Zakah on the funds of a company for the sale and rental of cars
Machine translationRead the Arabic original
Fatwa number ( 17409 )
Q: We, the (N.J.S.R) organization, which has several facilities operating in the field of cars and their services, are submitting this letter to you seeking your assistance and support with your jurisprudential opinion on how to calculate the prescribed zakah accurately. We provide the following brief overview of the organization's activities: First: The car rental activity: The capital in this activity consists of the following items: 1- The cash amounts in the organization's safe and banks, which naturally fluctuate and may increase or decrease on the date the lunar year (hawl) completes. 2- The debts owed by the lessees due to not paying the full car rent. 3- The advances given to the organization's employees, which are repaid in monthly installments deducted from their salaries. 4- The amounts paid for investment in shares of national companies. 5- The lands purchased for the purpose of investing in future projects or selling them. 6- The buildings, structures, equipment, tools, supplies, office devices, furnishings, furniture, and other items. 7- The cars owned by the organization, which are the primary source of income.
These cars include old ones on which a previous lunar year has passed, those purchased either in cash or on installments on which the lunar year has not yet passed, and those transferred from other branches within the Kingdom that are under repair at the organization's workshop. 8- Regarding cars transferred between branches within the Kingdom during the lunar year, this may increase the capital of one branch and decrease the capital of another. How is this calculated? Considering that there is a financial relationship between these branches, where one branch may be a debtor or creditor to another for the value of the cars transferred to it, but naturally pays nothing as they are a single organization. Here we ask how to calculate the zakah due for each branch individually? 9- There are liabilities owed by the organization as a result of purchasing these cars on installments, as well as expenses due for payment for the lunar year, such as office rent, housing for the organization's employees, and similar items. 10- Remaining here is the basic capital and the retained profits from previous years, and the realized profits for the current lunar year, considering that items (9, 10) are exactly equal in value to the previously mentioned items in the organization's balance sheet. Second: The car buying and selling activity: The capital of the showroom consists of the same items mentioned above, with the following differences: 1- Regarding the cars present in the showroom, and I mean here: the showroom's ownership, some are present in the showroom and a lunar year has passed without them being sold (stagnant capital), some were purchased months before the lunar year, and some were purchased recently. 2- 75% of the showroom's capital is utilized in selling cars on installments. This in itself makes the capital as if it did not exist; because the showroom's capital consists of debts from the showroom's customers, and the amounts collected from these debts are utilized in purchasing cars on installments as well. Thus, the capital increases year after year, but it is not present in cash form. What is the way to calculate the zakah? Third: The quick car services activity: The capital of the center consists of the same items mentioned above, with the following differences: 1- The primary income of the activity consists of service fees for oil changes, tires, and the like.
These vehicles include older ones that have already completed a lunar year of possession, and those purchased, whether for cash or on installments, for which the lunar year has not yet passed. They also include vehicles transferred from other branches within the Kingdom and currently under repair at the company's workshop. 8- Regarding vehicles transferred between branches within the Kingdom during the lunar year, this may increase the capital of one branch and decrease the capital of another. How is this calculated? Considering that there is a financial relationship between these branches, where one branch may be a debtor or creditor to another for the value of the vehicles transferred to it, but naturally, no payment is made since they are a single entity. Here we ask how the zakah due for each branch individually is calculated? 9- There are liabilities owed by the company as a result of purchasing these vehicles on installments, as well as expenses due for payment for the year, such as office rent, housing for the company's employees, and similar items. 10- What remains here is the basic capital and the retained profits from previous years, along with the profits realized for the current year, taking into consideration that items (9, 10) are exactly equal in value to the preceding items
in the company's budget. Second: The car buying and selling activity: The capital of the showroom consists of the same items mentioned above, with the following differences: 1- Regarding the cars present in the showroom, and I mean here: the showroom's ownership, some are present in the showroom and a lunar year has passed over them without being sold (idle capital), some were purchased months before the lunar year, and some were purchased recently. 2- 75% of the showroom's capital is utilized in selling cars on installments. This in itself makes the capital as if it did not exist; because the showroom's capital consists of debts owed by the showroom's customers, and the amounts collected from these debts are utilized in purchasing cars on installments as well. Thus, the capital increases year after year, but it is not present in cash form. What is the way to calculate the zakah? Third: The quick car services activity: The capital of the center consists of the same items mentioned above, with the following differences: 1- The basic income of the activity consists of service fees for oil changes, tires, and the like.
2 - Additional income consists of profits from selling tires, oils, spare parts, and the like. Fourth: Is it permissible to distribute a portion of the zakah to the employees of the company? We ask Allah for success and guidance for us and for you in what is good and right.
A: 1 – The cash amounts in the company's safe have their zakah paid from what is present when the lunar year passes over them, even if they increase and decrease. 2- The company's debts owed by tenants and employees require zakah if the lunar year passes over them, provided the debtors are wealthy and not delinquent. 3- Amounts paid for investment require zakah on them and their profits if the lunar year passes over them. 4- Land purchased for the purpose of investment by selling it requires zakah, which is paid from its estimated value when the lunar year passes, whether it is equal to what it was bought for, less, or more. 5- Items prepared for ownership and use, such as buildings, structures, furniture, etc., do not require zakah. 6- Used cars intended for trading by operating them require
zakah on their earnings, so the earnings of all the company's branches are collected and their zakah is paid if the lunar year passes over them. 7- The debts and liabilities of the company do not prevent the obligation to pay zakah on its commercial assets. 8- Cars intended for trading in their physical form require zakah on their estimated value at the time the lunar year passes, and on their profits if the lunar year passes over them. 9- Paying zakah to the eligible recipients among your employees in the company is permissible if their salary is not sufficient for them, unless this brings benefit to you, such as if the recipient is, for example, a debtor to the company, then it is not permissible – in this case – to pay it to him. Likewise, if the intention in giving it to him is to encourage him to work or to keep him in the job, then it is not permissible to give it to him. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his companions.
Q: We, the (N.J.S.R) organization, which has several facilities operating in the field of cars and their services, are submitting this letter to you seeking your assistance and support with your jurisprudential opinion on how to calculate the prescribed zakah accurately. We provide the following brief overview of the organization's activities: First: The car rental activity: The capital in this activity consists of the following items: 1- The cash amounts in the organization's safe and banks, which naturally fluctuate and may increase or decrease on the date the lunar year (hawl) completes. 2- The debts owed by the lessees due to not paying the full car rent. 3- The advances given to the organization's employees, which are repaid in monthly installments deducted from their salaries. 4- The amounts paid for investment in shares of national companies. 5- The lands purchased for the purpose of investing in future projects or selling them. 6- The buildings, structures, equipment, tools, supplies, office devices, furnishings, furniture, and other items. 7- The cars owned by the organization, which are the primary source of income.
These cars include old ones on which a previous lunar year has passed, those purchased either in cash or on installments on which the lunar year has not yet passed, and those transferred from other branches within the Kingdom that are under repair at the organization's workshop. 8- Regarding cars transferred between branches within the Kingdom during the lunar year, this may increase the capital of one branch and decrease the capital of another. How is this calculated? Considering that there is a financial relationship between these branches, where one branch may be a debtor or creditor to another for the value of the cars transferred to it, but naturally pays nothing as they are a single organization. Here we ask how to calculate the zakah due for each branch individually? 9- There are liabilities owed by the organization as a result of purchasing these cars on installments, as well as expenses due for payment for the lunar year, such as office rent, housing for the organization's employees, and similar items. 10- Remaining here is the basic capital and the retained profits from previous years, and the realized profits for the current lunar year, considering that items (9, 10) are exactly equal in value to the previously mentioned items in the organization's balance sheet. Second: The car buying and selling activity: The capital of the showroom consists of the same items mentioned above, with the following differences: 1- Regarding the cars present in the showroom, and I mean here: the showroom's ownership, some are present in the showroom and a lunar year has passed without them being sold (stagnant capital), some were purchased months before the lunar year, and some were purchased recently. 2- 75% of the showroom's capital is utilized in selling cars on installments. This in itself makes the capital as if it did not exist; because the showroom's capital consists of debts from the showroom's customers, and the amounts collected from these debts are utilized in purchasing cars on installments as well. Thus, the capital increases year after year, but it is not present in cash form. What is the way to calculate the zakah? Third: The quick car services activity: The capital of the center consists of the same items mentioned above, with the following differences: 1- The primary income of the activity consists of service fees for oil changes, tires, and the like.
These vehicles include older ones that have already completed a lunar year of possession, and those purchased, whether for cash or on installments, for which the lunar year has not yet passed. They also include vehicles transferred from other branches within the Kingdom and currently under repair at the company's workshop. 8- Regarding vehicles transferred between branches within the Kingdom during the lunar year, this may increase the capital of one branch and decrease the capital of another. How is this calculated? Considering that there is a financial relationship between these branches, where one branch may be a debtor or creditor to another for the value of the vehicles transferred to it, but naturally, no payment is made since they are a single entity. Here we ask how the zakah due for each branch individually is calculated? 9- There are liabilities owed by the company as a result of purchasing these vehicles on installments, as well as expenses due for payment for the year, such as office rent, housing for the company's employees, and similar items. 10- What remains here is the basic capital and the retained profits from previous years, along with the profits realized for the current year, taking into consideration that items (9, 10) are exactly equal in value to the preceding items
in the company's budget. Second: The car buying and selling activity: The capital of the showroom consists of the same items mentioned above, with the following differences: 1- Regarding the cars present in the showroom, and I mean here: the showroom's ownership, some are present in the showroom and a lunar year has passed over them without being sold (idle capital), some were purchased months before the lunar year, and some were purchased recently. 2- 75% of the showroom's capital is utilized in selling cars on installments. This in itself makes the capital as if it did not exist; because the showroom's capital consists of debts owed by the showroom's customers, and the amounts collected from these debts are utilized in purchasing cars on installments as well. Thus, the capital increases year after year, but it is not present in cash form. What is the way to calculate the zakah? Third: The quick car services activity: The capital of the center consists of the same items mentioned above, with the following differences: 1- The basic income of the activity consists of service fees for oil changes, tires, and the like.
2 - Additional income consists of profits from selling tires, oils, spare parts, and the like. Fourth: Is it permissible to distribute a portion of the zakah to the employees of the company? We ask Allah for success and guidance for us and for you in what is good and right.
A: 1 – The cash amounts in the company's safe have their zakah paid from what is present when the lunar year passes over them, even if they increase and decrease. 2- The company's debts owed by tenants and employees require zakah if the lunar year passes over them, provided the debtors are wealthy and not delinquent. 3- Amounts paid for investment require zakah on them and their profits if the lunar year passes over them. 4- Land purchased for the purpose of investment by selling it requires zakah, which is paid from its estimated value when the lunar year passes, whether it is equal to what it was bought for, less, or more. 5- Items prepared for ownership and use, such as buildings, structures, furniture, etc., do not require zakah. 6- Used cars intended for trading by operating them require
zakah on their earnings, so the earnings of all the company's branches are collected and their zakah is paid if the lunar year passes over them. 7- The debts and liabilities of the company do not prevent the obligation to pay zakah on its commercial assets. 8- Cars intended for trading in their physical form require zakah on their estimated value at the time the lunar year passes, and on their profits if the lunar year passes over them. 9- Paying zakah to the eligible recipients among your employees in the company is permissible if their salary is not sufficient for them, unless this brings benefit to you, such as if the recipient is, for example, a debtor to the company, then it is not permissible – in this case – to pay it to him. Likewise, if the intention in giving it to him is to encourage him to work or to keep him in the job, then it is not permissible to give it to him. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.