I bought some shares in National Halal Food in England about two years ago. Should I pay the zakat for these shares annually? Is the zakat applied on the total amount of our money, or merely the profits? Last year I paid the zakat obligation of the total amount of my money, since I thought that it resembled saving golds, and I this year I plan to do the same. but one of my friend told me that the obliged zakat is applied only on the profit of that investment? Please give me an explanation.
All praises be to Allah, peace and prayer of Allah be upon Prophet Muhammad, his family, and his devoted companions.
Share or stock is an ownership letter of a part of a company. Thus, it is understood that the value of that share will always in accordance with the development of that company. If everything runs smooth, and the company managed to score some profits, the value of it’s share will increase, and vice versa, thus the value of such share might decrease to a lower point than the value written on the share sheet.
Hence, it is understood that a share certificate may have three kinds of price:
– Price based on the value written on the share certificate or the value at the time the shares were released.
– Price based on assets/real assets of the company.
– Price applied on the stock market (the secondary market). This price, as already known, is affected by many factors, such as the dynamic of supply and demand, speculation, etc.
If that so, the way to count the amount of zakat of such shares should take in account the difference of the shares’ value, as explained above.
Beside that, there are 2 other things that should be considered in establishing the zakat of your shares. The two things are:
– First: The aim of shares ownership
Generally, the shares owner could be classified into two big groups:
The owners who aimed to get dividend (profits) from the company, and do not intend to trade his shares.
The owners who aimed to obtain the capital gain (the profit obtained from difference between the buying and selling price) yielded from supply and demand activity on the secondary market.
– Second: The type of company that issue the shares certificate.
According to the types of it’s business, Companies exist in society today could be classified into 3 big groups. This classification has a big impact in the determination of the amount of zakat that must be paid.
The first type : Companies operating in service field, such as aviation companies, hospitals, transportation companies, hotels, and the like.
The second type: Companies operating in producing goods (industrial companies) and selling it to people, such as animal husbandry, plantation, mines, and the like.
The third type: Companies operating in trading field, that is buying some goods and reselling it people, such as export and import companies, retails, and the like.
If you’ve known about the three things that affect the amount of zakat to be paid, below I’ll explain the details of it:
If you have some shares to be traded, and you obtained capital gain from it, you are obliged to pay the zakat of all shares you have, based on the current value applied on the stock market (at the time you should pay the zakat), without making any difference between the operating field of the company issuing the shares. For example: If you have the shares of Telkomsel company about 10.000 shares, and the price of each certificate applied on the stock market is IDR 2000,- , the zakat you are obliged to pay is about 2.5% from (10.000×2000) = 2.5% x IDR 20.000.000,- = IDR 500.000,-.
If you want to buy some shares intending to get dividend from the company issuing those shares, you need to consider the type of the company which shares you’ve bought:
If the company which shares you buy operating in services sector, the zakat you are obliged to pay is merely the result, or dividend or profit of that company. Because your fund is turned into movable or immovable assets, such as building, aircraft, vehicle, boat, and the like. The scholars agreed that such goods, if it is not traded, then it is not charged for zakat.
If the company operating in industrial services, you are obliged to pay the zakat from the total amount of your shares without the value of company’s assets. For example, if you have the shares of Aneka Tambang Co. about 500.000 shares, with the price of each certificate is IDR 3000,-, the total amount of your zakat obligation is: 2.5%x(500.000×3000) – the value of company’s assets which are not traded = (2.5%x1.500.000.000) – company’s assets. If the value of company’s assets is 50% from the total amount of shares, the zakat you are obliged to pay is = 2.5%x750.000.000= IDR 18.750.000,-.
C. If the company operating merely in trading sector, such as export and import company, then you are obliged to pay the zakat of all your shares.
That is the summary of details of zakat taken from shares, which I summarize from the explanations of the jurisprudence scholars of our time, and hopefully it benefits you. And Allah knows best.
Ustadz Dr. Muhammad Arifin Badri, M.A.
Article of www.syaria.com