Islahi, Abdul Azim and Obaidullah, Mohammed (2002): Zakah on stocks: some unsettled issues. Published in: Journal of King Abdulaziz University -Islamic Economics , Vol. 17, No. 2 (2004): pp. 3-17.
Download (151Kb) | Preview
Issues relating to zakah on equity shares are far from being settled if one considers the available fatawa and observed practices in many Muslim countries. The most basic questions pertain to the correct method of valuation of equity shares for the purpose of estimation of zakah liability. This paper reviews alternative methods of valuation and argues in favour of marketbased valuation. It also raises serious questions on the permissibility of exemption of fixed assets from zakah liability in the accounting based framework, notwithstanding its actual use in some Muslim countries. A market-based valuation framework is rooted in the notion of market efficiency, which dominates modern finance theories for over a century. The paper seeks to push forward the concept of "average price" as the basis of valuation as also of estimating zakah liability. It argues that the concept not only follows logically from the efficient market theory, but also is backed by sound Shari'ah evidence.
|Item Type:||MPRA Paper|
|Original Title:||Zakah on stocks: some unsettled issues|
|English Title:||Zakah on stocks: some unsettled issues|
|Keywords:||Zakah tax; stock evaluatio; application of average price; Islamic economic|
|Subjects:||M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting
B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B52 - Institutional; Evolutionary
H - Public Economics > H2 - Taxation, Subsidies, and Revenue
D - Microeconomics > D4 - Market Structure and Pricing > D40 - General
|Depositing User:||Abdul Azim Islahi|
|Date Deposited:||18. Nov 2009 00:58|
|Last Modified:||12. Feb 2013 06:09|
Algari, Mohamed Ali (1993), “Towards an Islamic Stock Market”. Islamic Economic Studies. Vol. 1, No. 1, pp. 21-30.
al-Amin, Hasan Abdullah (1993), Zakah al-Ashum fi’l-Sharikat: Munaqashah Ba’ d Ara al- Hadithah. Jeddah, IRTI/IDB.
Bayt al-Zakah (n.d.), Abhath wa A`mal al-Nadwah al-Hadiat `Ashrah wa’l Nadwah al-Thaniat `Ashrah li Qadayah al-Zakat al-Mu`asirah (held in Kuwait in 2001 and at Cairo in 2002 respectively. Kuwait. Bayt al-Zakah, part one.
Fama, E. (1965) “The Behavior of Stock Market Prices”, Journal of Business, 38, pp. 34-105.
IDB/IFA (2000), Resolutions and Recommendation of the Council of the Islamic Fiqh Academy, 1985-2000, Jeddah, Islamic Development Bank / IRTI.
Imtiazi, I. A. et al. (eds.) (1989), Management of Zakah in Modern Muslim Society. Jeddah, IRTI/ IDB.
Mawdudi, S. Abu’l A`la (1981), Ma’ashiyat-e-Islam (Economics of Islam) Delhi, Markazi Maktabah Islami.
Metwally, M. M. (1984) “The Role of Stock Exchange in an Islamic Economy”, Journal of Research in Islamic Economics, Vol. 2, No. 1, pp. 1-20.
Kahf, Monzer, (1991), “Zakat: Unresolved Issues in the Contemporary Fiqh", in Sadeq, A.M., et al. (1991), Development and Finance in Islam, Selangor, Malaysia, International Islamic University Press, pp. 173-190.
al-Qaradawi, Yusuf (1984), Fiqh al-Zakah, Beirut, Mu’assash al-Risalah.
al-Qurtubi, Abu Abdullah (n.d.), al-Jami’ Li Ahkam al-Qur’an, n.p., vol. 6.
Schiller, Robert J. (2000) The Irrational Exuberance, Princeton University Press.
Tirmidhi, Abu Isa (n.d.), Sunan, Delhi, Rashidiyah, p. 80 Bab ma ja’ fi karahiyat akhdh khiyar al mal fi’l Sadaqah.
Usmani, Muhammad Taqi (n.d.), Islam aur Jadid Ma'ishat wa Tijarat (Islam and the Modern Economy and Commerce), Delhi, Dar al-Isha`at.