Is there zakah on trade goods?

The questioner : May Allah preserve you. Regarding trade goods, it is well known that there is disagreement among the scholars regarding the ruling on zakah on them. The majority hold that zakah is obligatory on trade goods. The other view is that zakah is obligatory in general, without the conditions of a lunar year or a minimum threshold. The majority hold that zakah is obligatory with the conditions of a lunar year and a minimum threshold. The question is: We want to clarify this issue in light of the Book and the Sunnah and the understanding of the pious predecessors of this issue, so that we may emerge with our hearts certain of this correct position?

The Shaykh : Praise is to Allah; we praise Him, seek His help, and seek His forgiveness. We seek refuge in Allah from the evil of our own selves and from the evil of our deeds. Whomsoever Allah guides, there is none who can misguide him, and whomsoever He causes to go astray, there is none who can guide him. And I bear witness that there is no deity but Allah alone, with no partner, and I bear witness that Muhammad is His slave and His Messenger. As for what follows:
It is known to all scholars without exception that the original ruling regarding wealth, just as it is regarding blood and private parts, is prohibition. It is not permissible to impose any of these three things except by an explicit text from the Book of Allah or from the hadith of the Messenger of Allah (peace and blessings be upon him), or by a certain consensus of the scholars of the Ummah. In what I have known and examined and come across, I have not found any evidence from these three sources supporting what most of the scholars, both early and late, have held regarding the obligation of zakah on trade goods with the two conditions mentioned earlier in your question: that it reaches the minimum threshold first, and that a lunar year passes over it second. They also state a third point: that if these two conditions are met in any of the trade goods, it is necessary to appraise these goods at the end of every year after the lunar year has passed. After the appraisal, two and a half percent is paid from the estimated value, as is the case with the zakah of the two types of currency. We have not found this level of detail explicitly stated, as we mentioned earlier, in the Book and the Sunnah and the consensus of the Ummah. If the original ruling is as we have mentioned, then our position is the position of the methodology: not to impose zakah on trade wealth in a manner or with restrictions that are not mentioned in any of those sources. However, it is not hidden from any researcher or scholar that there are general texts commanding the payment of zakah and the purification of souls through the payment of zakah. These are general texts. Then there are specific texts that clarify what items are subject to zakah and what are the amounts that are obligatory, whether related to the two types of currency as mentioned earlier, or related to some domestic animals such as sheep, cattle, and camels, or related to some fruits and the like.
There are texts concerning the clarification of what is obligatory for these types. We say: We adhere to these texts and implement them, and we do not add to them by using reasoning or analogical reasoning, because there is something that prevents this, namely that original ruling which I mentioned at the beginning of this speech. Especially since some hadiths have come that confirm this original ruling, such as the hadith of Mu'adh
ibn Jabal (may Allah be pleased with him) when the Messenger of Allah (peace and blessings be upon him) sent him to Yemen as a caller, bringer of good news, and teacher. He said to him (peace and blessings be upon him): So his statement: is a confirmation of that rule that the original ruling regarding wealth is prohibition and restriction, except in what has come in an explicit text. Added to this are other hadiths that explicitly state, for example, in the hadith agreed upon by al-Bukhari and Muslim, which is the saying of him (peace and blessings be upon him): The hadith leads us to his saying (peace and blessings be upon him): or as he (peace be upon him) said. The hadith is in the two Sahihs. Therefore, when some merchants from Sham came to 'Umar ibn al-Khattab (may Allah be pleased with him), and they had horses for sale for trade, they said to him: "O Commander of the Faithful, take their zakah from us." He said (may Allah be pleased with him): "My two predecessors before me did not do that." They persisted and pressed the matter. 'Ali ibn Abi Talib (may Allah be pleased with him) was present in the assembly, so he said: "O Commander of the Faithful, take it from them as a charity among the charities." So he took it, and their hearts were pleased. This is evidence that there is no zakah on horses. The Prophet (peace and blessings be upon him) [did not take it], and the hadith is in the Musnad of Imam Ahmad. It clarifies that there is no zakah on horses that are raised and bought and sold for the purpose of trading, just as he (peace be upon him) imposed zakah on the other animals mentioned earlier, such as sheep, cattle, and camels. This is the end of my explanation in answer to that question.
However, many contemporary jurists, if not all of those who have studied jurisprudence, think otherwise, because most of these contemporaries have not studied jurisprudence in the Book of Allah or in the Sunnah of the Messenger of Allah (peace and blessings be upon him). Rather, if they have studied jurisprudence, they have done so by reading the traditional, school-based fiqh books, which require their reader and the one who studies with them to adhere to them without knowing the evidence of their authors. The best of these are those who study jurisprudence based on the four schools, which is what is called today comparative jurisprudence. They read the position of this school and that school, and live in the differences, then they transmit the opinion of each school accompanied by the evidence that the school mentions, without studying these evidence in light of the scientific principles of the principles of hadith or the principles of jurisprudence, or for example, without applying any of the principles of jurisprudence, such as the general and the specific, the absolute and the restricted, and the like, which they may have read in the science of principles and studied, and perhaps killed themselves with theoretical research, but they have not applied it practically. Likewise, regarding the other original ruling, which is the original ruling of the science of hadith and its principles, when he transmits the evidence of each opinion or school, he does not conduct scientific verification on them, saying this hadith is authentic, this is good, this is weak, and the like. What they fall into today, due to the ease of what they go to and fall into, is that they consider what they call public benefit. This excuses them from exerting themselves and applying the scientific principles mentioned earlier. Then, when they see the public benefit, what do they consider: the benefit of the poor, the benefit of the rich, or the benefits related to both parties? It is only one benefit. As for the Wise Lawgiver, He has seen the benefit of both parties. This is the difference between the ruling of the Wise Lawgiver and the opinion of those who opine and those who see from the people of opinion. I also want to draw attention to this.
And one more point, and I hope it is the last. These observers and those who look into the interest of the poor and the needy, they look at the issue we are discussing with one eye only. Here is the explanation: they say that it is not in the interest of the poor and the needy, nor does the wisdom of the Most Wise of the Wise indicate it, that a man who has millions of dollars in the value of trade goods should not be required to pay zakah on them. This would deprive the poor and the needy of their known right, which is mentioned in the general wording of Allah the Exalted’s statement: My answer to this is from two aspects, and perhaps explaining these two will conclude our discussion of this issue, so that we may receive any objections, doubts, or criticisms that may come to us. The first answer: We hold fast to the general principle mentioned at the beginning of the discussion. We say: It is obligatory for these wealthy people with trade goods to pay zakah from the goods themselves, to achieve the intended purpose for which zakah was legislated in all its types and forms, as our Lord, Mighty and Majestic, indicated in the Noble Qur’an in His statement: Therefore, every wealthy person who has trade goods must purify himself from what his soul has brought him, which is stinginess, as He, Mighty and Majestic, said: He must purify himself from this stinginess by giving what his soul is pleased to give as obligatory zakah, so that he purifies himself from the filth of miserliness and stinginess. This is the first answer. So let no one understand that there is absolutely no zakah on the wealthy with trade goods, because our discussion is only that there is no fixed-rate zakah on them, as explained at the beginning of the discussion. As for absolute zakah, it is necessary, as Allah the Exalted said: This right has an absolute aspect, which applies in its generality, and a restricted aspect, as explained in the Sunnah and in the books of jurisprudence as well, with disagreement among scholars on some branches.
As for the other matter, I say, and reality confirms it: That among the wisdom of the Most Wise of the Wise is that Allah, Mighty and Majestic, legislated a specific zakah on hoarded wealth at a known threshold, as long as this wealth remains hoarded. He did not legisulate such a zakah on wealth that was hoarded and then turned into trade goods. In this lies profound wisdom, because the greatest benefit for the poor and the needy, and indeed for the Muslim community as a whole, is realized by not imposing this fixed-rate zakah on these assets that are offered for trade. The proof is that when this hoarded wealth is turned into trade, it activates these assets and employs the poor and the needy. Thus, their benefit is first, greater than the percentage imposed on hoarded gold or silver. Then, may Allah have mercy on you, it becomes more noble and purer for them, as indicated by the Prophet (peace and blessings be upon him) in the well-known hadith: And as he said in the well-known hadith as well: Therefore, turning hoarded wealth into trade goods is more beneficial for the poor and more noble for them, because they receive it through the labor of their hands. This is what I have, and now we listen to what you have.