The General Authority for Zakat and Tax (ZATCA) has issued guidelines on the zakat treatment of transactions with related parties for the purposes of calculating the zakat base and zakat. This guide is intended to provide taxpayers with clarifications on the treatment of these transactions for zakat purposes.

Key Points- 
• Related party transactions are divided into three categories:
o Commercial transactions: These transactions are treated as arm’s-length transactions, and no adjustments are required to the zakat base.
o Indirect financing transactions: These transactions involve the related party paying or paying a cost or expense on behalf of the taxpayer. These transactions do not affect the zakat base, but they may be treated as debts for zakat purposes.
o Direct financing transactions: These transactions involve the related party financing the taxpayer’s commercial establishment. These transactions are treated as debts for zakat purposes.
• Taxpayers should adjust the outcome of their activity if they have overpaid for goods or services from related parties.
• Taxpayers should treat as debts any accounting entries that are reflected on the statement of financial position at the end of the year as liabilities.
• Taxpayers should add to the zakat base any obligations that are consistent with a debt relationship or something similar.