Zakah in the Capital of a Company
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Questions one, two, five, and six from Fatwa No. ( 19643 )
Q1: A company prepares an annual balance sheet of its financial position, which includes a statement of its assets and the debts it owes as of a specific date. Is zakah calculated on the company’s assets existing at the end of the year, or on those that were present at the beginning of the year and have completed a lunar year? And how is the completion of the lunar year determined? It is known that the balances present at the beginning of the year change, with increases or decreases at the end of the year depending on the results of the company’s operations?
A1: Answering this question requires explaining the following rulings: 1- For a company’s assets prepared for sale, zakah becomes obligatory after the completion of the lunar year, based on the value they equal at the completion of the lunar year, at the rate of one-quarter of a tenth, i.e., 2.5%. 2 - For a company’s assets prepared for leasing, there is no zakah in the assets themselves, but rather
zakah is due on their rental income if it reaches the minimum threshold (nisab) in itself or when combined with other assets, and a lunar year has passed on it from the time of the contract, and the amount of zakah is one-quarter of a tenth, i.e., 2.5%. 3- Company assets not prepared for trade, whether for sale or leasing, but rather for use and retention; such as the company’s headquarters, and what is necessary for it, like warehouses and showrooms, factories, their machinery, equipment, and tools prepared for their operation, and the like – there is no zakah in these. 4- The company’s balances in gold, silver, and other paper and metal currencies, such as the Saudi Riyal, require zakah if they reach the minimum threshold (nisab) and a lunar year has passed on them, and it is one-quarter of a tenth, i.e., 2.5%. Their profits must be subject to zakah following the principal, even if a lunar year has not passed on them; because their lunar year is the lunar year of the principal. The method of determining the completion of the lunar year on balances is done by one of two ways: The first: Incoming funds are considered by their date, so each amount is subject to zakah when a lunar year has passed on it from the date of its receipt, and so on. The second: The company designates a specific time for paying zakah, such as the month of Ramadan, on the condition that the zakah of an amount is not delayed beyond the completion of the lunar year; in order to care for the rights of the poor and others among the recipients of zakah, and to clear
the conscience from the responsibility of this great pillar of the pillars of Islam. 5- Debts that are on the company are not considered a barrier to zakah on the assets in its possession that are subject to zakah. 6- Debts that the company has from debtors with a term or terms, whatever the terms may be, require zakah if a lunar year has passed on them and they are in the liability of a solvent debtor who is not delaying, and the creditor is able to collect his money. However, if the debt is on an insolvent person whose owner does not know whether he will obtain it or not, or on a solvent person who is delaying and the creditor is unable to collect his debt from the debtor, either because he does not have the proof to extract his right before the judge, or because he has proof but does not have the support of the authority to help him clear his right, as in some countries where there is no support for rights – then zakah is not obligatory on the creditor for this money of his unless he receives it, in which case he starts a new lunar year with it.
Q1: A company prepares an annual balance sheet of its financial position, which includes a statement of its assets and the debts it owes as of a specific date. Is zakah calculated on the company’s assets existing at the end of the year, or on those that were present at the beginning of the year and have completed a lunar year? And how is the completion of the lunar year determined? It is known that the balances present at the beginning of the year change, with increases or decreases at the end of the year depending on the results of the company’s operations?
A1: Answering this question requires explaining the following rulings: 1- For a company’s assets prepared for sale, zakah becomes obligatory after the completion of the lunar year, based on the value they equal at the completion of the lunar year, at the rate of one-quarter of a tenth, i.e., 2.5%. 2 - For a company’s assets prepared for leasing, there is no zakah in the assets themselves, but rather
zakah is due on their rental income if it reaches the minimum threshold (nisab) in itself or when combined with other assets, and a lunar year has passed on it from the time of the contract, and the amount of zakah is one-quarter of a tenth, i.e., 2.5%. 3- Company assets not prepared for trade, whether for sale or leasing, but rather for use and retention; such as the company’s headquarters, and what is necessary for it, like warehouses and showrooms, factories, their machinery, equipment, and tools prepared for their operation, and the like – there is no zakah in these. 4- The company’s balances in gold, silver, and other paper and metal currencies, such as the Saudi Riyal, require zakah if they reach the minimum threshold (nisab) and a lunar year has passed on them, and it is one-quarter of a tenth, i.e., 2.5%. Their profits must be subject to zakah following the principal, even if a lunar year has not passed on them; because their lunar year is the lunar year of the principal. The method of determining the completion of the lunar year on balances is done by one of two ways: The first: Incoming funds are considered by their date, so each amount is subject to zakah when a lunar year has passed on it from the date of its receipt, and so on. The second: The company designates a specific time for paying zakah, such as the month of Ramadan, on the condition that the zakah of an amount is not delayed beyond the completion of the lunar year; in order to care for the rights of the poor and others among the recipients of zakah, and to clear
the conscience from the responsibility of this great pillar of the pillars of Islam. 5- Debts that are on the company are not considered a barrier to zakah on the assets in its possession that are subject to zakah. 6- Debts that the company has from debtors with a term or terms, whatever the terms may be, require zakah if a lunar year has passed on them and they are in the liability of a solvent debtor who is not delaying, and the creditor is able to collect his money. However, if the debt is on an insolvent person whose owner does not know whether he will obtain it or not, or on a solvent person who is delaying and the creditor is unable to collect his debt from the debtor, either because he does not have the proof to extract his right before the judge, or because he has proof but does not have the support of the authority to help him clear his right, as in some countries where there is no support for rights – then zakah is not obligatory on the creditor for this money of his unless he receives it, in which case he starts a new lunar year with it.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.