Andersen

Our participation in the Zakat and Tax House (Zakaa) exhibition

Andersen Saudi Arabia participated as a strategic sponsor in the Zakat and Tax House (Zakaa) Exhibition, one of the exhibitions organized by Imam Abdulrahman bin Faisal University. The exhibition is an important platform for highlighting zakat and tax topics and promoting the exchange of knowledge and expertise.

Andersen Saudi Arabia began its participation with a speech delivered by CEO Abdul Mohsen Al-Qahtani at the opening ceremony. During the speech, Al-Qahtani emphasized the company’s commitment to strengthening professional and educational cooperation with the university and supporting academic and professional efforts in the fields of zakat and taxes.

As part of this participation, Andersen Saudi Arabia will present a number of specialized workshops. On October 14, Mr. Abdul Mohsen Al-Qahtani will present a workshop titled “Digital Transformation in Tax and Zakat Administration: Opportunities and Enhancing Transparency.” This will be followed by another workshop presented by Mr. Majed Al-Qahtani.

This participation is an extension of Andersen Saudi Arabia’s commitment to supporting the development of national competencies, enhancing awareness in the fields of zakat and tax, and contributing to building a more knowledgeable and transparent business environment.

The Role of Saudi Economic Growth in Attracting Foreign Investment

The Saudi economy is undergoing a radical transformation and development under Vision 2030, driven by economic diversification and reducing dependence on oil. Non-oil activities, such as industry, tourism, and services, are experiencing strong growth, alongside an improving business environment, increased investment in small and medium-sized enterprises, and a significant increase in women’s participation in the labor market.

The Saudi economy has witnessed strong growth in attracting foreign direct investment (FDI), driven by economic diversification efforts and investment incentive policies, with inflows reaching SAR 119 billion in 2024. The Kingdom seeks to achieve a goal of attracting $100 billion annually by 2030, enhancing its attractiveness through reforms that reduce bureaucracy and facilitate business, in addition to reviewing data accounting methodologies to align with international standards.

The Saudi government confirmed that the Kingdom’s foreign direct investment (FDI) results for 2024 came amid a slowdown in global investment flows and international economic challenges. This reflects the Kingdom’s ability to address various economic challenges, in line with its ambitious vision for growth and diversification. Accordingly, current data demonstrates the success of Vision 2030 and the National Investment Strategy in attracting qualitative foreign investment from around the world. He pointed out that non-oil flows constituted, for the first time, nearly 90% of total FDI, while the proportion of these investments reached approximately 4.2% of non-oil GDP, a level he considered satisfactory compared to global standards.

Therefore, with the Kingdom of Saudi Arabia’s strong economic growth and unique strategic location, the country will continue to enhance its attractiveness to foreign investment, emphasizing the importance of continuously improving the investment ecosystem within the national strategy and related sectoral strategies to support the pace of accelerated economic growth and diversification.

The following table shows the targeted foreign direct investment flows:

Year	Value (Billions of S.R)	% to GDP
2025	140	3.4%
2026	176	3.8%
2027	217	4.3%
2028	266	4.8%
2029	323	5.2%
2030	388	5.7%

In conclusion, the future of foreign investment in the Kingdom of Saudi Arabia is promising, characterized by sustainable growth and increased direct investment flows. This is due to economic diversification efforts under Vision 2030, legislative reforms, incentives, and a focus on promising sectors such as technology, green energy, and tourism. The Kingdom’s attractiveness as a promising investment destination is expected to continue, thanks to its advanced infrastructure and stable regulatory environment, which will enhance economic growth and empower the local and foreign private sector.

Fixed Asset Management: A Comprehensive Guide to Fixed Asset Management

It is a vital aspect of any organization’s operational and financial health. It includes the systematic planning, acquisition, maintenance, and disposition of fixed assets—tangible assets expected to provide value over a long period, typically more than a year.

The importance of fixed asset management is as follows:

1. Financial reporting and compliance: Accurate management of fixed assets is essential for providing reliable financial reporting. These assets constitute a significant portion of an organization’s balance sheet. Proper tracking and evaluation ensures compliance with accounting standards, such as International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).
2. Operational efficiency: Effective fixed asset management enhances operational efficiency. By ensuring that assets are properly maintained and utilized, organizations can reduce downtime, lower repair costs, and extend the life of assets. This leads to improved productivity and cost-effectiveness.
3. Strategic decision-making: Organizations rely on accurate data related to their fixed assets to make informed strategic decisions. Effective management provides insights into asset performance, helping management prioritize investments, plan replacements, and assess the impact of assets on overall business objectives.

Key Components of Fixed Asset Management:

• Asset Acquisition: The process begins with the actual acquisition of fixed assets. Organizations must assess their needs, budget, and potential return on investment (ROI) for the assets they intend to acquire. This may include purchasing, leasing, or outsourcing assets based on strategic considerations.
• Asset Tracking: After acquisition, assets must be systematically tracked throughout their lifecycle. This includes maintaining an inventory that includes key details such as purchase date, cost, location, and maintenance history. Asset management software can facilitate this process by providing real-time data and reports.
• Maintenance and Repairs: Regular maintenance is essential to ensure the longevity and optimal performance of fixed assets. Organizations must establish scheduled maintenance programs and procedures to address repairs promptly. This helps avoid major disruptions and costly emergency costs.
• Valuation and Depreciation: Fixed assets must be valued regularly to reflect their current value in the financial statements. Depreciation methods—such as the linear or declining balance method—must be applied consistently to account for depreciation over time. Accurate depreciation contributes to budget planning and tax calculations.
• Asset Disposal: When fixed assets reach the end of their useful life or become obsolete, organizations must manage their disposal responsibly. This may include selling, recycling, or disposing of the assets. Proper disposal ensures compliance with environmental regulations and recovers a portion of the assets’ value.

Challenges in Fixed Asset Management:

• Lack of Standardization: Many organizations face challenges due to inconsistent practices in asset tracking and management. Without standardized procedures, it can be difficult to obtain accurate data and ensure compliance.
• Use of Technology: While technology can significantly enhance asset management, integrating advanced software solutions can be challenging. Organizations must invest in training.
• Data Accuracy: Maintaining accurate and up-to-date data is critical to effective decision-making. Organizations must establish protocols to ensure data is regularly reviewed and updated.

Best Practices for Effective Fixed Asset Management:

• Invest in asset management software: Using specialized asset management software can streamline operations, enhance data accuracy, and provide valuable insights through analytics and reports.
• Conduct regular inventory counts: Regular inventory counts help identify discrepancies, assess asset conditions, and ensure compliance with accounting standards.
• Implement a maintenance schedule: Establishing a proactive maintenance schedule helps prevent breakdowns and extends asset life. This can lead to significant cost savings in the long run.
• Enhance employee training: Training employees involved in asset management is essential to maintaining high standards and ensuring best practices are followed.

In conclusion, effective fixed asset management is vital for any organization seeking to improve its financial performance and operational efficiency. By implementing best practices, addressing challenges, and leveraging technology, organizations can enhance asset management processes, leading to better decision-making and increased profitability. As businesses evolve, the importance of strategic fixed asset management will continue to grow, making it a key focus for sustainable success.

Highlighting the Differences Between Regulation 2216 & Regulation 1007 of Zakat

Zakat Rate:

The zakat rate of 2.5% has not changed. However, Regulation 2216 differentiated the calculation of the zakat rate with respect to adjusted net profit and zakat base items. The zakat rate for zakat base items considered the number of days per year for each item, while adjusted net profit was directly multiplied by 2.5%. Regulation 1007 unified the calculation of the zakat rate based on the number of days without differentiating between adjusted net profit and zakat base items. This undoubtedly depends on the type of year, whether Hijri or Gregorian. A short fiscal year at the beginning of the activity is subject to zakat collection, while a short fiscal year at the end of the activity is not subject to zakat collection, according to Article 15.

Reliance on the values ​​shown in the balance sheet:

Regulation 1007 stipulates that the accounting officer shall base the addition and deduction elements in the zakat base on the value shown in the balance sheet at the end of the zakat year for the taxpayer, in accordance with Article 17.

Classification of Provisions:

Provisions in Regulation 2216 were added as an item of equity. Regulation 1007 reclassifies provisions into two categories: provisions treated as non-current liabilities added within the limits of deductions (end-of-service gratuity provision, vacation provision), and the remaining provisions treated as an item of equity added to the zakat base, in accordance with Article 24, and added to the end-of-period balance.

The concept of matching assets with liabilities:

The concept of matching assets with liabilities is a common concept in calculating zakat, whereby non-current assets are matched with non-current liabilities, current assets are matched with current liabilities, and equity completes the remainder. However, the new regulations provide more detail regarding the allocation of external liabilities to the zakat base, correcting the addition of liabilities in the case of deducting a current asset or not deducting a non-current asset. In the latter case, the non-current asset rejected from the deduction is considered, a percentage of the total non-current assets is calculated, and it is matched with the current liabilities to exclude it from additions to the zakat base, provided that the non-current liability does not exceed the value of the asset rejected from deduction. In the case of deducting a current asset, not only is the deduction performed, but the asset’s percentage of the total current assets is calculated, matched with the current liabilities, and added to the zakat base, provided that the added current liabilities do not exceed the value of the deducted current asset.