Tag: Zakat on Business

Whether a Partner in Business Partnership is Entitled to Salary?

Source: https://www.islamweb.net/emainpage/PrintFatwa.php?lang=E&Id=335446

Question:
Assalaamu alaykum.
‘A’ brought a business concept and requested me to invest. Me and two friends agreed to invest. ‘A’ agreed to manage the business. ‘B’ is a finance professional and agreed to look after the finance management. ‘C’ is a marketing professional and agreed to support marketing.

  1. Who is the owner of the business?; only ‘A’, or all partners? Is ‘A’ allowed to take a monthly amount as salary;
  2. How do we consider the role of ‘B’ and ‘C’? Are they entitled to any payment?;
  3. How should their role be considered while sharing the profit?

I kindly accept your feedback. May Allah bless you.

Answer:
All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger

Your question included several points, and we will answer them in the order in which you mentioned them:

The first question: Who is the owner of the business? Is it person (A) alone, or all partners? The answer is: the business is a joint venture (partnership) between the three if (A) will invest the money of (B) and (C) and will work with the money against a percentage from the profit that will be agreed upon in the contract. He does not have a salary. The partnership, in this case, will be called Mudhaarabah [as underlined in fatawa 5160 and 276166]: (A) with his effort and the two others, (B) and (C), with their money and their work.

However, if (A) will be given a specific salary for his effort and his investment of the money, then he is a hired person (employee) and not a partner; the business, in this case, is between (B) and (C), who are partners with their money and their work.

The second question: Is it permissible for the person (A) to take a sum of money each month as a monthly salary? The answer to this is that if (A) is a partner, then it is not valid that he will be given a specific salary; rather, he takes a percentage from the profit only, if there is any profit, in return for his work.

Ibn al-Munthir said, “All the scholars that we know of unanimously agreed upon the invalidity of profit-sharing if one or both parties stipulate a designated number of dirhams for themselves.”

However, if he only works and has nothing to do with the partnership, then he is given a known salary.

The third question: How do we consider the role of (B) and (C)? Are they entitled to any payment? How should their role be considered while sharing the profit? The answer is that (B) and (C) are partners in the business and the profit of each of them is according to what was agreed upon (between them) in the contract. If the company is a Mudhaarabah, in a way that (A) will work with them as a partner against a percentage from the profit, then the profit is divided between the three according to what was agreed upon in the contract. Since both (B) and (C) are participating with capital and they both work as well, then each of them is entitled to ask for a salary in return for his work or request an increase in their share from the profit. The author of Ar-Rawdh (a Hanbali book) wrote, “Or that one of them works with his money and he gets a profit more than the profit of.…his money [i.e. the profit he is entitled to according to his share from his money]”.

If the third (A) works as an employee with a salary, then the partnership is between (B) and (C) only and the profit is divided between them according to what they agree upon. If one of them works more than the other, then he may request an additional share from the profit in return for that. In any case, what should be taken into account depends on what they agree upon.

Al-Khiraqi said in his Mukhtasar, “If two persons have a partnership in their effort and the capital of one of them, or two persons in their effort and the money of others, or one person in his effort and the capital of another, or the capital of both of them and the effort of one of them, or the capital and effort of both of them – whether the capital is contributed equally or not – then all of this is permissible, and the profit is divided according to what is agreed upon between them.”

Allah knows best.

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Seeks Advice for Opening a New Business.

Source: https://www.islamweb.net/emainpage/PrintFatwa.php?lang=E&Id=84907

Question:
I am opening a new shop for electronics goods and I am new to this business. I want to know what are the things I need to do apart from being honest and not cheating so that Allah may bless my business with prosperity and let it flourish. What are the Dua’s or supplications or prayers I need to perform every day in the light of the Qur’an and Sunnah? What should I do when I first open the shop, i.e. are there any supplications or Salat I need to perform every day and what should I do when I close my shop?

Please answer me in the light of the Qur’an and Sunnah and reply soon as my shop is starting this week. I am afraid as whatever I did I did not succeed and this time lots of hard-earned money of my father is being invested. As my father is growing old, day-by-day his strength is diminishing and I need to do something so that my father gets a rest. If I do not succeed my father will have to continue working. Please help me for the sake of Allah and pray to Allah so that my business flourishes and I can give my father the much-required rest.

Answer:
Praise be to Allah, the Lord of the World; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.

Dear inquirer!

We ask Allah, The Exalted, to grant you success Here and Hereafter, to shower you with His blessings and to bless your family and wealth. Know that success is based on the following:

1) Pay Zakat if your business meets the minimum requirements. Make sure to calculate your zakat (by referring to your assets) annually so that you know you need to pay zakat or not. Otherwise, performing charitable activities is recommended.

2) Seeking Allah’s help and supplicating Him since He is The Most Generous. It is proved in the Hadith recorded by al-Tirmizi and Abu Dawood and others that the Prophet (Sallallahu Alaihi wa Sallam) said: “Allah is Modest and Generous, so He does not turn down one’s raised hands (supplicating Him) with failure”.

3) Persevere in truth and sincerity and search for what is Halal, for the Prophetic Hadith: “The seller and the buyer have the right to keep or return goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities of the goods, then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost” [Reported by Imam Bukhari ].

4) Seeking the help of experts in the field that you are considering so that they can help you choose successful projects and their best useful means. In this concern, it is proved in the Sunnah that Umm Salamah (Radiya Allahu Anha) said: “Allah’s Messenger (Sallallahu Alaihi wa Sallam) used to say after performing the dawn prayer: ‘O Allah! I ask you for useful knowledge, abundant livelihood and acceptable actions” [Ahmad in al-Musnad].

As for bringing down Allah’s blessings, it is proved in the Sunnah as recorded in al-Musnad from Ali (Radiya Allahu Anhu) that Allah’s Messenger (Sallallahu Alaihi wa Sallam) said: “O Allah! Bless the mornings of my Ummah (people)”.

When you enter a marketing place, you are advised to pray with Allah’s Messenger’s Hadith: “Whoever enters a market place and says: ‘There is no God but Allah, He has not a partner, to Him belongs the authority, His is all Praise, He grants life and causes death, He is The Living One, He does not die, good is in His Hand and He has power over all things; Allah will write down one million good deeds for him (in his account with Him) and cancel one million bad deeds and promote his rank one million degrees more”. Another Hadith reads: “Whoever desires to be pleased with abundance in his provision or that his age be lengthed, should show favor to his blood relatives” [Reported by Imam Bukhari ].

The above-mentioned Hadith states that having good relations with relatives and treating them well brings about more livelihood.

Allah knows best.

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Who is Responsible to Pay Zakat in a Profit-Sharing Partnership?

Regarding the zakat on the profits of sharikat al-mudarabah (profit-sharing partnership), is the zakat considered similar to other expenses, such that the profits are distributed only after the zakat has been deducted, or is each partner responsible for paying the zakat on his earned profits?

Question:
Regarding the zakat on the profits of sharikat al-mudarabah (profit-sharing partnership), is the zakat considered similar to other expenses, such that the profits are distributed only after the zakat has been deducted, or is each partner responsible for paying the zakat on his earned profits?

Answer:
Each one of the partners must pay the zakat on his share of the profits. After the expenses are deducted―and the zakat is not considered part of the expenses that are deducted prior to the distribution of profits―the rabb al-mal (capital provider) takes his capital and his profits and pays the zakat on all that, and the mudarib (entrepreneur) collects his share of the profits and pays the zakat on it.

Of course, each of them must combine the aforementioned amounts with the rest of his wealth on which zakat is due [and then pay zakat on the total].

Issuer:
Kuwait Finance House

Source: https://ifikr.isra.my/fatwa/final_level2/SOC03/2671

Zakat on Land that Granted to Others?

A man granted his children some land, is it obligatory to pay Zakat (obligatory charity) on these grants? If so, should they pay it with arrears as from the date in which they received the land? Or should they only pay Zakat from the date when they became aware of its obligation? And how about Zakat on land has been granted to children who are not yet adults? (find your answer here)…

Question:
A man granted his children some land, is it obligatory to pay Zakat (obligatory charity) on these grants? If so, should they pay it with arrears as from the date in which they received the land? Or should they only pay Zakat from the date when they became aware of its obligation? And how about Zakat on land has been granted to children who are not yet adults?

Answer:
If the people who were granted these lands have dedicated them for trade, it is obligatory on them to pay Zakat from the date of dedicating the lands for trade; not from the date they received them and also not from the date that they became aware of such obligation. On the other hand, if they have not dedicated the land for trade but for building houses for themselves to live in or to rent, it is not obligatory to pay Zakat.

In other cases, if the lands which has been granted to children who are not yet adults; which the guardians of these children dedicated the lands for trade to safeguard the interest of children by investing their money, it is obligatory on the former to pay Zakat on the value of such lands whenever one full lunar year passes from the date of dedicating the lands for trade.

However, if these children do not have money to pay for Zakat, it is permissible for their guardians to postpone the payment thereof until the lands are sold, then they should pay it with arrears calculating the date from the time the land was dedicated for trade. And again, if the land is not dedicated for trade but for building houses for themselves to live in or to rent, it is not obligatory to pay Zakat.

May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.

Sources: Fatwas of the Permanent Committee.

 

Zakat on Chickens?

It is permissible for Muslim to pay zakat of a chicken farm-based upon its value in money or by chicken itself?…

It is permissible for Muslim to pay zakat of a chicken farm-based upon its value in money or by chicken itself?

According to Shaykh Ibn Baz, all of what the Muslim keeps of wealth that is for sale, regardless of whether it is animals or other than animals, then he pays zakat on its value when a complete year passes.

This is due to what Abu Dawud recorded from Samurah ibn Jundub that he said:

“The Messenger of Allah commanded us to give charity (zakat) for whatever we kept for sale.” [Grade da’if (Albani) in Sunan Abi Dawud no. 1562]

This is also due to other evidence concerning this. The value of the sale (i.e., the sale price) is not what is considered. Rather, what is considered is the value of merchandise that is kept for selling, after it has been possessed for an entire year.

It makes no difference whether its value at the completion of one year is less than its price or more. And Allah is the Giver of success.

 

 

 

 

 

 

 

 

Zakat Obligatory for Online Businesses Too.

Online businesses are not exempted from paying zakat because there is monetary transaction involved. It is obligatory for online entrepreneurs to pay the rate of 2.5 per cent as long as there’s a year of continuous business and positive income.

Online businesses are not exempted from paying zakat because there is monetary transaction involved.

It is obligatory for online entrepreneurs to pay the rate of 2.5 per cent as long as there’s a year of continuous business and positive income.

Businesses, even online, must pay zakat according to the calculation when there are profit and loss. If income were positive, they should also issue zakat 2.5 per cent according to the standard calculation method.

Mostly zakat payers will pay zakat on monthly income only. Most of the time, zakat institution are not very detailed about the income, they only interview whether the income is the source of halal or not halal. However, if they do not want to declare whether they are doing an online business or another business, they do not force it.

This was based on news reported on yesterday’s news. Refer: http://www.karangkraf.com/berita/peniaga-online-tidak-terkecuali-bayar-zakat-1.890059

Apa Yang Anda Perlu Tahu Tentang Zakat Perniagaan.

Harta perniagaan ialah apa sahaja yang diperniagakan atau disediakan untuk jual beli bagi tujuan mendapat keuntungan sama ada dalam bentuk perniagaan persendirian, perniagaan perkongsian semasa Islam atau dengan bukan Islam, perniagaan semua jenis syarikat, koperasi atau perniagaan saham dan sebagainya.

Taken from https://facebook.com/myzakat/

Harta perniagaan ialah apa sahaja yang diperniagakan atau disediakan untuk jual beli bagi tujuan mendapat keuntungan sama ada dalam bentuk perniagaan persendirian, perniagaan perkongsian semasa Islam atau dengan bukan Islam, perniagaan semua jenis syarikat, koperasi atau perniagaan saham dan sebagainya.

Zakat VS Cukai Korporat

  • Rebat atas Cukai Pendapatan – Semua pembayaran zakat boleh ditolak dari Cukai Pendapatan Individu berdasarkan Akta Cukai Pendapatan 1967 Seksyen 6A (3) pada tahun semasa.
  • Tolakan atas Cukai Korporat – Potongan cukai ke atas Zakat Perniagaan yang dibayar oleh Syarikat, Koperasi dan Badan Amanah, tertakluk kepada had maksimum 2.5% daripada Pendapatan Agregat.

Cara Pengiraan
Merujuk kepada harta perniagaan iaitu apa sahaja yang diperniagakan atau disediakan untuk jual beli bagi tujuan mendapat keuntungan sama ada dalam bentuk perniagaan persendirian, perniagaan perkongsian sesama Islam atau dengan bukan Islam, perniagaan semua jenis syarikat, koperasi atau perniagaan saham dan sebagainya.

  • Kaedah 1: Modal Kerja (Working Capital)
    Sesuai bagi syarikat Berhad, Sendirian Berhad dan Koperasi.
  • Kaedah 2: Modal Berkembang (Growth Model)
    Sesuai bagi institusi kewangan dan perbankan Islam.
  • Kaedah 3: Bagi yang tiada sistem perakaunan khusus
    Perniagaan secara kecil-kecilan seperti pasar malam, pasar tani, restoran dan seumpamanya.