Home Zakat Information 12.7 Private Companies, Corporations, and Partnerships
12.7. Private Companies, Corporations and Partnerships
AddThis Social Bookmark Button

 

a) The shareholders in a company must pay Zakat on the Zakat-able assets less allowable liabilities in proportion to their shareholding. ABC Corporation has 5 shareholders, L, M, N, O, and P who own the issued shares in the company in equal proportions. Company A carries on business as a manufacturer of garments. Each shareholder will be liable to pay Zakat on one third of the Zakatable assets of the company less the liabilities incurred in respect of those assets at the end of the relevant Zakat year. The Zakatable position of Company A at the end of the relevant Zakat year is for example as follows:

 

 

Zakatable Assets
Business Merchandise Inventory
$200 000

 

Cash on hand
$40 000

 

Accounts Receivable
$160 000

 

 

 

$400 000
Less Liabilities
Creditors
$100 000

 

Bank overdraft
$50 000

 

Loan Accounts
$100 000

 

 

 $250 000
Total Zakatable amount
 $150 000

Table 1: Private Companies, Corporations and Partnerships

 

L will pay 2.5% of $30 000 = $750
M will pay 2.5% of $30 000 = $750
N will pay 2.5% of $30 000 = $750
O will pay 2.5% of $30 000 = $750
P will pay 2.5% of $30 000 = $750

 

b) Similarly, the Zakat liability of the members of a corporation will be calculated in proportion to the respective member's share in the corporation.

 


c) The Zakat liability of partners will also be calculated in accordance with their profit sharing ratio.

 

 

<<Prev
12.6 Business Merchandise Inventory
Next>>
12.8 Retirement Plans (401K, IRA, etc.)

  

 

Sitara-e-Isaar Awarded to Hidaya Foundation

The sister organization of Hidaya Trust, Hidaya Foundation was awarded Sitara-i-Eisaar (Star of Sacrifice) by the Government of Pakistan, in recognition of the results-oriented relief efforts of both the organizations during the 2005 earthquake in Pakistan. It was awarded during a special ceremony held at the Embassy of Pakistan in Washington, DC.

In Keeping with our commitment to the communities in which Hidaya Trust operates, it hires its work force as an equal opportunity employer.  It means that employment decisions are based on merit and business needs and not on race, color, status in the society, ancestry, sex, age, religion, creed and marital status.