The concept of zakat, or the giving of alms, predates Islam, but it was the early Muslims who organized the process of collecting and distributing charitable funds. Zakat is now one of the Five Pillars of Islam, and a religious duty for all Muslims with sufficient assets. The Arabic word zakat means “that which purifies,” in the sense that the payment of zakat purifies the larger sum of money from which it has been deducted. Scholars define zakat as a payment that God requires of Muslims for the poor, and those in need. Traditionally, the funds were also distributed to recent converts to Islam, debtors, travelers who had run out of money, and the heads of tribes and those with influence in society, with the aim of encouraging peace and harmony among them. Zakat is usually levied annually at a rate of 2.5 percent, or one fortieth, of a person’s income and assets above a minimum amount that is exempt. The concept of zakat assumes particular importance in Saudi Arabia because the Kingdom is one of the few countries in which payment is compulsory for the owners and shareholders of commercial companies and businesses, and is therefore regulated by law. Company zakat is payable by Saudi nationals, and by GCC citizens regarded as Saudi for tax purposes. They are required to keep books that show capital, receipts and expenditure relevant to their activity for each year, certified by commercial courts or a notary public, to be used to assess their zakat. The beginning of the year for zakat purposes is the date of issuance of the commercial register, the issuance of the first permit to the business, or the date of depositing the capital, whichever is first. The financial declaration must be submitted no later than 120 days from the end of the zakat year, and must be in Arabic. If the commercial documentation relating to the company’s activity is not available for any reason, the General Authority of Zakat and Tax will estimate the amount payable. Any objection to the authority’s decision should be submitted within 60 days, and the authority is obliged to consider the complaint within 90 days. If the issue remains unresolved, the taxpayer may have it referred to the internal committee. Even that committee’s decision may be challenged at the tax dispute resolutions committee, and there are further avenues of complaint open to taxpayers who remain dissatisfied. It is important for every business owner to be aware of the procedures for calculating and collecting zakat. Entrepreneurs in particular should educate themselves about these laws, which will make it easier for them to advance their new companies. That was perhaps more difficult in the past, when the laws and regulations were not as detailed and clear as they are now, with efficient mechanisms for collecting zakat and dealing with any disputes — a matter of particular importance because disputes related to zakat and taxes are among the most common in the country. Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif