Do I Need to Pay Zakah on Company Shares?

07 October, 2020
Q As-salamu `alaykum. I owned shares at two companies I worked for. The company put a condition on me; if I want to be promoted to be one of the senior managers, I should buy the company shares. I wanted to do that as it will benefit me with my job and financially if and when I sell. I didn't have full control to sell the shares all the time I owned as this was tied to the internal market. Do I have to pay Zakah on company shares? If I do, can I claim the sadaqah I paid in the past to my brother as I didn't know I had to pay Zakah?

Answer

Wa `alaykum as-Salamu wa Rahmatullahi wa Barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

The shares you own in the company are part of your properties and are due to Zakah. Any charity (sadaqah) cannot be deduced from Zakah.


In responding to your question about zakah on company shares, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Shares, at their market value on the day Zakah is due, are part of your wealth and subject to Zakah whether you intend to sell them or not.

I am fully aware that there is an opinion otherwise, but it has no evidence to support it and it is incorrect.

On the distribution side, your brother cannot be a recipient of your Zakah because if he is poor, you are responsible for him and if he is not poor, he does not deserve Zakah, whether you gave him assistance in the past or you will give him in the future.

Zakah requires intention because it is an act of worship like Prayers. If you gave sadaqah in the past without intention of Zakah, that is a sadaqah and cannot be later deducted from due Zakah.

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf
Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey