The Ruling on Zakah on Company Shares and House Rentals
Machine translationRead the Arabic original
The brother (A. S.) from Riyadh also asks and says: Is zakah due on the value of the shares at the completion of the lunar year, or on the fifteen percent that is distributed from the profits, in the case of companies such as gas and electricity companies? Or is zakah due only on the fifteen percent if a lunar year passes over it? And if there is a house that is rented out, is zakah due on the value of the house and its rent, or only on the rent? Please inform us, may Allah reward you.
Answer: Companies intended for investment rather than sale, such as electricity companies and the like, zakah is due on the money obtained, specifically the money and profits distributed to the shareholders. Zakah is due on this if a lunar year passes over it after it is obtained and a man owns it. So if he owns it and a lunar year passes over it, he pays zakah on it.
As for the capital, which is the shares in the company, there is no zakah on it; because it is an investment company intended for profit, not for selling its assets. This is unlike lands in which people partner for the purpose of sale, where the intention is to sell their assets and benefit from their profits. In this case, one pays zakah on both the capital and the profit, whether it is land intended for sale, a car intended for sale, or a building and the like.
As for companies intended for investment where the assets remain, zakah is due on the fruit obtained, that is, the money obtained as profits. It is paid when it is gathered and obtained by its owners; it is paid when a lunar year passes over it. Yes.
The presenter: And regarding the house?
The Shaykh: The house is the same; the rent is subject to zakah, but the capital is not subject to zakah if it is for rental and not for sale, and it is prepared for renting so that he rents it out and benefits from the rent. Zakah is due on the rent if a lunar year passes over it. However, if he spends it and a lunar year has not passed over it, there is no zakah on it, or if he pays a debt with it or the like, there is no zakah on it unless a lunar year passes over it after the lease contract is concluded, meaning a year has passed after the completion of the contract. Yes.
The presenter: May Allah reward you.
Answer: Companies intended for investment rather than sale, such as electricity companies and the like, zakah is due on the money obtained, specifically the money and profits distributed to the shareholders. Zakah is due on this if a lunar year passes over it after it is obtained and a man owns it. So if he owns it and a lunar year passes over it, he pays zakah on it.
As for the capital, which is the shares in the company, there is no zakah on it; because it is an investment company intended for profit, not for selling its assets. This is unlike lands in which people partner for the purpose of sale, where the intention is to sell their assets and benefit from their profits. In this case, one pays zakah on both the capital and the profit, whether it is land intended for sale, a car intended for sale, or a building and the like.
As for companies intended for investment where the assets remain, zakah is due on the fruit obtained, that is, the money obtained as profits. It is paid when it is gathered and obtained by its owners; it is paid when a lunar year passes over it. Yes.
The presenter: And regarding the house?
The Shaykh: The house is the same; the rent is subject to zakah, but the capital is not subject to zakah if it is for rental and not for sale, and it is prepared for renting so that he rents it out and benefits from the rent. Zakah is due on the rent if a lunar year passes over it. However, if he spends it and a lunar year has not passed over it, there is no zakah on it, or if he pays a debt with it or the like, there is no zakah on it unless a lunar year passes over it after the lease contract is concluded, meaning a year has passed after the completion of the contract. Yes.
The presenter: May Allah reward you.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.