Saudi Zakat Payroll Reconciliation and Outsourced Labour

Separate the payroll expense from the social-insurance comparison

A payroll difference is a fact to explain, not a complete Zakat conclusion. Zakat Collection Regulations Article 62 requires actual expenses connected with the activity and acceptable evidence. Article 63(6) specifically permits wages exceeding the amount recorded with the General Organization for Social Insurance, or GOSI, where supporting legal documents acceptable to ZATCA establish the difference.

ZATCA’s Guideline on Modification of the Activity Result, November 2024, section 5.7, explains the reconciliation. Section 6.3.2 separately considers employees and labour supplied through service contracts. The accounting payroll balance, social-insurance record and outsourced-services ledger do not necessarily contain the same population or components.

Dariba recommendation: reconcile the actual people, period and pay components before deciding the adjustment. Do not use the difference as an unexplained deduction or disallow every excess automatically.

Reproduce the unexplained-difference example

Official example: section 5.7, Example 27, compares SAR 6,807,000 wages and salaries in the books with SAR 6,300,000 registered with social insurance. The company is asked to explain the difference before the preliminary assessment but supplies no justification or supporting documents. The official adjustment is SAR 507,000.

Dariba analysis: the failed condition is the unexplained, unsupported difference. The example does not say that every allowance outside the GOSI amount is fictional or that the registered amount is a universal Zakat deduction ceiling. The actual category and acceptable evidence still determine the treatment.

Reconcile the general ledger to the payroll register and then to the relevant official records. Investigate joiners, leavers, timing and component differences on their actual evidence; those are practical review steps, not automatic statutory exceptions.

Follow the supported reconciliation rather than assuming total relief

Official example: section 5.7, Example 28, continues the same SAR 507,000 difference. It identifies SAR 130,000 explained by the example’s registration ceiling and employee contracts, SAR 60,000 contractual transport allowances, SAR 32,000 contractual cost-of-living allowances and SAR 210,000 overtime under documented employment rules. SAR 75,000 remains unsupported.

The supported components total SAR 432,000. The official residual adjustment is SAR 75,000, rather than the original SAR 507,000 or an automatic nil adjustment.

The stated component treatment belongs to the official example. It does not independently establish the current GOSI ceiling, contribution rules, age-based registration treatment or allowance classification for every worker. Those underlying obligations must be established under their applicable rules and period.

Dariba recommendation: give each difference its own employee or category reference, reason, amount and evidence. A general letter saying the total relates to allowances is weaker than a schedule that explains why each amount differs and ties it to actual entitlements and payment.

Keep owner remuneration under its own condition

Article 63(4) separately identifies owners’ wages and allowances registered with GOSI. The supported employee-difference route in paragraph (6) should not be assumed to remove that owner-specific condition.

Official example: section 5.12, Example 39, disallows SAR 560,000 partner remuneration despite an authentic employment contract because the partner’s remuneration is not registered with GOSI on the stated facts. The contract alone does not satisfy the separate registration requirement.

Board remuneration is another category under Article 63(5), subject to the relevant laws. An owner receiving a payment does not make every payment a board fee, and an accounting label cannot by itself select the most favourable category. The accepted-expense guide explains those distinctions.

Establish the business use of outsourced labour

Section 6.3.2 considers workers supplied through documented contracts with licensed providers for projects, maintenance, cleaning and operations. It requires support for the cost and evidence that the labour served the payer’s activity.

Official example: section 6.3.2, Example 44, accepts SAR 750,000 employee wages supported by employment contracts and social-insurance records. It also accepts SAR 320,000 for labour supplied by other companies under documented service contracts for a company project, even though those workers are not under the payer’s sponsorship.

Dariba analysis: the worker’s absence from the customer’s own sponsorship does not, by itself, defeat the supported outsourced-service expense in this case. Confirm the actual supplier, contract, services, project and evidence. The example establishes its Zakat treatment; it is not an independent ruling that every staffing arrangement complies with labour, immigration or supplier-licensing rules.

Split a mixed service charge where the facts require it

Example 44 also identifies SAR 79,000 of service labour, including SAR 17,000 for the board chairman’s domestic worker. The official solution accepts SAR 62,000 related to the company and rejects SAR 17,000 unrelated to its activity.

The total accepted costs in the example are SAR 750,000 plus SAR 320,000 plus SAR 62,000, giving SAR 1,132,000. The SAR 17,000 adjustment is the identified private element. It is not a percentage disallowance for every service contract or a reason to reject the entire mixed invoice without considering its components.

Dariba recommendation: establish who received the services and separate the supported business element from private costs. An invoice addressed to the company does not automatically establish that every service benefits its activity.

Retain a reviewable payroll evidence file

Sections 5.7 and 6.3.2 identify contracts, approved payroll, bank transfers, social-insurance records and appropriate analyses among the supporting evidence. The necessary documents depend on the difference and the actual expense category; no single document establishes every condition.

Retain the ledger-to-payroll bridge, employee or provider details, actual entitlement, period, settlement and explanation for each difference. Articles 110–111 separately address record retention and proof of return accuracy. The compliance guide explains the applicable document and request procedures.

Dariba recommendation: prepare this reconciliation with the return rather than reconstructing it only after an assessment. Example 28 demonstrates the importance of proof, but it does not promise an extension of objection periods or automatic acceptance of late evidence in every case. The assessment guide explains the separate procedural clocks, and the profit guide connects the resulting adjustment to the activity result and final-base analysis.