Zakat on Business Assets
Zakat on a business is owed on its trade goods — inventory held for sale, business cash, and money owed to you — at 2.5%, after subtracting short-term liabilities. Fixed assets used to run the business, like equipment, vehicles, and premises, are not zakatable.
Calculate
Value inventory at current wholesale/resale price. Add business cash and money owed to you that you expect to collect. Exclude fixed assets like equipment and property.
Credit cards, personal loans, or other debts due within the lunar year.
What counts as zakatable business wealth
A business pays zakat on its circulating wealth — the assets that turn over as part of trade. This means inventory and stock held for sale, cash in business accounts, and receivables (money customers owe you that you reasonably expect to collect). These are the modern form of 'urud al-tijarah,' trade goods, which the Prophetic practice established as zakatable.
Value inventory at its current market or wholesale resale price on your zakat anniversary — what you could sell it for now, not what you paid. Work-in-progress and raw materials destined for sale are included at their current value.
What is exempt — fixed assets
Assets used to operate the business, rather than to be sold, are not zakatable. Machinery, tools, computers, delivery vehicles, furniture, and business premises are means of production — the equivalent of a farmer's land, which is not itself zakated. Only what they produce or hold is.
The line is purpose: a vehicle a dealership holds for sale is zakatable inventory, while the same vehicle used to make deliveries is exempt equipment. Apply the test asset by asset — is this held to sell, or to run the business?
Liabilities and bad debts
Subtract short-term business liabilities — payables, supplier invoices, and debts due within the year — from your zakatable base, just as you would for personal cash. Long-term financing is generally not deducted beyond the portion due this year.
Receivables you expect to collect are included; debts you reasonably consider bad or unrecoverable can be excluded until actually received. Some scholars prefer to zakat doubtful debts only in the year you collect them. If your receivables are significant and uncertain, that distinction is worth raising with your scholar.
Frequently Asked Questions
- Do I pay zakat on my business equipment and premises?
- No. Equipment, vehicles, furniture, and premises used to run the business are exempt fixed assets — the tools of production. Zakat falls on what circulates: inventory for sale, business cash, and good receivables.
- How do I value my inventory?
- At current resale or wholesale market value on your zakat anniversary — what you could sell it for now — not your original purchase cost. Include raw materials and work-in-progress destined for sale at their present value.
- Are customer debts to me zakatable?
- Receivables you expect to collect are included in your zakatable base. Debts you reasonably judge unrecoverable can be left out until actually received; some scholars prefer to zakat doubtful debts only in the year they come in.
- Can I deduct business debts?
- Yes — short-term liabilities like supplier payables and debts due within the lunar year reduce your zakatable base. Long-term financing is generally only deducted to the extent of the portion due this year.
- I'm a sole proprietor. Do I combine business and personal wealth?
- Compute your zakatable business assets, then add your personal zakatable wealth (cash, gold, investments). Nisab is assessed on the combined total, and zakat is 2.5% of the combined net. Keep the categories clear so you don't double-count.