Zakah on Wealth and Its Increase
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Fatwa No. ( 17996 )
Q: A partnership with a capital of five hundred thousand riyals (500,000) purchased a farm for approximately twelve million riyals (12,000,000) on credit, and the debt appeared in the balance sheet for 1413 AH. The company’s operations achieved net profits of (300,000) in the same year. The question is: Do we have to pay zakah despite the value of the farm appearing as a liability at the end of the year, or is it paid on the net profits? Knowing that the farm now does not equal its purchase price. We hope for your guidance.
A: It is obligatory for the aforementioned company to pay zakah at the end of the year on the money it has accumulated from profits and other sources, by giving one-quarter of a tenth, i.e., 2.5%. Even if it has debts, they do not prevent the obligation of zakah on the money that has completed a lunar year in its possession. Likewise, the goods prepared for sale in its possession must have their value zakaed if a lunar year has passed over them, just as with the money present. As for the farm, zakah is not obligatory on its value if it is not intended for sale. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: A partnership with a capital of five hundred thousand riyals (500,000) purchased a farm for approximately twelve million riyals (12,000,000) on credit, and the debt appeared in the balance sheet for 1413 AH. The company’s operations achieved net profits of (300,000) in the same year. The question is: Do we have to pay zakah despite the value of the farm appearing as a liability at the end of the year, or is it paid on the net profits? Knowing that the farm now does not equal its purchase price. We hope for your guidance.
A: It is obligatory for the aforementioned company to pay zakah at the end of the year on the money it has accumulated from profits and other sources, by giving one-quarter of a tenth, i.e., 2.5%. Even if it has debts, they do not prevent the obligation of zakah on the money that has completed a lunar year in its possession. Likewise, the goods prepared for sale in its possession must have their value zakaed if a lunar year has passed over them, just as with the money present. As for the farm, zakah is not obligatory on its value if it is not intended for sale. 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.