A Detailed Analysis of Zakat on Inventory and Investments

To download the research in PDF format Click Here Researched and written by Mufti Faraz Adam, Amanah Advisors Reviewed by Khondamir Nusratkhujaev, AAOIFI, Board member Checked and Approved by Mufti Mohammed Zubair Butt Summary:  Zakat is payable on Amwal al-Tijara. Amwal al-Tijara are inventories purchased for resale in the ordinary course of business. Any asset purchased for resale as […]
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What is the Zakat treatment of crypto-assets?

QUESTION What is the Zakat treatment of Crypto-assets?  ANSWER In the Name of Allah, the Most Gracious, the Most Merciful As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh Answer: The Zakat treatment of crypto-assets depends on two things: The type of crypto-asset The investment and trading strategy in crypto-asset To read more on our explanation of crypto-assets, you can […]
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Is there Zakat on an investment in a start-up company?

Question: Is there Zakat on an investment in a start-up company? In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. The Answer: Zakat on a start-up depends on the underlying net Zakatable assets of the company. An investor will pay Zakat (2.5%) on the percentage of shareholding in net […]
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What is the Zakat liability on a fixed-term annuity?

Question: What is the Zakat liability on a fixed-term annuity? In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. The Answer: Zakat is not due on the total amount in a fixed annuity yet to be received. The Fiqh (jurisprudence of the answer): An annuity is a contract between you and […]
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How are raw materials, goods in progress and finished goods valued for Zakat?

Question: How are raw materials, inventory and finished goods valued for Zakat? In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. The Answer:1. Raw material – for Zakat purposes, will consider its current value (usually difficult to determine, so may use cost price alternatively) 2. Work in progress – for […]
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What is the Zakat treatment for prepaid expenses on one’s balance sheet?

Question: What is the Zakat treatment for prepaid expenses? In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. The Answer: The prepaid sum is no longer in one’s ownership and as such, it is not Zakatable. Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have […]
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Is Zakat due on Sukuk al-Ijarah investments?

Question: Is Zakat due on Sukuk al-Ijarah investments? In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. The Answer: Ijarah Sukuk is based on an underlying Ijarah structure. Certificates are issued by a special purpose vehicle that entitles the holders to an ownership interest and a right to a return in proportion to […]
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