Is there zakah on trade goods, and how does one calculate it?
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The questioner : If a person has a company and wants to pay zakah regarding the fixed assets, we know that there is no zakah on them. But as for the existing merchandise, how is it paid out? That is, is it paid out based on the cost of this merchandise or the selling price, or what is the method?
The Shaykh : Pardon me, I got confused by your speech because you said there is no zakah on it, and then you asked about how to pay out the zakah. How do you mean?
The questioner : The fixed assets, which we mean by that, for example, buildings or machines, have no zakah on them. The zakah is on the produced merchandise, so this is what is subject to zakah. So if you have stored merchandise, how do you pay it out, meaning its value? Is it by cost or by selling price?
The Shaykh : Now I understand you. I understood the term "fixed assets." In the jurisprudential expression,, my answer is that there is no zakah on trade goods that necessitates directing this question. This is according to the stronger opinion among the scholars' opinions, which the Sharia evidence indicates. Many scholars say that zakah is obligatory on trade goods. Those who say this obligation require the owner of the trade and goods to appraise them at the end of every year, estimate their value, and then pay out two and a half percent from every hundred, as if they were currency. This is the method of payment according to those who say zakah is obligatory on trade goods.
As for what we adopt, it is that there is no zakah on trade goods of this type. Rather, there is an absolute zakah, meaning the owner of these goods pays out from them what his soul is generous with, without determining the quantity of trade he has and without appraising it at the end. Rather, he pays out from it what his soul is pleased with. This is an application of the general texts that command spending and purifying souls through zakah and the like. As for this codification and classification, which states that it is necessary to appraise trade goods at the end of every year and then pay out two and a half percent from the hundred, this is an opinion and independent legal reasoning for which there is no evidence from the Book and the Sunnah.
The questioner : ... O Shaykh.
The Shaykh : And I think. Yes, but I think I gave you the answer to your question?
The questioner : The problem for us is if you pay the zakah, the problem is in appraising the merchandise. Because the merchandise, meaning some people say it is appraised by cost. The intended meaning of cost is the price of the merchandise and what was spent on it until it reached the warehouses. As for the selling price, the profit price is added to it.
The questioner : It is necessary.
The Shaykh : So on which is it estimated, on the cost or on the sale? Because the merchandise may be spoiled, or it may not be sold, or for example, we cannot... it stays with me for years not sold, so I pay the selling price which I have not yet obtained. Is this the problem?
The Shaykh : This question is actually directed to those who say zakah is obligatory, not to someone like me. But if I give you a fatwa, I would be speaking on behalf of others, because I do not adopt it. They say, regardless of the profit that will be added to the cost, as you will say, meaning, take the merchandise, what did it cost you? You calculate the total at two and a half percent, and that comes out. As for the profit that will come to you, and you may not profit, this is a return to the future, and you are not obligated by it. But the Sharia and the evidence, which are stronger than the evidence of those who say zakah is obligatory on this method we referred to earlier, and which is easier for the obligated ones, is that you pay out what your soul is pleased with from the merchandise itself.
Please, whoever wants to.
The questioner : On the same topic, O Shaykh. Now, due to scientific progress and life differing from the situation of people in the past, there is now the issue of budgets. Every company makes a budget and inventories its merchandise and financial conditions at the end of every year. So I expect that, Allah knows best, the first opinion, which is paying out zakah based on two and a half percent, is suitable currently. The reason is that things have become clear for traders. What is your opinion, O Shaykh?
The Shaykh : May Allah bless you. The issue is not a logical and rational issue; the issue is a religious act of worship. It is not permissible for a Muslim to reject it because of its difficulty, nor to legislate it because of its ease. Rather, it is submission to the Sharia ruling, whether it agrees with one's desires or contradicts them. And obedience and worship are not except on this basis. [An-Nisa: 65]. It is agreed upon among scholars that there is no zakah on vegetables. The logic you mentioned earlier applies to vegetables. So is it said that zakah is obligatory on them? It is not said, because as long as the Lawgiver has not made it obligatory, it is not permissible for us to make obligatory something the Lawgiver did not make obligatory. Likewise, the opposite is not permissible, which is to drop something the Lawgiver made obligatory. Then those who said regarding the percentage we mentioned, two and a half percent, said it in the early centuries where these precise calculations you referred to earlier did not exist. Because the answer is clear that the person calculates according to his ability in the first time, meaning where these calculating machines do not exist. This does not drop the obligation if it were established. But the true, radical answer is that it has not been established in codified zakah on all wealth, but only on some. So in the hadith of Mu'adh ibn Jabal, when the Prophet (peace and blessings be upon him) sent him to Yemen, he said to him , regarding lentils, barley, and other things, he said, "Do not take." And many people imagine that this analogy for the wealth on which zakah is obligatory contains injustice against the poor. And I believe that if the matter were so, we would not be obligated to apply our minds, because the Sharia is from Allah and not from us. But we believe that the opposite is correct, because trade goods, when zakah is not obligatory on them...
If we want to picture now two traders, or in the correct sense, two rich men. One has hoarded his wealth and does not employ it, and the other has employed it in trade. Both pay out the zakah they see as obligatory on them. There is no disagreement among Muslims that hoarded wealth has zakah on it at two and a half percent. This is a matter of consensus.
The second, the trader, has the disagreement we mentioned earlier. But let us assume he pays out the zakah, and the second hypothesis, which adopts an opinion like ours, does not pay out the zakah. Now we compare the trader who does not pay out the zakah with the rich man who hoarded his wealth. Which of the two men is more beneficial economically for the poor and the needy?
The questioner : The one who invested his wealth.
Another questioner: The one who invested his wealth.
The Shaykh : Yes?
The questioner : The one who employed his wealth.
The Shaykh : The one who employed his wealth is the more beneficial. Well done.
The questioner : The one who is more beneficial for the society.
The Shaykh : Yes.
The questioner : The one who hoarded his wealth for a job...
The Shaykh : No, the opposite.
The questioner : Because he will pay out two and a half from his zakah.
The Shaykh : May Allah bless you. The one who hoarded his wealth will pay out two and a half from the hundred.
The questioner : No, he will not pay out anything...
The Shaykh : May Allah bless you. Why did we raise this question? Because the matter requires some deliberation. That one does not pay out anything, but he put his wealth in the market and employed hundreds of individuals. So in this regard, he is more beneficial for the people, the poor and the needy, than that one who pays out two and a half percent from his hoarded wealth. This is from one side. And from another side, the wealth that is taken with the sweat of the brow and the labor of the hand is more lawful, more pure, and more blessed than taking from that one who takes it as charity.
And therefore we have two hadiths that fit the occasion. The first hadith is. So this poor man, when he takes from the rich man two and a half percent, he takes it with humiliation and poverty. But that one who takes it, as we said, with the sweat of the brow and the earnings of the hand, takes it with self-respect and right. This is the first hadith.
The second hadith is the verse[At-Tawbah 9:103]. It was among the wisdom of zakah being a purification that the wise Lawgiver, in honoring the Messenger and his household, forbade them from charity. And He explained that by saying Muwatta Malik 58:13.
So, if we imagine these two men, one is a rich man who hoards his wealth and pays his zakah, and the other is a rich man who throws his wealth into the market, then without a doubt, from an economic standpoint, the latter is more beneficial than the former. Therefore, we should not say that there is injustice or oppression here against the poor and the needy. It is not so. This is what appears to us, and Allah knows best. In reality, we might call this philosophy, because it is logical and rational discourse. It is permissible for a philosopher who is more philosophical than me to come along and ruin things for me. But if we engage in philosophy, and if that is the correct expression, we do so only after relying on the texts of the Shari'ah. As you heard, the texts of the Shari'ah do not take charity except from such and such. And the general text in which the Messenger (peace and blessings be upon him) addressed the greatest community, which is at 'Arafah, as is well known, is his saying (peace and blessings be upon him):.
So, the original state of wealth is inviolability, just as it is for blood. Therefore, it is not permissible to rule with the killing of a Muslim soul except with a Shari'ah argument, and it is not permissible to take wealth from a person except with a Shari'ah argument. And this argument does not exist in the Shari'ah. Yes.
The Shaykh : Pardon me, I got confused by your speech because you said there is no zakah on it, and then you asked about how to pay out the zakah. How do you mean?
The questioner : The fixed assets, which we mean by that, for example, buildings or machines, have no zakah on them. The zakah is on the produced merchandise, so this is what is subject to zakah. So if you have stored merchandise, how do you pay it out, meaning its value? Is it by cost or by selling price?
The Shaykh : Now I understand you. I understood the term "fixed assets." In the jurisprudential expression,
The Shaykh (may Allah have mercy on him) laughed
ضحك الشيخ رحمه اللهAs for what we adopt, it is that there is no zakah on trade goods of this type. Rather, there is an absolute zakah, meaning the owner of these goods pays out from them what his soul is generous with, without determining the quantity of trade he has and without appraising it at the end. Rather, he pays out from it what his soul is pleased with. This is an application of the general texts that command spending and purifying souls through zakah and the like. As for this codification and classification, which states that it is necessary to appraise trade goods at the end of every year and then pay out two and a half percent from the hundred, this is an opinion and independent legal reasoning for which there is no evidence from the Book and the Sunnah.
The questioner : ... O Shaykh.
The Shaykh : And I think. Yes, but I think I gave you the answer to your question?
The questioner : The problem for us is if you pay the zakah, the problem is in appraising the merchandise. Because the merchandise, meaning some people say it is appraised by cost. The intended meaning of cost is the price of the merchandise and what was spent on it until it reached the warehouses. As for the selling price, the profit price is added to it.
The questioner : It is necessary.
The Shaykh : So on which is it estimated, on the cost or on the sale? Because the merchandise may be spoiled, or it may not be sold, or for example, we cannot... it stays with me for years not sold, so I pay the selling price which I have not yet obtained. Is this the problem?
The Shaykh : This question is actually directed to those who say zakah is obligatory, not to someone like me. But if I give you a fatwa, I would be speaking on behalf of others, because I do not adopt it. They say, regardless of the profit that will be added to the cost, as you will say, meaning, take the merchandise, what did it cost you? You calculate the total at two and a half percent, and that comes out. As for the profit that will come to you, and you may not profit, this is a return to the future, and you are not obligated by it. But the Sharia and the evidence, which are stronger than the evidence of those who say zakah is obligatory on this method we referred to earlier, and which is easier for the obligated ones, is that you pay out what your soul is pleased with from the merchandise itself.
Please, whoever wants to.
The questioner : On the same topic, O Shaykh. Now, due to scientific progress and life differing from the situation of people in the past, there is now the issue of budgets. Every company makes a budget and inventories its merchandise and financial conditions at the end of every year. So I expect that, Allah knows best, the first opinion, which is paying out zakah based on two and a half percent, is suitable currently. The reason is that things have become clear for traders. What is your opinion, O Shaykh?
The Shaykh : May Allah bless you. The issue is not a logical and rational issue; the issue is a religious act of worship. It is not permissible for a Muslim to reject it because of its difficulty, nor to legislate it because of its ease. Rather, it is submission to the Sharia ruling, whether it agrees with one's desires or contradicts them. And obedience and worship are not except on this basis.
But no, by your Lord, they will not [truly] believe until they make you, [O Muhammad], judge concerning that over which they dispute among themselves and then find within themselves no discomfort from what you have judged and submit in [full, willing] submission.
فَلا وَرَبِّكَ لا يُؤْمِنُونَ حَتَّى يُحَكِّمُوكَ فِيمَا شَجَرَ بَيْنَهُمْ ثُمَّ لا يَجِدُوا فِي أَنفُسِهِمْ حَرَجًا مِمَّا قَضَيْتَ وَيُسَلِّمُوا تَسْلِيمًاCharity is not taken except from these four: wheat, barley, raisins, and dates
لا تأخذ الصدقة إلا من هذه الأربع من القمح والشعير والزبيب والتمرIf we want to picture now two traders, or in the correct sense, two rich men. One has hoarded his wealth and does not employ it, and the other has employed it in trade. Both pay out the zakah they see as obligatory on them. There is no disagreement among Muslims that hoarded wealth has zakah on it at two and a half percent. This is a matter of consensus.
The second, the trader, has the disagreement we mentioned earlier. But let us assume he pays out the zakah, and the second hypothesis, which adopts an opinion like ours, does not pay out the zakah. Now we compare the trader who does not pay out the zakah with the rich man who hoarded his wealth. Which of the two men is more beneficial economically for the poor and the needy?
The questioner : The one who invested his wealth.
Another questioner: The one who invested his wealth.
The Shaykh : Yes?
The questioner : The one who employed his wealth.
The Shaykh : The one who employed his wealth is the more beneficial. Well done.
The questioner : The one who is more beneficial for the society.
The Shaykh : Yes.
The questioner : The one who hoarded his wealth for a job...
The Shaykh : No, the opposite.
The questioner : Because he will pay out two and a half from his zakah.
The Shaykh : May Allah bless you. The one who hoarded his wealth will pay out two and a half from the hundred.
The questioner : No, he will not pay out anything...
The Shaykh : May Allah bless you. Why did we raise this question? Because the matter requires some deliberation. That one does not pay out anything, but he put his wealth in the market and employed hundreds of individuals. So in this regard, he is more beneficial for the people, the poor and the needy, than that one who pays out two and a half percent from his hoarded wealth. This is from one side. And from another side, the wealth that is taken with the sweat of the brow and the labor of the hand is more lawful, more pure, and more blessed than taking from that one who takes it as charity.
And therefore we have two hadiths that fit the occasion. The first hadith is
The upper hand is the one that gives, and the lower hand is the one that takes
اليد العليا هي المعطية واليد الدنيا هي الآخذةThe second hadith is the verse
Take, [O, Muhammad], from their wealth a charity by which you purify them and cause them increase
خُذْ مِنْ أَمْوَالِهِمْ صَدَقَةً تُطَهِّرُهُمْ وَتُزَكِّيهِمْ بِهَاIt is only people's impurities.
إنما هي أوساخ الناسSo, if we imagine these two men, one is a rich man who hoards his wealth and pays his zakah, and the other is a rich man who throws his wealth into the market, then without a doubt, from an economic standpoint, the latter is more beneficial than the former. Therefore, we should not say that there is injustice or oppression here against the poor and the needy. It is not so. This is what appears to us, and Allah knows best. In reality, we might call this philosophy, because it is logical and rational discourse. It is permissible for a philosopher who is more philosophical than me to come along and ruin things for me. But if we engage in philosophy, and if that is the correct expression, we do so only after relying on the texts of the Shari'ah. As you heard, the texts of the Shari'ah do not take charity except from such and such. And the general text in which the Messenger (peace and blessings be upon him) addressed the greatest community, which is at 'Arafah, as is well known, is his saying (peace and blessings be upon him):
Indeed, your wealth, your blood, and your honor are inviolable to you, just as the inviolability of this day of yours in this month of yours in this land of yours in this year of yours. O Allah, have I conveyed it? O Allah, be a witness
إنما أموالكم ودماؤكم وأعراضكم حرامٌ عليكم كحرمة يومكم هذا في شهركم هذا في بلدكم هذا في عامكم هذا، اللهم هل بلغت اللهم فاشهدSo, the original state of wealth is inviolability, just as it is for blood. Therefore, it is not permissible to rule with the killing of a Muslim soul except with a Shari'ah argument, and it is not permissible to take wealth from a person except with a Shari'ah argument. And this argument does not exist in the Shari'ah. Yes.