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June 26, 2026

Simplified Guideline for Construction Sector

Zakat Guide | ZAKAT

Contents

1. Definitions

2. Sector Activities

3. Zakat Calculation Method

4. Zakat Base Rules

5. Sector-Specific Zakat Issues

The Zakat, Tax and Customs Authority ('ZATCA', 'Authority') has issued this Guide for the purpose of clarifying certain tax treatments concerning the implementation of the statutory provisions in force as of the Guide's issue date. The content of this Guide shall not be considered as an amendment to any of the provisions of the Laws and Regulations applicable in the Kingdom.

Furthermore, the Authority would like to highlight that the clarifications and indicative tax treatments prescribed in this Guide, where applicable, shall be implemented by the Authority in light of the relevant statutory texts. Where any clarification, interpretation or content provided in this Guide is modified - in relation to unchanged statutory text - the updated indicative tax treatment shall then be applicable prospectively, in respect of transactions made after the publication date of the updated version of the Guide on the Authority›s website.

Definitions

Construction Sector

:

general and specialized construction activities, and civil engineering works, such as new, repairs, additions and changes construction.

General Construction

:

construction of entire buildings for housing, offices, shops, public buildings, interests or farm buildings, or construction of civil engineering works such as highways and streets.

Build and Operate Contracts

:

investment contracts aimed at creating income-producing and income-generating assets, in which the lessor builds and operates the income-generating product in exchange for its benefit and production to the tenant who receives (benefit/ production) in exchange for the obligation to pay rent to the lessor, and does not include whether the sale is the asset alone.

This Sector Includes the Following Activities

  1. Complete constructions for civil engineering work.

  2. Specialized constructions if they are part of the construction process.

  3. Specialized constructions if implemented only as part of the construction process.

  4. Construction projects for buildings or civil engineering work, which are carried out by financial, technical and material means in order to achieve the construction project for sale later.

The Authority's Method of Calculating the Zakat Pot for the Taxpayer Who Holds the Commercial Books

The Authority uses the indirect method (the sources of funds method) to reach the zakat base, on the following:

(Additions): The addition of the sources of the internal taxpayer’s funds and the sources of his external funds in the discount financing.