Zakat on trade and business

Goods bought to be resold are subject to zakat (agreement of the four schools), provided you intended to trade them when you acquired them. Stock takes the year of the money used to buy it. The nisab is that of gold or silver; the Hanafi and Hanbali schools take whichever of the two is more beneficial for the poor.

The formula, handed down from Maymun ibn Mihran and used by the Kuwait Zakat House: (goods + cash + receivables you expect to collect − debts) × 2.5%.

• Counted: stock (in the shop, in transit, in storage), work in progress and raw materials that go into the product, cash, customer receivables you expect to collect, land and buildings bought for resale.
• Not counted: premises, machines, vehicles, furniture, shelving, materials that do not stay in the product (fuel), goodwill, doubtful receivables (zakated once when collected).
• Short-term business debts (suppliers, wages and taxes due) are deducted according to the rule on debts.

At the market price on the zakat day, not the purchase price (Permanent Committee; Ibn Baz). Several refinements are in use: the price you usually sell at (Kuwait Zakat House), the wholesale price for a wholesaler and the retail price for a retailer (11th Symposium; AAOIFI), the current value without the expected profit (Diyanet).

In the Maliki school, a trader who holds stock waiting for prices to rise (al-muhtakir) pays only on sale, for one year; one who sells continuously (al-mudir) pays every year.

Zakat on trade is in principle paid in money (Maliki, Shafi‘i and Hanbali schools). Paying it in goods is accepted when there is a need: a slump, a lack of cash, the interest of the poor (Ibn Taymiyya; 1st Symposium).