How Do Shareholders Of A Company Pay Zakat?
How do shareholders of a company pay zakat?
Because the companies are legal entities, if not the company itself but the shares of each shareholder reach nisab amount alone or, together with the other goods, if there is any, they are subject to zakat. In this regard, those who are in possession of goods except their essential needs in nisab amount (80.18 gr gold or equivalent value) must give zakat out of these if one year passes after these goods are owned.
Fixed assets (production tools, machinery, etc.) of the companies operating in the industrial sector are exempt from zakat. After calculating and deducting the expenses such as debts, material, labor, production, marketing, management and financing etc. for one year, liquid assets (semi-products and products, raw material, cash money, cheque, etc.) together with net profit are subject to zakat at the rate of 1/40 (2,5%) (Zuhayli al-Fiqh al-Islami, II, 864-865) .
Therefore, a person who is a partner of such a company must give zakat if the amount of his share from liquid assets, apart from real assets such as office, devices etc. of the company, reaches nisab amount and one year passes upon being owned. This situation also applies to the companies working in the field of trade.
If the shareholders gives over the responsibility of zakat to the management, the management is allowed to give the zakat of their shares instead of them by proxy. In this case, the management calculates the zakat amount the same way as real persons do. If the company does not pay zakat for the shares, the shareholders must give zakat for their shares themselves (Majma al-Fiqh, Qararat and Tawsiyat, 6-11 February 1988 dated desicion, p. 143-145).
Inventory/balance sheets are prepared once a year based on Lunar Year. Liquid assets, cashes, cheques and account receivables are accumulated in value. After deduction of the debts, if there is any, 2,5% of the rest of the balance is paid as zakat.
Source: Presidency Of Religious Affairs The Turkey, High Board of Religious Affairs FATWA
