It is well known that Muslim’s practice zakat. Zakat is one of the five pillars of Islam. zakat means purification and growth. It is compulsory for every Muslim to give 2.5% of all his belongings and accumulated wealth to charity. This is to purify a Muslim’s wealth so that he does not become greedy. The payment of zakat is regarded primarily as an act of worship of God. Zakat is essential to a Muslim’s way of life as it eliminates greed and selfishness and give back to the community.It encourages honesty as Muslims are not checked if they pay the right amount or even if they pay at all. Giving zakat reminds a person that his wealth is not his own, but its real owner is Allah. Giving zakat is obeying Allah’s commands and acknowledging that whether we are rich or poor is God’s choice. So we should help those he has chosen to make poor. The prophet Muhammad stated “He is not a believer who eats his fill while his neighbour remains hungry by his side” This is expressing the need for Muslims to do their duty for the welfare of the poor. Saudi Arabia is the largest Arab country in the middle-east with a 23 million population.It is also the homeland of Islam and hosts two of the holiest places in Islam; Medina and Mecca as a result it is well known for its practice of zakat. Saudi Arabia has one of the world’s largest oil reserves, but the oil-price crash of the 1980’s and the $55 billion in debt accumulated during the 1991 Persian Gulf War, left the kingdom struggling with deficits throughout much of the 1990’s. The oil boom brought on by the war in Iraq is only a temporary fix for a withering economy. The gap is widening between Saudi Arabia’s very rich and very poor.The malls are stocked with the latest imported designer fashion brands. Many of its citizens namely the oil barons and the royal family are purchasing expensive sports cars and building lavish properties. However many poor Saudis line up for hours to obtain water, cannot afford electricity and have take to begging on the streets. 20-30% of the population are under the line of poverty. Saudi Arabia has declined over the decades; in the early 1980’s, its capita income was $28,000 equal to the United States. As a result of the decline Saudi Arabia’s has slipped to $18,855 while the U.S per capita income has grown to $34,100. In comparison to the United Kingdom, Saudi Arabia has an inefficient taxation system.In the UK all employees are taxed at higher rate or lower rate depending on their income. The money generated is reinvested in the infrastructure for example; school, hospitals, roads etc. In Saudi there is no such tax system; money earnt is tax free. Businesses in Saudi Arabia are primarily in control of monopolies owned by the royal family. The royal family and its 7000 princes rule the country like they own it and are notorious for scandals and corruptions. This long term policy has fuelled a generation of Saudi’s who are unable to afford good housing and have no access to a good social welfare system.Zakat is an effective system used for helping the poor and needy. It balances the social equilibrium by reducing the gap between the rich and poor. Sadly however zakat relies on the honesty of the people giving it and those who collect it. Zakat cannot be used by the government for general purposes. Until there is effective leadership zakat will not play the dominating role it should in eradicating poverty in Saudi Arabia and the rest of the world.