The default principle of Zakāh is that it is paid according to the type of wealth. For example, if it is stored wealth (e.g., cash, gold), the Zakāh is paid from that stored wealth. If it is prepared for growth (e.g., investments, business assets), the Zakāh is paid from the earnings, and if it is goods for trade (῾urūḍ al-tijārah), the Zakāh is paid from the trade goods, regardless of individual ownership of these assets.

The only difference in the given scenario is the nature of the wealth being subjected to Zakāh. The Zakāh on stored wealth is one-quarter of one-tenth (2.5%). The Zakāh on company assets varies depending on the nature of the assets. If the company’s assets are earnings, they can be combined with personal stored wealth and the Zakāh rate would be one-quarter of one-tenth (2.5%). If the assets are shares, then the Zakāh rate applicable to shares would be considered. If the assets are trade goods, their value should be estimated after deducting expenses and debts, and Zakāh on trade goods should be paid.

However, tools and machinery used for production in the company are typically exempt from Zakāh.

Fatwā issued by Dr. Khālid Naṣr