Essay Questions in the Zakat and Tax Subject

Last verified: 31 October 2026. Sources: SOCPA's amendments to the Fellowship exam structure and weights (2025) and its practice questions for the zakat and tax subject (September 2025). Check the Fellowship exam page before your exam, since the structure and weights can change.

The question bank and full mock exam on this site cover the multiple-choice part only. The essay questions are not in the bank, so practise them with this guide: how to answer, how to split your time, where candidates lose marks, and three worked examples with model answers.

The essay part in numbers

SOCPA gives an example in its FAQ: a candidate with 60 marks in multiple choice and 3 in the essays has a total of 63 and still fails the subject, because the essay score is below 5. So do not skip the essay part, even if multiple choice is your strength.

What the essay questions look like in SOCPA's practice set

The practice questions SOCPA published in September 2025 include two essay questions, both numerical cases:

• Zakat and income tax for a mixed-ownership company (estimated time 45 minutes). A balance sheet and income statement for a company owned by a Saudi partner and a foreign partner, plus eight additional facts: opening balances, provisions, impairment, accounting depreciation against tax-group depreciation, withholding tax, and donations inside and outside the Kingdom. You must calculate the zakat due from the Saudi partners and the income tax. The model answer is two tables: a net profit adjustment with one column for zakat and one for tax, then the zakat base checked against its minimum and maximum.
• A quarterly VAT return (estimated time 30 minutes). Ten transactions for a retailer that also sells on murabaha terms: cash discounts, gifts to staff, sales to customers in a GCC state, returns and credit notes, sale of a capital asset, purchases from abroad, services from a non-resident supplier, and a partial input-tax recovery rate. You must fill in the return form attached to the question line by line, then work out any penalty.

If the exam follows this pattern, expect calculations: financial statements or a blank form, with final figures and the steps behind them. SOCPA states that these practice questions are for learning and may not match the exam.

How to answer in five steps

1. Read the requirement first. Before the numbers, pin down: zakat, income tax or VAT? The whole company, or the Saudi or the foreign partner's share? One figure, a full return, or a penalty?
2. Cite the article with every adjustment. One short line per item: the item, the treatment (add back, deduct, no adjustment), then the article. Example: "Donation to a body outside the Kingdom SAR 50,000: added back to net profit, Article 63(7) of the Zakat Collection Implementing Regulations."
3. Draw a table. For zakat, a net profit adjustment table, then the base table: additions, then deductions, then the base. For zakat and tax together, two columns side by side. For VAT, the return lines themselves: amount, adjustment, VAT.
4. Write the unit and rate on every calculation line. "SAR 4,100,000 × 2.5777%" is clearer to the marker than a bare figure. State whether amounts are before VAT or VAT-inclusive.
5. Finish with a conclusion sentence. For example: "Zakat due is SAR 105,685; the base exceeds adjusted net profit, so the minimum base does not apply." That sentence shows you checked the minimum and maximum base.

Splitting the 80 minutes

SOCPA's practice set estimates 45 minutes for the zakat and tax case and 30 minutes for the VAT return, or 75 minutes for two questions. The exam has 3 questions in 80 minutes, so time is tighter. A suggested plan:

• 5 minutes: read all three questions and spot the longest.
• About 30 minutes for the longest case (usually the zakat base) and about 20 minutes for each of the other two. Start with the one whose method you know.
• 5 minutes at the end: check the rates (2.5% adjusted for days, 20%, 15%), the table totals and your conclusion sentences.

If you run short, write the structure of the answer: table headings, items and articles, then fill in as many figures as you can. Do not leave a question blank: you need at least 5 of the 25 marks.

Where candidates lose marks

• Charging zakat on the whole base of a mixed company. Zakat applies to the Saudi partner's share (Article 3(3) of the Zakat Collection Implementing Regulations), and income tax to the non-Saudi share (Article 2(a) of the Income Tax Law).
• Mixing the two depreciation figures. Zakat accepts accounting depreciation (Article 63(2)); income tax uses depreciation by asset group and rate (Article 17 of the Income Tax Law).
• Forgetting the closing balance of provisions. A provision charged in the year is an accepted expense for zakat (Article 63(9)), but its closing balance is added to the base like equity, except end-of-service and leave provisions, which are treated as non-current liabilities (Article 24). For income tax, provisions are not deductible except bad-debt provisions of banks (Article 15 of the Income Tax Law).
• Deducting inventory held for sale. It is not deductible (Article 52(2)). Spare parts not held for sale are deductible (paragraph 3), with the matching share of current liabilities added (Article 25(3)).
• Adding all non-current liabilities when a non-current asset is not deducted. Exclude that asset's share of total non-current assets from the addition (Article 25(2)).
• Skipping the minimum and maximum base checks (Articles 27 and 28).
• Applying a flat 2.5% to a Gregorian year. The rate is adjusted by days: 2.5% ÷ days in the Hijri year × days in the financial year (Article 15(2)).
• In VAT: confusing exempt supplies with zero-rated ones, recovering input tax that relates only to an exempt supply (Article 51(2) of the VAT Implementing Regulations), or forgetting that reverse charge means declaring output tax and the deductible input tax in the same return (Article 47(1)).
• Adding VAT-inclusive and VAT-exclusive amounts on the same line.

Example 1: the zakat base of a Saudi company

Company A Trading is a limited liability company wholly owned by Saudis, with a financial year from 1 January to 31 December 2025 (365 days). Figures in SAR:

• Book net profit before zakat 1,200,000. Expenses include: a donation to a licensed charity inside the Kingdom 30,000, a donation to a body outside the Kingdom 50,000, expenses with no supporting documents 20,000, and a doubtful-debt provision charged in the year 40,000.
• Equity at 31 December 2025: share capital 5,000,000, statutory reserve 500,000, retained earnings 2,300,000.
• Closing balance of the doubtful-debt provision 90,000, netted against receivables in the statements.
• Non-current liabilities: long-term loan 3,000,000, end-of-service provision 600,000, non-current lease liabilities 400,000.
• Non-current assets: net fixed assets 5,950,000, right-of-use asset 450,000, a non-trading investment in a Saudi subsidiary registered with ZATCA and subject to zakat 1,000,000, software (intangible) 200,000, and raw land held for sale classified as non-current 400,000.
• Current assets 3,500,000, including inventory of goods 1,500,000 and spare parts not held for sale 140,000. Current liabilities 2,000,000.

Required: calculate the zakat base and the zakat due.

Model answer

Step 1: adjusted net profit (Articles 62 and 63)

Step 2: additions (Article 23)

Step 3: deductions (Article 26)

Inventory of 1,500,000 is not deducted (Article 52(2)), nor is the land held for sale of 400,000 (Article 48(1)(a) and Article 49(9)).

Step 4: the base and the two limits

• Base = 11,840,000 − 7,740,000 = SAR 4,100,000 (Article 21).
• Liabilities added, 3,880,000, are below the assets deducted, 7,740,000, so the Article 25(4) limit is respected.
• Minimum: the base of 4,100,000 exceeds adjusted net profit of 1,270,000, so Article 27 does not apply.
• Maximum: equity and equivalents 7,890,000 (including the provision) + profit difference 70,000 = 7,960,000; the base is below it (Article 28).

Step 5: zakat

• Rate = 2.5% ÷ 354 × 365 = 2.5777% (Article 15(2), assuming a 354-day Hijri year).
• Zakat = 4,100,000 × 2.5777% ≈ SAR 105,685.

Conclusion: the zakat base is SAR 4,100,000 and the company's zakat due is SAR 105,685; neither the minimum nor the maximum base applies.

Example 2: zakat and income tax for a mixed-ownership company

Company B Industries is a resident limited liability company, 60% owned by a Saudi partner and 40% by a non-GCC foreign partner, with a 2025 financial year (365 days). Figures in SAR:

• Book net profit before zakat and income tax 2,000,000.
• Expenses include: accounting depreciation 500,000 (tax-group depreciation 420,000), a doubtful-debt provision charged in the year 100,000 (the company is not a bank), a donation to a licensed charity inside the Kingdom 25,000, and a donation to a body outside the Kingdom 40,000.
• At 31 December 2025: equity 6,000,000, closing doubtful-debt provision 180,000, non-current liabilities (long-term loan and end-of-service provision) 2,000,000, and net fixed assets 5,500,000, which are all of the non-current assets. Current assets 4,000,000 and current liabilities 1,500,000.

Required: calculate the zakat on the Saudi partner's share and the income tax on the foreign partner's share.

Model answer

Step 1: net profit adjustment in two columns

Step 2: income tax

• Tax base for the foreign share = 2,220,000 × 40% = SAR 888,000 (Article 2(a) of the Income Tax Law).
• Tax = 888,000 × 20% = SAR 177,600 (Article 7(a)(1)).

Step 3: zakat base for the whole company

Current liabilities are not added because they are below current assets (Article 29(2)). Minimum: the base exceeds zakat adjusted profit of 2,040,000 (Article 27). Maximum: 6,000,000 + 180,000 + 40,000 = 6,220,000, and the base is below it (Article 28).

Step 4: zakat on the Saudi share

• Saudi partner's share of the base = 2,720,000 × 60% = SAR 1,632,000 (Article 3(3) of the Zakat Collection Implementing Regulations).
• Zakat = 1,632,000 × 2.5777% ≈ SAR 42,068 (Article 15(2)).

Conclusion: zakat of SAR 42,068 is due on the Saudi partner's share, and income tax of SAR 177,600 on the foreign partner's share. Each item followed its own rules: depreciation and the provision changed the income tax but not the zakat.

Example 3: a quarterly VAT return

Company C Trading is VAT-registered, and its annual taxable supplies are below SAR 40 million, so it files every three months (Article 58(2) of the VAT Implementing Regulations). You need its return for Q2 2026 (April to June). In calendar year 2025 its taxable supplies (including zero-rated) were SAR 18,000,000 and its exempt supplies SAR 2,000,000, with no capital asset sales. All amounts below are before VAT:

1. Standard-rated local sales 4,000,000.
2. Exports of goods to a customer in Egypt 1,200,000, with export documents held.
3. Sales of qualifying medicines under the Ministry of Health classification 300,000.
4. Rent from residential flats owned by the company 400,000.
5. Credit notes issued for returns of local sales already declared 100,000.
6. Standard-rated local purchases of goods for local resale 2,000,000.
7. Imported goods with a customs value of 800,000; VAT of 120,000 paid to customs on import.
8. Maintenance of the rented residential flats 100,000 (VAT 15,000).
9. Consultancy services from a non-resident supplier in the UK 200,000, serving the whole business.
10. General local overheads (office rent and electricity) 300,000 (VAT 45,000), serving the whole business.

Required: calculate the net VAT due for the quarter, the filing and payment deadline, and the penalty if the VAT is paid on 15 August 2026.

Model answer

Step 1: input-tax recovery rate = 18,000,000 ÷ (18,000,000 + 2,000,000) = 90% (Article 51(4): numerator taxable supplies, denominator taxable plus exempt supplies in the previous calendar year; capital asset supplies are left out under paragraph 5).

Step 2: output tax

Step 3: input tax

Step 4: net VAT

• Output tax = 585,000 on sales + 30,000 reverse-charge VAT on the imported services = SAR 615,000.
• Net VAT due = 615,000 − 487,500 = SAR 127,500.

Step 5: deadline and penalty

• Filing and payment deadline: 31 July 2026, the last day of the month after the period ends (Article 62(1) and Article 59(1)).
• Paying on 15 August 2026 is late by part of a month. The penalty is 5% of the unpaid tax for each month or part of a month (Article 43 of the Law): 127,500 × 5% = SAR 6,375.

Conclusion: net VAT of SAR 127,500 is due for Q2 2026, plus a late-payment penalty of SAR 6,375.

How to use this guide alongside the question bank

• Solve each example on paper before reading the answer, against the clock: 30 minutes for the first and 20 minutes each for the second and third. Then compare your table with the model answer line by line.
• Change one figure (such as the Saudi partner's share or the recovery rate) and solve it again.
• Work through the two essay cases in SOCPA's practice questions and compare with the model answers in the same file.
• The articles you need for the essays are the same ones tested in multiple choice. Practise the zakat, income tax and VAT topics in the bank, and read the subject content and weights and the study plan.

To see what you would score today on the multiple-choice part, start the 10 free questions, no sign-up. You will see your score against the pass mark and which topics cost you points.

This study guide is from an independent website with no link to the Saudi Organization for Chartered and Professional Accountants (SOCPA), the Zakat, Tax and Customs Authority (ZATCA) or any government body. The worked examples are our own, written for practice; always rely on the regulations in force and on what the official bodies announce.