Zakat vs tax: what is the difference, and can zakat be deducted from tax?

What is the difference between zakat and tax?

The main difference is where each comes from and what it is for:

• Zakat is a religious duty on Muslims, with a threshold (nisab), rates and recipients set by Islamic law. In most countries people pay it themselves, or the state collects it where the law says so.
• Tax is a legal obligation imposed by the state on income, spending or profits, and spent through the public budget.

There is also a practical difference in what is taxed. Income tax is worked out on what you earn during the year. Zakat on wealth is worked out on what you own and have held for a full lunar year.

The salary calculators do not count zakat as a payroll deduction. In the Gulf, no zakat is deducted from employees' salaries. In Sudan, there are references to zakat on earned income collected by the Zakat Chamber, but we have not confirmed from an official source how it is applied, so it does not appear in the calculator. To work out zakat on your personal wealth, use the zakat calculator.

Saudi Arabia: zakat on businesses, not individuals

The Zakat, Tax and Customs Authority (ZATCA) collects zakat under the Zakat Collection Implementing Regulations, issued by Ministerial Decision No. 1007 dated 19/8/1445 AH, as amended. Article 3 lists who must pay, including:

• A resident Saudi running a licensed activity in the Kingdom.
• A company owned by Saudis, on the Saudi partner's share.
• Licensed investment funds and state-owned companies.

The regulations treat GCC nationals the same as Saudis.

Rate (Article 15): 2.5% of the zakat base if the year is a Hijri year. If the financial year is a Gregorian year, the rate is adjusted by the number of days: 2.5% divided by the days in the Hijri year and multiplied by the days in the financial year. For a 365-day year against a 354-day Hijri year, the rate becomes about 2.5777%.

Individuals: the regulations do not list an individual who runs no business among those who must pay. So ZATCA does not collect zakat on an employee's savings. The employee pays it themselves.

Mixed-ownership companies in Saudi Arabia: zakat and tax together

When a company is owned by Saudis and foreigners, it does not choose between zakat and tax. The two are split:

• The Saudi or GCC partner's share is subject to zakat.
• The non-Saudi partner's share is subject to income tax at 20%, under the Income Tax Law.

Simple example: a company 60% owned by a Saudi and 40% by a foreigner. The zakat base is 10,000,000 riyals for a Hijri year, and taxable profit is 2,000,000 riyals.

• Zakat: 10,000,000 × 60% × 2.5% = 150,000 riyals.
• Income tax: 2,000,000 × 40% × 20% = 160,000 riyals.

Each obligation falls on a different share, so zakat is not deducted from tax, and tax is not deducted from zakat. The example is simplified: the regulations have detailed rules for working out the zakat base, including additions and deductions.

Sudan: compulsory zakat collected by the Zakat Chamber

Sudan is one of the countries where zakat is compulsory by law. The Zakat Chamber describes the Zakat Act of 2001 as confirming that zakat is compulsory and that the state is responsible for it, building on the 1990 law that made it compulsory and set up the Chamber.

The Income Tax Act of 1986, as amended, deals with how the two interact in Article 18: zakat paid to the Zakat Chamber for the accounting period counts as an expense deducted from income once payment is proven, except for personal income.

In practice: a business owner who paid zakat deducts it from their taxable profits. An employee cannot deduct zakat from the tax on their salary. Work out your salary with the Sudan calculator.

Oman: zakat deducted from income from 2028

Oman's Personal Income Tax Law (Royal Decree 56/2025) takes effect on 1 January 2028. Article 25 exempts from net income an amount equal to the zakat and donations paid to bodies named by the head of the Tax Authority, up to 5% of total income.

Example: a resident with annual income of 60,000 Omani rials pays 2,000 rials of zakat to an approved body.

• Maximum deduction: 5% × 60,000 = 3,000 rials, so the full 2,000 is deducted.
• Net income after excluding the first 42,000: 18,000 rials.
• After deducting zakat: 16,000 rials.
• Tax at 5%: 800 rials, instead of 900 rials without zakat.

Note that zakat cut the tax by only 100 rials, not by 2,000. That is the difference between a deduction from income and a deduction from tax. Details are in the guide to personal income tax in Oman.

Deducted from income or from tax? The difference in numbers

This question causes most of the confusion:

• Deduction from income: zakat is subtracted from income before tax is worked out. The saving = zakat × tax rate. This is what Oman does, and what Sudan does for business profits.
• Deduction from tax: zakat is subtracted from the tax itself, riyal for riyal. The saving = the full zakat, up to the amount of tax.

Example: zakat of 2,000 and a tax rate of 5%. With a deduction from income, the saving is 100. With a deduction from tax, the saving is 2,000 if the tax is that much or more.

In the countries we reviewed here, zakat is treated as a deduction from income where it is allowed, not as a deduction from tax. Saudi Arabia keeps the two bases apart by nationality instead of deducting one from the other.

What does this mean for employees?

• Employees in the Gulf: no income tax on salaries and no zakat deducted from them. Zakat on their savings is their own responsibility.
• Employees in Sudan: they pay tax on their salary, and cannot deduct zakat from their taxable income because the law excludes personal income. They may be asked to pay zakat on earned income through the Zakat Chamber, so ask your employer.
• Residents of Oman from 2028: if their income passes the tax threshold, they deduct zakat paid to an approved body from their income, up to 5%.
• Saudi business owners: they file a zakat return for their business with ZATCA.

To work out zakat on your wealth, use the zakat calculator. Because the religious rules on zakat are detailed, consult a recognised fatwa authority in your country on the threshold (nisab) and who may receive zakat.

Sources

1. ZATCA: Zakat Collection Implementing Regulations (Ministerial Decision 1007, as amended)
2. ZATCA: Income Tax Law
3. ZATCA: 20% income tax rate
4. Sudan Zakat Chamber: Zakat in Sudan
5. Sudan Taxation Chamber: Income Tax Act of 1986 (Article 18)
6. Royal Decree 56/2025 issuing Oman's Personal Income Tax Law (Article 25)

This guide is general information, not tax advice. Rules change; check with the authority or a qualified adviser before you act. How we work.