Jump in Islamic tax liabilities worries Saudi banks | ZAWYA MENA Edition

Jump in Islamic tax liabilities worries Saudi banks | ZAWYA MENA Edition:

"A jump in retroactive Islamic tax liabilities faced by Saudi Arabian banks is creating concern about damage to their earnings and the government's motives in demanding the money.

While Saudi banks and other firms generally do not pay corporate tax, they are subject to an annual Islamic tax called zakat, a 2.5 percent levy on each bank's net worth. Analysts say the way in which this is assessed can be complex and opaque.

In the last couple of weeks, several major banks have disclosed that the government's General Authority of Zakat and Tax (GAZT) is seeking additional zakat payments from them for years going back as far as 2002. In some cases, the demands exceed half of a bank's annual net profit."



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