Preparation of the return and making it ready for approval and filing.
- Preparation of a computation file and supporting documents for each tax period.
The credit balance and the reasons it arose are assessed before the refund application is filed, and a file is then prepared that explains the source of the balance and links it to the invoices, records, and returns. The service includes:
- A preliminary assessment of the amount's eligibility for refund.
- Reconciliation of the claimed balance with the returns and the tax account.
- Analysis of the invoices and documents supporting input tax.
- Examination of the adjustments and the periods over which the balance accumulated.
- Preparation of the refund schedules and attachments.
- Filing of the application under an authorization from the taxpayer.
- Follow-up on information requests and technical responses until the Authority's decision is issued.
The Authority's decision, the basis of computation, and the disputed items are reviewed for any of the zakat or tax obligations, including VAT, withholding tax, the Real Estate Transaction Tax, and excise tax, and an objection is then built that links each claim to the relevant facts, documents, computations, and provisions. The service includes:
- Study of the assessment, reassessment, or penalty decision.
- Identification of the items open to objection and the value of each item.
- Review of the time limits and formal requirements for filing.
- Preparation of the technical objection memorandum.
- Preparation of the supporting computations, schedules, and documents.
- Filing of the objection with the Zakat, Tax and Customs Authority under an electronic authorization.
- Responding to information requests and discussing the technical aspects with the Authority.
- Analysis of the objection outcome and identification of the options available after the decision is issued.
This service is provided to non-audit clients so that the zakat and tax impact of a decision is understood before it is executed, not after the obligation has arisen. It may include:
- Analysis of the impact of ownership and financing structures.
- Study of the zakat and tax impact of material contracts and transactions.
- Assessment, before execution, of whether a planned real estate transaction is subject to the Real Estate Transaction Tax or qualifies for an exemption.
- Evaluation of dividend distribution or restructuring options.
- Analysis of related party transactions.
- Study of the impact of expansion or of establishing a new entity or branch.
- Preparation of alternative financial, zakat, and tax scenarios.
- Identification of the documentation and disclosure requirements before the transaction is executed.
From the Return to a Traceable File
A single disciplined path through which returns, applications, and objections of every type pass.
Defining the Engagement Scope
The type of return or the decision under objection, the periods covered, the entities, the statutory deadlines, and the required deliverables are defined.
Data Collection and Completeness Checks
The financial statements, trial balance, general ledgers, prior returns, contracts, invoices, and relevant documents are requested.
Performing the Reconciliations
Figures are tied between the accounting system, the financial statements, the returns, e-invoicing, and the tax account, and differences are identified before the result is prepared.
Analysing the Treatment
The accounting, zakat, and tax treatment of each material item is studied, and the basis used, the assumptions, and the matters requiring a management decision are documented.
Preparing and Reviewing the Deliverable
The return, application, or objection memorandum and the supporting schedules are prepared, then reviewed before being presented to management for approval.
Filing and Retaining the File
Filing is performed under an authorization from the taxpayer, with a copy of the return, computations, documents, and correspondence retained in an organized file.
An Objection Before the Authority Differs From Litigation Before the Committees
HHAB can study the decision, prepare the technical objection, file it with the Authority under an electronic authorization, and follow up on the related information requests and responses.
If the dispute moves to the Tax Violations and Disputes Resolution Committees or the Appellate Committees at the General Secretariat of Zakat, Tax and Customs Committees, representation and pleading are governed by the Code of Law Practice and the Operating Rules of the Zakat, Tax and Customs Committees. At that stage, HHAB acts as a technical accounting advisor to the taxpayer and the taxpayer's counsel through:
- Analysing the items and amounts in dispute.
- Preparing the technical computations and schedules.
- Organizing the accounting evidence and documents.
- Reviewing the arguments relating to the treatments and the financial facts.
- Helping counsel understand the accounting, zakat, and tax implications of the matter.
Services to Audit Clients Are Subject to Professional Restrictions Under the Requirements of the Saudi Organization for Chartered and Professional Accountants
Any zakat or tax service provided to a client whose financial statements HHAB audits is subject to a prior independence assessment, and to the list of permitted services under the circulars issued by the Saudi Organization for Chartered and Professional Accountants.
Preparation of zakat returns is among the services permitted for an audit client under the requirements of the Saudi Organization for Chartered and Professional Accountants, provided that the preparation is based on information and treatments approved by management, and that management remains responsible for the return, the computations, and all related decisions.
HHAB does not provide an audit client with zakat and tax planning services, does not determine the computation method or the accounting recording, and does not assist the audit client in discussing those treatments with the Authority or with litigation bodies.
Where the professional and regulatory requirements are met, an independent assurance engagement relating to the zakat, income tax, or withholding tax returns falling within the white list of permitted services may also be accepted.
The permissible scope is defined for each client before the engagement is accepted, and the presentation of any service on this page does not mean that it is automatically available to an audit client.
Potential Deliverables of the Engagement
Depending on the nature of the engagement, deliverables may include the following:
A zakat or tax return ready for approval and filing
A VAT return with the reconciliations file
A monthly or annual withholding tax return
A detailed computation of the zakat base or the tax liability
A register of significant adjustments and treatments
A file of the return's supporting documents and the sources of the figures
A VAT refund application with its attachments
A technical objection memorandum and schedules of the disputed items
A report on open matters, risks, and missing documents
A zakat or tax planning memorandum for a future transaction
A memorandum assessing whether a real estate transaction is subject to, or exempt from, the Real Estate Transaction Tax
A register of correspondence, information requests, and responses submitted
Work That Starts From the Records and Ends With a Reviewable File
A Licensed Saudi Professional Firm
HHAB is a Saudi professional firm licensed by the Saudi Organization for Chartered and Professional Accountants, providing its services under the relevant laws and professional standards.
Work That Starts From the Records
Returns and objections are tied to the financial statements, the general ledger, contracts, and invoices, rather than merely completing forms.
A Clear Separation Between Facts and Judgment
Deliverables make clear what rests on a statutory provision or a document, what depends on professional interpretation, and what requires a decision or disclosure from management.
Frequently Asked Questions on Zakat and Tax Services
Does HHAB guarantee that there will be no differences or penalties?
No. The procedures performed help raise the quality of the return and its supporting file, but examination, assessment, and refund decisions are issued by the Zakat, Tax and Customs Authority.
Can HHAB file the objection with the Authority?
Yes. The technical objection can be prepared, filed, and followed up with the Authority under an electronic authorization from the taxpayer.
Does HHAB represent the client before the zakat and tax committees?
No. Representation and pleading before the resolution and appellate committees are governed by the Code of Law Practice and the rules governing the committees' work. The client and the client's counsel can be supported on the technical and accounting aspects, the computations, and the documents.
Can HHAB prepare the return for a client it audits?
Yes. Preparation of zakat returns is among the services permitted for an audit client under the requirements of the Saudi Organization for Chartered and Professional Accountants, provided management remains responsible for the information provided and for approving the return. Zakat and tax planning and the determination of treatments are not provided to audit clients, and the permissible scope for each client is defined after the independence assessment.
Does filing a refund application guarantee acceptance of the amount?
No. The balance's eligibility is assessed, the application and documents are prepared, and the Authority's requests are followed up, but acceptance of the refund and its amount are subject to the Authority's examination and final decision.
Do the services cover the Real Estate Transaction Tax and excise tax?
Yes. The engagement scope may cover the taxes imposed in Saudi Arabia that apply to the entity, including assessing, before completion, whether a real estate transaction is subject to the Real Estate Transaction Tax or qualifies for an exemption, and excise tax compliance support for the goods subject to it, in addition to zakat, income tax, withholding tax, and VAT. The scope is determined by the nature of the entity's activity and transactions.
What information is required to start the work?
It varies by service, but it typically includes the financial statements, the trial balance, the general ledger, prior returns, the tax account, contracts, invoices, correspondence, and the relevant Authority decisions.
How are the timeline and fees determined?
The timeline and fees are determined by the number of periods and returns, the volume of data, the quality of the records, the number of items under study, the proximity of the statutory deadline, and the volume of documents and correspondence required.
Note: This content is general information and does not constitute zakat, tax, or legal advice on any specific matter. Treatment varies with the nature of the entity, its ownership, its transactions, the financial period, and the laws, regulations, and decisions in force, and the scope of each engagement is defined after the relevant information is studied. The entity's management remains responsible for the completeness and accuracy of the information, the approval of returns and computations, the making of decisions, and the payment of obligations on time. HHAB does not provide legal services or representation before judicial bodies, and does not guarantee acceptance of a return, an objection, or a refund application, or the achievement of a specific outcome. Acceptance of all engagements is subject to assessment of independence, conflicts of interest, and professional and regulatory requirements.