Shaykh Ibn ‘Uthaymeen also drew attention to this when he said:
If a person has bought these shares for the purpose of trade – meaning that he buys these shares today and will sell them in the future whenever he can make a profit – then he must pay zakaah on these shares every year, and pay zakaah on any profit that he makes.
But if these shares are for the purpose of investment, and he does not intend to sell them, then it depends. If they are money – gold, silver or cash money – then zakaah must be paid on them, because zakaah is due on cash, gold and silver and must be paid every year.
In that case he should ask those who are in charge of this institution what money they have in their reserve.
If the wealth is in the form of a product or other benefits, other than gold, silver or cash, then no zakaah is due on it, rather zakaah is due on any profits that are made, when one year has passed since taking possession of it. End quote.
Majmoo’ Fataawa Ibn ‘Uthaymeen, 18/199
The Standing Committee for Issuing Fatwas was asked: We have invested some money in buying company shares, knowing that some of these companies deduct the zakaah before distributing the profits, and some of them do not calculate the zakaah. Should we pay zakaah on the capital or on the profits of these companies? Please note that there are two types of shares: (a) Those the aim of which is to receive the profits, not to sell the shares (b) Another type which is to sell the shares like other kinds of trade goods.
They replied: he has to pay zakaah on the shares which are for selling and on their profits every year. If the company pays zakaah on behalf of its owners with their permission, that is sufficient.
As for the shares which are for investment only, zakaah should be paid on their profits when one year has passed, unless it is cash, in which case zakaah must be paid on the capital and on the profit. End quote.
Fataawa al-Lajnah al-Daa’imah, 9/341
Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was asked:
Some commercial companies invest in real estate etc and issue shares, and the money may be left with the company for a long time, maybe years. How should zakaah be paid on the value of these shares? Is it permissible for the owner of the company to pay zakaah on all these shares at the proper time, then deduct it from the capital of the shareholders or from the profits before they are distributed?
He replied:
Zakaah is due on commercial shares every year, because they are trade goods. Their value should be worked out every year when the zakaah becomes due, and one-quarter of one-tenth should be paid, whether it is equivalent to the purchase price, or more or less.
With regard to the company owner paying the zakaah on these shares, if that is done with authorization from the shareholders, there is nothing wrong with it, and the zakaah should be worked out as explained above. But if they did not authorize him to pay the zakaah, then he should not do so; but he has to inform the shareholders of its value at the time when zakaah becomes due, so that each of them may pay the zakaah on his shares by himself, or authorize him to pay the zakaah. If some of them authorize him and some do not, then he should pay the zakaah of those who authorized him and not that of the others.
Of course, if he pays the zakaah he will deduct it from the capital, or from the profit. End quote.
Majmoo’ Fataawa Ibn ‘Uthaymeen, 18/217
Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was asked: Is the zakaah on shares based on the official value of the shares or on the market value, or what?
He replied:
Zakaah on shares and other kinds of trade goods is based on their market value. If it was worth one thousand at the time of purchase and is worth two thousand at the time when zakaah becomes due, then zakaah must be based on the value of two thousand, because what counts is the value of a thing at the time when zakaah becomes due, not at the time of purchase. End quote.
Majmoo’ Fataawa Ibn ‘Uthaymeen, 18/197.