12 Saudi banks to pay 17.9bn riyals to settle Zakat payments
The listed lenders said the settlement covers previous years and 2018 fiscal year
Twelve listed Saudi banks reached a 17.86 billion riyal (Dh17.5bn) settlement with the kingdom’s tax authority over the payment of religious tax called Zakat.
Al Rajhi Bank, Saudi Arabia’s second-largest bank by assets, will pay the highest amount of 5.4bn riyals, followed by Riyad Bank with 2.96bn riyals and Samba Financial Group with 2.3bn riyals, the lenders said in separate statements to the Saudi stock exchange, where their shares are listed.
Alinma bank said it did not pay any settlement and it would record “a credit balance", with the General Authority of Zakat and Tax.
All banks said the settlements, reflected in their shareholder’s equity, cover a number of previous years that will include the fiscal year of 2018 and the lenders will publish further details on the effect in their financial statements for this year.
"Any weakness due to this resolution is likely to be short-lived, and focus should shift to the key themes for Saudi banks in 2019: index inclusion, rates and mortgage growth," said Egyptian investment bank EFG Hermes on Sunday.
The government also recently reached a settlement with the three mobile phone operators in the country, signing a deal to resolve old disputes and define a new investment framework and mechanism for the calculation of service and license royalties.
The deal signed with Ministry of Finance, the Ministry of Telecommunications and Information Technology and the Communications and Information Technology Commission will see annual royalty for commercial service dropping retroactively to 10 per cent from 15 per cent of net revenues, starting January 1, 2018.
Zain KSA, which is a part of Kuwait’s Zain Group, expects to save 220 million riyals in royalty fees for the first nine months of the year and expects the reduction in annual royalty fees to benefit the company's financial results going forward.
STC, the government-backed operator, also expects the agreement to boost its fourth-quarter earnings taking into account the provisions allocated for the royalties. Part of those provisions will be used to cover the differences resulting from the modified mechanism and the remaining part, which is about 500m riyals, will be reversed on the books.
Starting from 2019, Etihad Etisalat (Mobily), a unit of UAE’s operator Etisalat, will have to bear additional cost estimated between 450 to 600m riyals per year over the next few years.
Updated: December 23, 2018 12:53 PM