FIQH: AHLUS SUNNAH WAL JAMAAH - TRADITIONAL SHAFI"I SCHOOL
Zakat on Trade Goods
A zakat of 2.5 percent like that of gold and silver as merchandise is assessed according to its value in them is obligatory for anyone who:
1. has possessed trade goods for a year whether the merchandise itself remains, or whether there is sale and replacement;
2. whose value at the zakat year's end, as at equals or exceeds the zakat minimum (592.9 grams of silver if bought with monetary currency or silver, and 84.7 grams of gold if bought with gold, these being reckoned according to the values of silver and gold existing during the year);
3. that the trade goods have been acquired through a transaction such as a purchase, or acquired by a woman as her marriage payment (Mahr), or received as a gift given in return for something else, or such as articles rented from someone in order to rent them out to others at a profit, or land rented from someone in order to rent it out to others at a profit;
4. and that at the time of acquisition, the owner intended to use the goods for trade. There is no zakat on the trade goods if the owner acquired them by estate division or received them as a gift, or if he acquired them by purchase but at the time did not intend using them for trade.
THE BEGINNING OF THE ZAKAT YEAR FOR TRADE GOODS
When the owner buys trade goods that cost at least the gold or silver zakat minimum, the year of the merchandise's possession is considered to have begun at the beginning of the gold or silver's zakat year, so that a merchant's zakat is figured yearly on his total business capital and goods. But the year of the merchandise's possession is considered to have begun at the moment of purchase if:
1. the owner has bought the merchandise for less than the zakat minimum, provided the price of the merchandise plus his remaining money do not amount to the zakat minimum;
2. or he has bought it in exchange for non-monetary goods provided these are not also trade goods, for if they are, the zakat year continues from the zakat year of the previous goods.
ESTIMATING WHETHER THE VALUE OF ONE'S TRADE GOODS AMOUNTS TO THE ZAKAT MINIMUM OR NOT
Merchandise is appraised at its current market value at the end of the zakat year:
1. in terms of the same type of money that it was purchased with, if bought with money; i.e if purchased with silver or monetary currency, we see if the merchandise's market value at the year's end has reached the silver zakat minimum; or if with gold, we see if its market value has reached the gold minimum; even if it had been purchased for less than the zakat minimum at the beginning of the year, so that if it has now reached the value of the zakat minimum, one pays zakat on it, and if not, then there is no zakat;
2. or in terms of its value in local monetary currency, if the merchandise was acquired by other than paying money for it, such as in exchange for goods, or acquired by a woman as her marriage payment (Mahr), or by a husband in exchange for releasing his wife from marriage. If its value equals the zakat minimum, then zakat is paid. But if not, then there is no zakat on it until the end of the next year, when it is reappraised and zakat is paid if its value amounts to the zakat minimum, and so on in the following year.
It is not a condition that the value of the trade goods amount to the zakat minimum except at the end of the year; not at the beginning, middle, or during the whole of the year.
If trade goods are exchanged for other trade goods during the course of the year, this does not interrupt their possession, because zakat on merchandise is based on the value, and the value of the previous merchandise and the new merchandise is the same, so the year of its possession is not interrupted by merely transferring it from one set of goods to another, though the zakat year of the funds which a professional money changer exchange, for other funds is interrupted by each exchange; and he pays no zakat as long as he keeps changing his business capital.
If merchandise is sold during the zakat year at a profit and its price is kept until the end of the year, then zakat on the merchandise's original value is paid at the end of that zakat year, but the zakat on the profit is not paid until the profit has been possessed for a full year. A second position in the Shafi'i school of jurisprudence is that the zakat on the profit is simply paid in the current zakat year of the merchandise, just as one pays zakat on the offspring of livestock in the current year of their mothers.