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

 

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
$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

Hidaya Foundation was awarded Sitara-i-Eisaar (Star of Sacrifice) by the Government of Pakistan, in recognition of the results-oriented relief efforts during the 2005 earthquake in Pakistan.

Combined Federal Campaign

Hidaya Foundation is a non-profit 501(c)(3) with FEIN 77-0502583. All cash and in-kind donations are tax deductible. Hidaya puts it’s best effort to utilize the funds donated for a specific project, sometimes circumstances dictate we use funds otherwise.