What is the stronger position in your view regarding the issue of trade goods? And if you hold that there is no zakah on them, then most merchants’ wealth is in their trade goods, so where is the zakah?

The questioner : O Shaykh—may Allah reward you with good—I have an inquiry regarding the question of zakah on trade goods!

The Shaykh : Please, go ahead!

The questioner : It seems to me that you hold the view that there is no zakah?

The Shaykh : How could it be otherwise!!

The questioner : Well, many merchants, for most of the lunar year, have their wealth in trade goods. That is, it is rare for a merchant to have liquid cash that remains with him for a full lunar year reaching the threshold (nisab) on which zakah becomes obligatory.

The Shaykh : This is an argument against you, not for you. Because we are now going to state a position known by scholars specializing in economics, and perhaps we can say that the general public shares this view with them, or if not the general public, then at least the merchants. Now we pose a question:
There are two merchants, and their wealth is equal in amount. One has, for example, one million, and the other has one million. One of them has hoarded the million in an iron safe. I do not say in the bank, because that is forbidden and not permissible. Rather, he has hoarded this money in an iron safe placed in a secure, trustworthy location. And whenever the lunar year passes over this million, he pays out the charity of this money, two and a half percent, and distributes it among the poor and the needy. There is no doubt that he has purified his wealth, and thereby purified himself. The other rich man with the million—whether they are riyals or dinars, the point is to make the matter clear to our minds:
This second man converted the million into trade goods and put them on the market and dealt in them. Imagine now: how many people will benefit from this rich man’s wealth that has been converted into trade goods?!
He has benefited the poor and the needy, on whom zakah is not obligatory, and he has benefited other people, such as workers and merchants who are lower than him in wealth. This is from one aspect. And from another aspect, I mean this first aspect, the benefit of wealth that is put to work and circulated among people is undoubtedly more beneficial than that hoarded wealth from which two and a half percent is paid out at the end of every year.
And from another aspect, which of the two types of wealth is more noble in the Shari'ah: the wealth that is given from the upper hand to the lower hand, or the wealth that is taken rightfully by the sweat of the brow and the toil of the hand?!
You know the saying of the Prophet (peace and blessings be upon him): And in an Arabic dialect as it came in the hadith itself:
As for the other rich man who put his wealth into dealing among people, he and those who deal with him in that are equal; each of them takes his right in the prescribed manner.
So, if we set aside the other aspect—the aspect of it being more complete for a Muslim to take his right with a lower hand or with a hand equal to the upper one—and if we set that aspect aside and look at the first aspect, we find that from the economic perspective, the trade goods on which zakah is not paid—indeed, we said earlier that one pays out from them what pleases his soul—beyond that, they keep the community occupied with this wealth.
And imagine, I gave an example of two rich men. Now imagine if we had hundreds of rich men, and all of them hoarded their wealth in their safes. What would be the state of the economy?
There is no doubt that it would collapse. So, we believe, and this is a virtue of following the Salaf, and we do not say this in vain, what we have mentioned to your ears earlier is based on the Book and the Sunnah and the methodology of the righteous Salaf, because that following is what reforms the society. For that reason, the Imam of the City of Migration, Malik ibn Anas (may Allah be pleased with him), said: “Whoever innovates in Islam an innovation that he sees as good has claimed that Muhammad (peace and blessings be upon him) betrayed the message. Read the saying of Allah, Blessed and Exalted is He:

This day I have perfected for you your religion and completed My favor upon you and have approved for you Islam as religion.

اليوم أكملت لكم دينكم وأتممت عليكم نعمتي ورضيت لكم الإسلام ديناً

[Al-Ma'idah 5:3]

So, whatever was not a religion at that time will not be a religion today. And the point he made was: ‘And the last of this community will not be reformed except by what reformed its first.’” And from here we understand the importance of jurisprudence derived from the Qur'anic verses, the Prophetic hadiths, and the reports of the Salaf, for by that the society is reformed, as Malik said earlier: “And the last of this community will not be reformed except by what reformed its first.”
I did not intend to mention this economic aspect because it is not part of my scholarly methodology to support a Shari'ah ruling with more than what came in the Book and the Sunnah. But I mentioned this only in answer to that question which we have heard repeatedly and often, with an answer like the one to that question:
Is zakah obligatory on trade goods? We mention what came in the Book and the Sunnah and the reports of the Salaf, as I mentioned earlier.
As for if a questioner assumes that if we say that trade goods are included, we cause harm to the poor and the needy, no, by Allah, the matter is exactly the opposite. Indeed, putting these hoarded wealths in some safes to work and converting them into trade goods is more beneficial for the poor and for others as well. And in that, there is no objection to adding to this utilization the paying out of what pleases his soul, as came in the noble verse: And as we said earlier:
Yes