In our personal reasoning, in which we follow some contemporary scholars, it is appropriate to differentiate between short-term shares, which are considered commercial goods (῾urūḍ al-tijārah).

These are subject to Zakāh after a full year if they reach the niṣāb (minimum amount subject to Zakāh). The Zakāh rate is one-quarter of one-tenth (2.5%), and Zakāh is due on both the principal amount and the profit, meaning the value of the shares at the time of Zakāh payment.

There are also long-term shares, which represent a long-term investment in the company and are not intended for immediate sale but rather for their profit and yield. These are treated similarly to agricultural land. Zakāh is due only on their profit and yield (dividends), not their market value. Zakāh on these profits should be paid at the time of harvest (i.e., when profits are received), and the rate is one-tenth (10%) after deducting expenses, or half of one-tenth (5%) without deducting expenses. This is analogous to agricultural produce.

We follow the Ḥanafī school of Islamic law in this matter, which states that the obligatory Zakāh on agricultural produce is one-tenth if it is irrigated by rainwater or similar sources, and half of one-tenth if it is irrigated by mechanical means, regardless of the quantity produced. Thus, Zakāh is due on all produce without requiring a specific niṣāb or the passage of a full year (ḥawl). Shares are analogous to agricultural produce in this essence.

Fatwā issued by Dr. Khālid Naṣr