Is Zakaat paid every year on the amount one has invested in a business?

Answer

Zakaat is not paid on the capital invested. The capital is used to run the business and it becomes permeated in the stock, equipment, etc. Zakaat is paid on the stock-in-trade, cash on hand and in the bank. There is no Zakaat on the initial investment.

The business should assess the financial position for the purpose of paying Zakaat on the Zakaat-taxable assets. Since all shareholders have consented to their Zakaat being paid, the Zakaat will be validly discharged. Example

Stock-in-trade R500,000

Cash on hand and in bank

100,000

R 600,000

Owing to creditors 200,000

R 400,000

2.5% Zakaat = R10,000

This will be the Zakaat payment on behalf of all the partners.