How to Calculate Zakah on Shares
Machine translationRead the Arabic original
Question:
The first message in this episode is from listener (A. M. Al-Sa'dun), who says: Please tell us about the zakah on shares. How is the zakah calculated? Is the profit zakaed along with the capital, or is only the profit zakaed, or only the capital? Does the zakah become due from the time of subscription, or at the end of the lunar year? Please guide us. May Allah reward you with good.
Answer:
In the name of Allah, the Most Gracious, the Most Merciful. Praise be to Allah, and may Allah send prayers and blessings upon the Messenger of Allah, and upon his family and his Companions, and upon whoever follows his guidance. As for what follows:
The joint-stock company requires a detailed explanation: If the shares are for sale and the pursuit of profit, then zakah is due on their principal value when the lunar year has passed. Whenever the year passes, you determine the value of the shares, whether they are in land, cars, buildings, or otherwise. Whenever the year passes on the principal capital invested in the shares, you calculate the zakah after determining the value of that land, or those cars, or those buildings, or the like. The zakah is calculated on the shares along with their profit. For example, if a share was bought for ten thousand, and when the year passed it was worth twenty thousand, you pay zakah on twenty thousand. The same applies in the reverse case: if it was bought for ten thousand, but when the year passed its value decreased to eight thousand or seven thousand, you pay zakah on the reduced value. The criterion for zakah is the value of the commodity, meaning the share, at the completion of the lunar year.
However, if the shares are not for sale but for investment and retention, such as investing in land to build housing on it or to rent it out, without intending to sell it, but rather intending to develop the land and make it housing for themselves or to rent it out, then there is no zakah on the shares themselves. The zakah is only on the rent they receive, if they receive rent and a lunar year passes over it, they pay zakah on the rent.
There is no zakah on the land itself. Similarly, if the investment is in buildings that they do not intend to sell, but rather invested in them to rent them out, then the zakah is on the rent when a lunar year passes over it. The same applies to cars if they invest in cars to use them as taxis or to rent them out specifically to those who use them; the zakah is on the rental fee when a lunar year passes over it. Yes.
The presenter : May Allah reward you with good. If the share itself is subject to buying and selling, O Shaykh, how is the zakah calculated?
The Shaykh : It depends on the intention. If his intention is to sell, he pays zakah on it as trade goods, so they become trade commodities. If, at the time of investment, he did not intend to sell, but only intended to invest in the share, then he does not pay zakah except on the fruit, meaning the rental income.
The presenter : May Allah bless you.
The first message in this episode is from listener (A. M. Al-Sa'dun), who says: Please tell us about the zakah on shares. How is the zakah calculated? Is the profit zakaed along with the capital, or is only the profit zakaed, or only the capital? Does the zakah become due from the time of subscription, or at the end of the lunar year? Please guide us. May Allah reward you with good.
Answer:
In the name of Allah, the Most Gracious, the Most Merciful. Praise be to Allah, and may Allah send prayers and blessings upon the Messenger of Allah, and upon his family and his Companions, and upon whoever follows his guidance. As for what follows:
The joint-stock company requires a detailed explanation: If the shares are for sale and the pursuit of profit, then zakah is due on their principal value when the lunar year has passed. Whenever the year passes, you determine the value of the shares, whether they are in land, cars, buildings, or otherwise. Whenever the year passes on the principal capital invested in the shares, you calculate the zakah after determining the value of that land, or those cars, or those buildings, or the like. The zakah is calculated on the shares along with their profit. For example, if a share was bought for ten thousand, and when the year passed it was worth twenty thousand, you pay zakah on twenty thousand. The same applies in the reverse case: if it was bought for ten thousand, but when the year passed its value decreased to eight thousand or seven thousand, you pay zakah on the reduced value. The criterion for zakah is the value of the commodity, meaning the share, at the completion of the lunar year.
However, if the shares are not for sale but for investment and retention, such as investing in land to build housing on it or to rent it out, without intending to sell it, but rather intending to develop the land and make it housing for themselves or to rent it out, then there is no zakah on the shares themselves. The zakah is only on the rent they receive, if they receive rent and a lunar year passes over it, they pay zakah on the rent.
There is no zakah on the land itself. Similarly, if the investment is in buildings that they do not intend to sell, but rather invested in them to rent them out, then the zakah is on the rent when a lunar year passes over it. The same applies to cars if they invest in cars to use them as taxis or to rent them out specifically to those who use them; the zakah is on the rental fee when a lunar year passes over it. Yes.
The presenter : May Allah reward you with good. If the share itself is subject to buying and selling, O Shaykh, how is the zakah calculated?
The Shaykh : It depends on the intention. If his intention is to sell, he pays zakah on it as trade goods, so they become trade commodities. If, at the time of investment, he did not intend to sell, but only intended to invest in the share, then he does not pay zakah except on the fruit, meaning the rental income.
The presenter : May Allah bless you.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.