{"id":7236,"date":"2026-02-05T15:08:36","date_gmt":"2026-02-05T15:08:36","guid":{"rendered":"https:\/\/alhamli.com.sa\/?p=7236"},"modified":"2026-02-05T16:39:35","modified_gmt":"2026-02-05T16:39:35","slug":"tax-refund","status":"publish","type":"post","link":"https:\/\/alhamli.com.sa\/en\/blog\/tax-refund\/","title":{"rendered":"Zakat and Value Added Tax Regulations in Cases of Liquidation, Bankruptcy, or Tax Refund in Saudi Arabia"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Zakat and the <\/span><span style=\"font-weight: 400;\">Value Added Tax regulations<\/span><span style=\"font-weight: 400;\"> are among the essential financial obligations that entities in the Kingdom of Saudi Arabia must comply with. However, some entities may face exceptional circumstances such as liquidation, bankruptcy, or <\/span><span style=\"font-weight: 400;\">tax refund<\/span><span style=\"font-weight: 400;\">, raising questions about how the zakat and <\/span><span style=\"font-weight: 400;\">Value Added<\/span><span style=\"font-weight: 400;\"> Tax regulations apply in such cases. In this article, we will review the key regulations concerning these situations according to Saudi laws.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Zakat Regulations in Liquidation or Bankruptcy Cases in Saudi Arabia<\/span><\/h2>\n<h3><span style=\"font-weight: 400;\">What is Liquidation, Bankruptcy, and <\/span><span style=\"font-weight: 400;\">Tax Refund<\/span><span style=\"font-weight: 400;\">?<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Liquidation is the process of ending a company&#8217;s operations and liquidating its assets to settle debts and distribute the remaining funds to the owners.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bankruptcy is a legal state declared when a company is unable to pay its debts, and its assets are liquidated to pay creditors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tax Refund<\/span><span style=\"font-weight: 400;\"> is the process of reclaiming overpaid or unduly paid taxes by the company.<\/span><\/li>\n<\/ul>\n<h3><span style=\"font-weight: 400;\">What are the Zakat Regulations in Liquidation?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">According to the Zakat system in the Kingdom of Saudi Arabia, entities undergoing liquidation are required to calculate zakat for the period before the liquidation process begins.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Zakat is calculated on the zakatable assets such as cash, inventory, and accounts receivable after deducting liabilities. If the entity has prepaid zakat for future years, it must adjust these payments according to the actual operational period.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Value Added Tax<\/span><span style=\"font-weight: 400;\"> Regulations in Liquidation or Bankruptcy Cases<\/span><\/h2>\n<h3><span style=\"font-weight: 400;\">What Are the VAT Obligations During Liquidation?<\/span><\/h3>\n<figure id=\"attachment_7238\" aria-describedby=\"caption-attachment-7238\" style=\"width: 1920px\" class=\"wp-caption aligncenter\"><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-7238 size-full\" src=\"https:\/\/alhamli.com.sa\/wp-content\/uploads\/2026\/02\/Value-Added-Tax.jpg\" alt=\"Value Added Tax\" width=\"1920\" height=\"1080\" srcset=\"https:\/\/alhamli.com.sa\/wp-content\/uploads\/2026\/02\/Value-Added-Tax.jpg 1920w, https:\/\/alhamli.com.sa\/wp-content\/uploads\/2026\/02\/Value-Added-Tax-300x169.jpg 300w, https:\/\/alhamli.com.sa\/wp-content\/uploads\/2026\/02\/Value-Added-Tax-1024x576.jpg 1024w, https:\/\/alhamli.com.sa\/wp-content\/uploads\/2026\/02\/Value-Added-Tax-768x432.jpg 768w, https:\/\/alhamli.com.sa\/wp-content\/uploads\/2026\/02\/Value-Added-Tax-1536x864.jpg 1536w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><figcaption id=\"caption-attachment-7238\" class=\"wp-caption-text\">Value Added Tax<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">The liquidation process is subject to <\/span><span style=\"font-weight: 400;\">Value Added<\/span><span style=\"font-weight: 400;\"> Tax if it includes the sale of the company\u2019s assets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company must submit a VAT declaration for the period during which the assets were sold, unless the asset sale is part of transferring an economic activity to another <\/span><span style=\"font-weight: 400;\">tax system,<\/span><span style=\"font-weight: 400;\"> in which case it is not subject to VAT.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If the entity is registered under the VAT system, it must settle the due VAT on the sales made during the liquidation process.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">What Are the <\/span><span style=\"font-weight: 400;\">Value Added Tax<\/span><span style=\"font-weight: 400;\"> Obligations in Bankruptcy Cases?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In bankruptcy, the VAT due is treated as a debt owed by the entity. The due VAT must be settled from the company\u2019s assets after paying off priority debts such as employee salaries.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If the entity is insolvent and does not have enough assets to settle the VAT, it may be exempted from the non-recoverable portion of the VAT after approval from the Zakat and Tax Authority. For more information about our services, feel free to contact us at <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/contact-us\/\"><span style=\"font-weight: 400;\">0539300404<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Procedures for Tax and Zakat Filing and Settlement in Liquidation or Bankruptcy Cases<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Filing Declarations:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Entities subject to liquidation or bankruptcy must submit VAT and zakat declarations for periods prior to the liquidation or bankruptcy date through a legal accounting firm like <\/span><span style=\"font-weight: 400;\">Al-Hamli &amp; Partners<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In other cases of dissolution, such as voluntary liquidation, the entity must submit the due zakat declarations, settle them, and submit financial statements on time until closure.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Settlement with the Zakat and Tax Authority:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The entity must communicate with the authority to settle any outstanding tax or zakat obligations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Exemptions:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In cases of bankruptcy, it is possible to request a <\/span><span style=\"font-weight: 400;\">tax exemption<\/span><span style=\"font-weight: 400;\"> on the non-recoverable portion of zakat or <\/span><span style=\"font-weight: 400;\">taxes in Saudi Arabia<\/span><span style=\"font-weight: 400;\"> after providing the necessary evidence. <\/span><span style=\"font-weight: 400;\">Tax refund<\/span><span style=\"font-weight: 400;\"> may also be available in certain cases after ensuring compliance with the established conditions.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Tips for Entities in Liquidation, Bankruptcy, or <\/span><span style=\"font-weight: 400;\">Tax Refund<\/span><span style=\"font-weight: 400;\"> Situations<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Proper Documentation: Ensure all financial transactions and tax filings are accurately documented.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Legal and Tax Consultation: Seek specialized advice from consultants like <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/\"><span style=\"font-weight: 400;\">Al-Hamli &amp; Partners<\/span><\/a><span style=\"font-weight: 400;\"> regarding <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/our-services\/professional-services-sector\/tax-and-zakat-services\/\"><span style=\"font-weight: 400;\">tax and zakat services<\/span><\/a><span style=\"font-weight: 400;\"> and understanding the types of taxes in Saudi Arabia to ensure compliance with regulations. For more information about our services, feel free to contact us at <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/contact-us\/\"><span style=\"font-weight: 400;\">0539300404<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Communication with the Zakat and Tax Authority: Notify the authority of any changes in the entity&#8217;s status to avoid penalties.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Tax Refund<\/span><span style=\"font-weight: 400;\">: If entitled to a <\/span><span style=\"font-weight: 400;\">tax refund<\/span><span style=\"font-weight: 400;\">, ensure that you submit the necessary requests within the specified timeframe.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Also Read:<\/span><\/h3>\n<ul>\n<li><span style=\"font-weight: 400;\">Why Do Major Companies Rely on <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/accounting-firms-in-riyadh\/\"><span style=\"font-weight: 400;\">Accounting Firms in Riyadh<\/span><\/a><span style=\"font-weight: 400;\">?<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Most Important <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/internal-auditing-tasks\/\"><span style=\"font-weight: 400;\">Internal Auditing Tasks<\/span><\/a><span style=\"font-weight: 400;\"> and Their Role in Strengthening Financial Control<\/span><\/li>\n<li><span style=\"font-weight: 400;\">How Does <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/preparing-financial-statements\/\"><span style=\"font-weight: 400;\">Preparing Financial Statements<\/span><\/a><span style=\"font-weight: 400;\"> Affect Your Company\u2019s Opportunities for Funding?<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Target <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/local-content\/\"><span style=\"font-weight: 400;\">Local Content<\/span><\/a><span style=\"font-weight: 400;\"> Ratio and Gradual Plan, and the Periodic Report between Nature and Target<\/span><\/li>\n<li><span style=\"font-weight: 400;\">How do you choose suitable legal <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/auditing-offices\/\"><span style=\"font-weight: 400;\">Auditing Offices<\/span><\/a><span style=\"font-weight: 400;\"> for your accounting needs?<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The role of the <\/span><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/comprehensive-income-statement\/\"><span style=\"font-weight: 400;\">Comprehensive Income Statement<\/span><\/a><span style=\"font-weight: 400;\"> in determining corporate profitability and growth strategies<\/span><\/li>\n<li><a href=\"https:\/\/alhamli.com.sa\/en\/blog\/accounting-standards-2\/\"><span style=\"font-weight: 400;\">Accounting Standards<\/span><\/a><span style=\"font-weight: 400;\"> and their impact on your financial reports and credibility<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Conclusion:<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Liquidation and bankruptcy cases require a detailed understanding of the zakat and <\/span><span style=\"font-weight: 400;\">Value Added Tax<\/span><span style=\"font-weight: 400;\"> regulations in Saudi Arabia. By adhering to the regulations and cooperating with the Zakat and Tax Authority, entities can settle their obligations in a legal and organized manner. It is always recommended to consult tax professionals like <\/span><span style=\"font-weight: 400;\">Al-Hamli &amp; Partners<\/span><span style=\"font-weight: 400;\"> to ensure full compliance with the regulations and avoid financial or legal risks.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Zakat and the Value Added Tax regulations are among the essential financial obligations that entities in the Kingdom of Saudi [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7230,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"_joinchat":[],"footnotes":""},"categories":[27],"tags":[],"class_list":["post-7236","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/posts\/7236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/comments?post=7236"}],"version-history":[{"count":4,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/posts\/7236\/revisions"}],"predecessor-version":[{"id":7281,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/posts\/7236\/revisions\/7281"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/media\/7230"}],"wp:attachment":[{"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/media?parent=7236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/categories?post=7236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alhamli.com.sa\/en\/wp-json\/wp\/v2\/tags?post=7236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}