:: Zakat - Another Project by MUIS ::

:: English :: Malay ::

Zakat on wealth comprises several sub-categories, namely zakat on savings, zakat on gold, zakat on business, zakat on CPF savings and zakat on shares.


	Zakat on business Zakat on business is zakat that is obligatory to be paid on business property whether it is based on production, mining, fishing, shipping, supplying, agriculture or service providing. The trade can be in the form of private business, partnership with fellow Muslims or non-Muslims, business corperations, business shares or any other forms of businesses.

Working Capital Model Working capital and adjustments shall only be applicable to certain related items. The adjustments are either added or deducted upon the items identified. Current Assets - Current Liabilities +/- *Adjustments = Business assets that are subject to zakat calculation

Adjustments The adjustments concerned are deducted upon the arguments and basis below: Minus Current Assets Items that are not zakat obligated* - these items have to be withdrawn from zakat calculation such as items and non-permissible products such as riba', gambling and liquor. Limited ownership - Water, telephone, electrical appliances and its like shall be deducted as it does not comply with the requirements of full rights. Financial creditor - Money on loan to the borrower is based on the characteristics of full ownership that has been transferred to the borrower. The borrower possesses the full right to exploit and is free to manage the financial resources for his own interest, thus making it zakatable upon him. No items are zakatable twice - The dividend that isalready been deducted for zakat may be zakat exempted. Current assets should be productive - Bad debts, expired stocks and depreciations that is permanent should be exempted. Charitable Funds - such as khairat and education fund in current assets may be exempted from zakat. Nevertheless, in cases of charitable funds which are business in nature such as the Qardhul hassan loan, the amount exempted from zakat is the basic value. For funds that are charitable in nature such as donations and khairat, only the balance is exempted. Inventory/ stock category - Zakat is subjected on finished product only; raw materials and items in productions are exempted from zakat. Added to Current Assets (Adjustments that need to be added) All contributions, donations and alms made by any of the business entities at the end of haul (the last quarter) shall be added again (with the assumption that the donations made will not affect the company's liquidity) into the current assets. Current assets channeled for charitable purposes, are still zakatable unless the source is from a charitable fund. Added to Current Liabilities According to the deductions made by Imam Shafie, there is no zakat requirement on debts, whether or not assets qualify for nisab. According to Imam Shafie, financial loan (not commercial liabilities) does not affect the obligations of zakat.

To qualify for nisab, current liabilities that are exempted are those operational in nature only that including: Trade Creditors Operating payables such as salaries, electrical and phone bills Taxes based on current assessment Adjustments only involve those items that are not deductable such as: Financial loans and scheduled refinancing. Dividends payable Overdraft Financial/ capital lease

Quantum Of Zakat Payable 2.5 % of the portion of the assets (business assets) which are subjected to zakat, upon completion of the haul and nisab. Conditions governing zakat on business The following conditions apply Islam - Only Muslims need to pay zakat. In a business company where ownership is shared between a Muslim and a non-Muslim, only the Muslim's share of the business is subjected to zakat. Full ownership - Zakat is payable on the shared capital or company shares owned by the owner minus any money borrowed to purchase the shares. Intention to do business Haul is completed. Nisab is reached.