Fatwa's Insights - Islamic Finance
Calculation Of Zakat On Traded Shares On The Stock Market
THE 43RD MEETING OF THE PERLIS STATE FATWA COMMITTEE / 2019
17 SEPTEMBER 2019 / 17 - 18 MUHARRAM 1441H
CALCULATION OF ZAKAT ON TRADED SHARES ON THE STOCK MARKET
The Perlis State Fatwa Committee agrees that the calculation of zakat for shares traded in the market is as follows:
1. For shares that are actively traded (where buying and selling transactions exist within one haul period), the calculation is as follows:
i. Lowest share price within one year × number of share units + (trading profits or dividends obtained within the 1-year haul period) – (necessary costs) = (net holdings according to haul if exceeding current nisab) × 2.5% = (zakat rate imposed)
ii. Current share price × number of share units + (trading profits or dividends obtained within the 1-year haul period) – (necessary costs) = (net holdings according to haul if exceeding current nisab) × 2.5% = (zakat rate imposed)
The payer may choose one of the above methods.
2. For shares that are not actively traded in the market, the owner may pay zakat at a rate of 2.5% on dividends only. This is based on the principle that shares held inactively are considered like zakat on income from fixed assets (al-Mustaghallat).
Resolved at the Meeting of the Majlis Agama Islam dan Adat Istiadat Melayu Perlis No. 6 of 2019 convened on 22 October 2019.