Zakat on Shares Frequently Asked Questions
- What zakat rate does incur on shares investment?
Zakat rate on shares is similar to zakat rate on standard personal wealth rate which is 2.5 percent.
- What is the nisab (floor amount) and haul (applicable period) for zakat on shares?
Nisab and haul on shares is similar to other zakat types. Zakat is payable only if the amount reach nisab and haul. Nisab and haul can be referred to the respective zakat authorities.
- What is the calculation methodology for zakat on shares?
The methodology differs for shares held for short term (purchased with intention to sell within a haul) and long-term (purchased with intention to hold and enjoy dividend).
- How is zakat calculated if the intention of purchase is for holding and enjoying dividend payment?
For this case, zakat is calculated at 2.5% of the value of all shares after deducting outstanding financing / loan amount (which is obtained for the purpose of buying shares, if any).If various shares are purchased on different dates, payment date for zakat is subject to completion of haul of the respective shares. Example: Date of purchase of Shares X : 10 Jan 2010Haul : Haul has been reached.
Number of shares owned : 100,000 units value per unit share : RM1.30 (price reference shall be subject to zakat authorities e.g. at the end of haul or lowest price in the period of haul) Zakat on shares payable:= (RM1.30 x 100,000 units) x 2.5%= RM130,000 x 2.5%= RM3,250
Zakat is payable subject to meeting applicable nisab requirement of respective zakat authorities. Payment date is different based on purchase date of the shares. Purchase on different dates shall result to different zakat payment dates where haul is reached respectively.
- How is zakat calculated if the shares are purchased with intention to sell within a short term?
For this case, zakat is calculated at 2.5% of the disposal gain i.e. the sale value minus the cost of purchase. This calculation shall not include borrowed shares. Example: Date of purchase / sale of Shares Y : 10 Jan 2010 / 20 Jan 2010Haul : n.a.Number of shares owned : 50,000 unitsValue : RM1.50Value : RM1.70
Zakat on shares payable:= ([RM1.70 – RM1.50] x 50,000 units) x 2.5%= RM10,000 x 2.5%= RM250Zakat is payable subject to meeting applicable nisab requirement of respective zakat authorities.
- After calculation, how is the zakat sum paid?
Zakat can be paid to any zakat authorities.If the issuing company paid zakat on its business, should there be any payment of zakat by investors?If the company pays zakat, the shareholders do not need to pay because there is no double payment of zakat.
- Is investment in Shariah non-compliant shares subject to zakat?
No, zakat is only applicable to Shariah-compliant assets only. Zakat is also not applicable to gain from disposal as a result of reclassification to Shariah non-compliant; such gain shall be treated in accordance to the SAC SC recommendation.
- Is investment in Shariah-compliant shares by non-Muslims subject to zakat?
Zakat is applicable to Muslims only.Zakat falls under the purview of state religious authorities thus Zakat requirements may differ. For further information on zakat of shares, please refer to the zakat authorities of your respective states. KL: http://www.zakat.com.my/index.php?option=com_content&view=article&id=77%3Azakat-saham&catid=10&Itemid=83&lang=msSelangor: http://www.e-zakat.com.my/zakat-harta/zakat-sahamPenang: http://www.zakatpenang.com/index.php?option=com_content&view=article&id=22&Itemid=101Pahang: http://www.zakatpahang.my/InfoZakatJenisSaham.aspxSarawak: http://www.tabung-baitulmal-sarawak.org.my/zakatsaham.htmlMelaka: http://www.izakat.com/index.php?option=com_content&view=article&id=19&Itemid=10&lang=bm
- How zakat is calculated if the shares are transacted throughout the year?
For shares which are transacted throughout the year, 2.5% of the total profit (less initial capital) shall be deducted [2.5% x profits from selling the shares (Value of shares sold – capital)]
Basic Example: Zakat on transacted shares:Shares X : = RM6,000 – RM2,000 = RM4,000Shares Y : = RM8,000 – RM2,000 = RM6,000Total zakat : = (RM4,000 + RM6,000) x 2.5%= RM250