Quora Answer: If a Company is Owned by Muslims & Non-Muslims, How Does One Pay Zakat on the Company's Savings?

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ

If this is a sole proprietorship, the Muslim pays zakat al-mal on his share.  This is calculated based, not on his income, since zakat is not a tithe on income, but on the excess wealth.  This is determined by the value of the business, and assets, less expenses, and trade obligations.  Zakat on business earnings are immediately liable if they exceed the nisab.

If this is a limited liability company, or trust, these are distinct legal entities from the owners.  They do not pay zakat al-mal on the business.  However, the Muslim owner pays zakat out of what he earns from the business.  As above, the zakat is immediately liable if it exceeds the nisab.  It should be noted that the position of businesses being legal persons distinct from the shareholders is a modern legal phenomenon, and is not mentioned in classical fiqh, jurisprudence.  However, based on how companies are valued, and how earning statements are reported, this is the most practical manner of addressing this conundrum.


Popular posts from this blog

The Benefits of the Verse of 1,000 Dananir

The Du'a of the Blind Man

A Brief Biography of Shaykh Ibrahim Niyas (q.s.)