Consolidated Financial Statements
14. ZAKAT AND INCOME TAX
The Company’s zakat and tax status The Company finalized its zakat and tax status with the DZIT up to 2000. The Company submitted the zakat returns for all fiscal years from 2001 up to 2008 and paid the zakat due according to these returns. The Company has not received zakat assessments from the DZIT for these years. The Company also has not received the final tax assessments for the years 2001 up to the end of July 2004 the date of enforcement of the new tax law. Since the enforcement of the new tax law, the Company pays regularly the withholding tax on payments to non-resident parties. The Company believes that adequate provision is maintained at December 31 2009 for any potential zakat and tax claims by DZIT for the concerned years. The Company had appealed zakat assessments issued by DZIT for the years 1989 up to 2000 and the tax assessments for the years 1996 up to 2000. Higher Appeal Committee issued decisions number (924,925,926,927,928) in the year 1430H and the Company received the final amended assessments issued by DZIT in accordance with the said decisions. The Company had previously established provision against these appeals in the amount of SR 50.5 million, whereas the final
amended assessments by the DZIT amounted to only SR 38.5 million which was paid in full and resulted in excess provision of SR 12 million which was written-back to other income during 2009. Zakat and Tax status for the subsidiary (NCC) NCC submitted the zakat returns for all fiscal years up to 2007 and paid the zakat due according to these returns. NCC received additional zakat and withholding tax assessments for the years 1991 to 2004 amounting to SR 59 million. NCC filed appeals against some items in these assessments and their treatments. The appeals are still pending with DZIT as of the date of these consolidated financial statements. NCC is of the opinion that adequate provision for zakat and withholding tax is maintained as of December 31, 2009. Zakat returns are prepared separately for the Company and NCC. Provision for zakat and tax Following is the movement in provision for zakat and tax during the year ended December 31:
2009
2008
Balance at beginning of the year Amounts paid during the year
187,086 (90,840) (12,050)
152,951 (20,336)
Reversal of excess zakat and withholding tax provision Provisions:
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Zakat
32,627
40,211 14,260
Withholding tax
3,550
Income tax (benefit)
(1,587) 118,786
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Total zakat and tax provision Tax obligation – non current Provision for zakat and tax
187,086 (4,000) 183,086
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118,786
In Thousands Saudi Riyals
Annual Report 2009 The National Shipping Company of Saudi Arabia
59
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