In 2025, zakat compliance has become a central focus for business owners, professionals, and investors across the Kingdom and beyond. As the Zakat, Tax and Customs Authority (ZATCA) continues to digitize and enforce compliance with greater precision, failing to calculate your zakat correctly can expose you to significant penalties, delays, and reputational risks.
This article highlights three of the most common zakat calculation mistakes individuals and entities are still making in 2025—and provides actionable, compliant solutions. Whether you're handling your zakat manually or via ERP systems, these insights will help you stay accurate, confident, and legally secure.
Why Getting Zakat Right in 2025 Is More Important Than Ever
ZATCA audits are now automated, faster, and more thorough than ever. Businesses are being held to a higher standard, and ignorance is no longer an excuse. Mistakes in zakat working papers can result in:
- Costly fines and penalties
- Delayed government approvals or licensing
- Missed zakat credits and deductions
- Loss of investor and public trust
Your zakat record is a statement about your reputation as well as a financial commitment. Would you be able to defend your stats today?
Mistake #1 Deducting All Liabilities—Even the Long-Term Ones
Many taxpayers incorrectly assume that all liabilities reduce the zakat base. This is not true. According to ZATCA's regulations, only short-term liabilities—those due within 12 months—are zakat-deductible.
What You Can Deduct
- Accounts payable
- Accrued salaries and bonuses
- Utilities payable
- Outstanding invoices
- Unearned revenues (short-term)
What You Must NOT Deduct
- Long-term loans (beyond 12 months)
- Deferred tax liabilities
- Pension provisions
- Lease liabilities with maturity > 1 year
- Long-term bonds and sukuk
Tip: Go through your balance sheet and classify all liabilities according to maturity. Use your ERP filters or audit tags to segment them correctly. If in doubt, consult the ZATCA Zakat Guidelines for Financial Statements.
Mistake #2 The Zakat Base's Inclusion of Non-Productive Assets
Zakat is only due on productive wealth—assets that are actively generating income, revenue, or trade value. Many companies still include non-operating or idle assets, which inflates their zakat base and results in overpayment or incorrect classification.
Common Non-Productive Assets to Exclude
- Vacant land held for future use (unless intended for trade)
- Construction in progress (CIP)
- Spare parts or maintenance stock not meant for resale
- Non-current investments (unless held for sale)
- Machinery under decommissioning
Ask this: Is this asset actively used in daily operations or for profit generation? If not, it likely doesn’t qualify for zakat.
Checklist Available: Download our Zakat Productive Asset Audit Checklist
Mistake #3 Using Book Values Instead of Market or Net Realizable Values
Valuing assets at their historical or book values instead of their present fair market value (FMV) or net realizable value (NRV) is one of the most frequently ignored compliance gaps. Zakat is a dynamic obligation—it must reflect the present-day value of zakatable assets.
Correct Valuation Methodology
- Inventory: Use Net Realizable Value (NRV) after deducting expected discounts, returns, and deterioration
- Accounts Receivable: Deduct provision for doubtful debts
- Public investments and listed stocks: Use market value on zakat valuation date
- Private investments: Apply fair value through appraisal or recent transaction benchmarks
- Review Required: Update your valuation methods annually and align ERP data fields accordingly. Consider integrating your financial systems with valuation APIs or external auditors for annual zakat cycles.
Pro Tip Automate Zakat Compliance to Eliminate Risk
Manual spreadsheets and ad hoc calculations are responsible for most zakat errors. Instead, adopt automation solutions designed to streamline compliance.
Top Zakat Automation Tools in 2025
- Oracle Fusion Cloud – Zakat Module
- SAP Business One with Zakat API
- Zoho Books with Zakat custom fields
- Finance Spire Zakat Workbook (Free & Excel-based)
Automation ensures
- Consistent classifications
- Real-time market valuation
- Audit-ready documentation
- Instant generation of zakat forms
Tip: To prevent surprises at the end of the year, run quarterly zakat simulations.
Try This Use ZATCA’s Official Zakaty Calculator
To verify your zakat figures or cross-check estimations, use the ZAKATY platform—ZATCA’s official calculator and payment gateway.
👉 Website: zakaty.gov.sa
What You Can Do on Zakaty
- Calculate the zakat on real estate, gold, silver, cash, and stocks.
- View real-time Nisab rates
- Submit payments securely
- Access zakat history and receipts
- Compliant, easy, and backed by ZATCA.
Bonus Downloadable Tools to Stay Compliant
Managing zakat properly involves more than just math. We’ve compiled practical tools to help you implement what you’ve just read.
Free Downloads
✔️ Zakat Working Paper Template (Excel)
✔️ Liability Classification Cheat Sheet
✔️ Asset Classification Matrix
✔️ Zakat Revaluation Worksheet
✔️ ZATCA Filing Calendar (2025)
Share Your Zakat Challenges
We would want to speak with experts who are negotiating zakat in real time:
- What part of the calculation process is confusing you the most?
- Which tools have helped streamline your process?
- Have you had an audit experience with ZATCA? What lessons did you learn?
Participate in our weekly Q&A sessions on LinkedIn Live or post a comment below.
Final Zakat Compliance Checklist for 2025
Before submitting your zakat return, confirm the following:
✅ Short-term and long-term liabilities are properly segregated
✅ Non-productive assets are excluded from zakat base
✅ All assets are valued at current market or NRV
✅ Tools like Zakaty and automation software are used
✅ Backup of working files is ready for audit
Remember: Zakat is not just a legal obligation. It’s an ethical commitment. Let’s get it right.
Tags
Tax & Zakat