Series of Answers by the Eminent Scholar Ata Bin Khalil Abu Al-Rashtah, Ameer of Hizb ut-Tahrir, to the Questions of his Facebook Page Followers (Fiqhi)
Answer to Question
To: Ahmad Saleh Ajoli
Question:
Assalamu Alaikum Wa Rahmatullah Wa Barakatuhu
Subject: Is Zakat an individual act of worship?
Our virtuous Ameer, our noble Sheikh...
May Allah help you, grant you success, and support you with supporters like the Aws and Khazraj. To proceed:
With reference to the above subject, I would like to ask:
Is Zakat an individual act of worship imposed on individuals only, or is it also imposed on companies?
To clarify my question, I will present an example:
Khalil and Zaid have a company with a 50% share each. The company's capital was 3,000 Jordanian Dinars. Khalil had nothing else eligible for Zakat and had a personal debt of 1,000 Dinars. As for Zaid, he had 4,000 Dinars in his house upon which a year (Hawl) had passed...
How should Khalil and Zaid each calculate their Zakat? Does each person calculate his share in the company separately from the other person, or is Zakat paid on the total capital of the company as a corporate entity?
Answer:
Wa Alaikum Assalam Wa Rahmatullah Wa Barakatuhu,
May Allah bless you for your kind prayer, and we ask Allah Subhanu to respond to this prayer and reward you with goodness...
Regarding Zakat on money consisting of gold, silver, and what takes their place of contemporary currency, Zakat is obligatory on the individual for his wealth if it reaches the Nisab and a year (Hawl) passes over it...
As for the example you mentioned in the question, the answer is as follows:
1- Regarding Khalil, his share of the company's capital is "1,500 Dinars," and he has a debt of "1,000 Dinars." This means what remains with him for the Zakat calculation is "500 Dinars," because the debt he owes is deducted from his money, and Zakat is due on the remaining money after deducting the debt. We have explained the evidence for this in the book The Funds in the Khilafah State, in the discussion on "Zakat on Debt" on page 165, where it states:
"Whoever has wealth that has reached the Nisab and a year has passed over it, but owes a debt that consumes the Nisab, or makes the remaining wealth after paying the debt less than the Nisab, then there is no Zakat upon him. This is like someone who owns a thousand dinars and owes a thousand dinars in debt, or like someone who owns forty gold dinars and owes thirty gold dinars. In these two cases, there is no Zakat upon him because he does not own the Nisab. On the authority of Nafi’ from Ibn Umar, he said: The Messenger of Allah ﷺ said:
إِذَا كَانَ لِرَجُلٍ أَلْفُ دِرْهَمٍ، وَعَلَيْهِ أَلْفُ دِرْهَمٍ، فَلَا زَكَاةَ عَلَيْهِ
'If a man has a thousand dirhams and owes a thousand dirhams, there is no Zakat on him.' (Mentioned by Ibn Qudamah in Al-Mughni).
However, if the wealth remaining after the debt reaches a Nisab, then he must pay Zakat on it...)" End quote.
The calculation we mentioned before the quote assumes there are no profits resulting from the capital. If there are profits for the company, they are considered growth (Namaa') of the capital and take its ruling; meaning they are added to the capital for each partner according to his share of the profit and are taken into account when calculating Zakat...
Accordingly, if the remaining amount with Khalil according to the calculations above—which is "500 Dinars"—reaches the Nisab and a year has passed over it, then Zakat is due on it at a rate of "2.5%," which Khalil pays from his money. If the mentioned amount does not reach the Nisab or a year has not yet passed over it, then there is no Zakat on it until it reaches the Nisab and a year passes over it. As mentioned earlier, if there are profits, they are added to the capital.
2- Regarding Zaid, his share of the company's capital is "1,500 Dinars," and he has "4,000 Dinars" in his house with no debt. That is, he owns a total of "5,500 Dinars." This calculation, of course, assumes there are no profits resulting from the capital. If there are profits for the company, they are considered growth of the capital and take its ruling; they are added to the capital for each partner according to his share of the profit and are taken into account when calculating Zakat...
It is clear for Zaid that the money he has reaches the Nisab because it is a large amount (5,500 Dinars). So, if a year passes over it, Zakat is obligatory at a rate of "2.5%" on the entire amount, i.e., on the "5,500 Dinars," and the year (Hawl) begins from the moment the Nisab was reached.
I hope this is sufficient, and Allah is All-Knowing and All-Wise.
Your brother, Ata Bin Khalil Abu Al-Rashtah
19 Dhu al-Hijjah 1441 AH Corresponding to 09/08/2020 CE
Link to the answer from the Ameer's Facebook page: Facebook
Link to the answer from the Ameer's Website: Web