Home Zakat Information 12.7 Private Companies, Corporations, and Partnerships
Zakat Information
12.7. Private Companies, Corporations and Partnerships
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Private Companies, Corporations and Partnerships
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 fifth 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

Cash on hand

Accounts Receivable

Less Liabilities

Bank overdraft

Loan Accounts

Total Zakatable amount


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.



12.6 Business Merchandise Inventory
12.8 Retirement Plans (401K, IRA, etc.)

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