Do you pay zakāh on the FULL value of your shares, or only on the dividends?

THE QUESTION A HALAL INVESTOR ALWAYS REACHES. You have moved your savings out of interest and into Shariah-screened shares or an Islamic equity fund. Zakāh season arrives. Do you owe 2.5% on the whole market value of the holding, or only on the income it threw off this year? The OIC International Islamic Fiqh Academy answered this directly in Resolution No. 28 (3/4), 'Zakāh on Company Shares', adopted at its 4th session in Jeddah (18-23 Jumādā al-Akhira 1408H / 6-11 February 1988). It is the resolution that finally SETTLED the question - the 3rd-session Resolution No. 14 (2/3) on the same subject had 'Resolve[d] To postpone the issuance of a resolution on this issue until the Academy's fourth session', and this is that fourth-session answer.

WHY THE ACADEMY RULED. The Council issued the resolution 'Having examined the research papers submitted to the Academy concerning Zakāh on Company Shares' (IRTI edition: 'Having considered the research papers submitted to the Academy concerning "Payment of Zakat on company shares"'), and then 'Resolves' four operative points. Read together they answer three practical questions: WHO pays, HOW the company computes it, and - the part a personal investor needs most - what YOU do when the company has not paid.

FIRST - WHO PAYS, AND WHEN THE COMPANY PAYS FOR YOU. The zakāh is the shareholder's liability, but the company discharges it on the shareholders' behalf in four situations. Verbatim (official): 'Zakāh on shares is an obligation upon their shareholders. The company must pay zakāh on their behalf if any of the following conditions are met: If its statutes so stipulate, by resolution of the General Assembly, If the State's law (the law of the land) requires companies to pay zakāh, Or if a shareholder himself authorizes the company's governance to pay zakāh on his behalf.' A GENUINE TRANSLATION DIVERGENCE sits right here and is disclosed rather than smoothed: the IRTI edition frames the same point permissively - 'Shareholders may pay Zakat on their shares. The company's management may pay Zakat on their behalf' under the same four conditions ('by virtue of a General Assembly ruling'; 'If the law of the land requires that companies must pay Zakat on behalf of its shareholders'; 'Or if a shareholder himself empowers the Management of the Company to pay Zakat on his behalf'). The operative machinery - the company pays under these four triggers, otherwise the shareholder does (point Three) - is identical in both; the official reads it as an obligation, the IRTI as a permission.

SECOND - HOW THE COMPANY COMPUTES IT (AND WHAT IT DEDUCTS). When the company pays, it treats the whole shareholder body as one taxpayer. Verbatim (official): 'The company's governance must pay zakāh on its shares in the same manner as person pays zakāh on his wealth. In other words, it shall pay zakāh on the assumption that the capital of all shareholders is the property of a single person, and calculate zakāh accordingly' - on 'the principle of mixed assets generally accepted by some Fiqh scholars' (IRTI: 'The management of the company shall pay Zakat on shares in the same manner as person pays Zakat on his wealth... the principle of mixed assets generally accepted by some Fiqh scholars (Fuqahas)'). Crucially, it then nets out the shares that carry no zakāh: the company 'shall take due account of shares not liable to zakāh, such as shares owned by the Public Treasury, Waqf institutions, charitable organizations as well as non-Muslim shareholders, and make the necessary deductions' (IRTI names the exempt holders slightly differently - 'shares owned by the Public Treasury, charitable institutions, philanthropic societies and non Muslim shareholders' - the official naming Waqf institutions explicitly, the IRTI naming philanthropic societies; both make 'the necessary deductions'). The principle a Muslim investor takes from this: zakāh tracks the underlying zakatable wealth of the enterprise, not a headline share count.

THIRD - THE HEART OF IT FOR A PERSONAL INVESTOR: WHEN THE COMPANY HAS NOT PAID. This is the part that governs almost every retail shareholder, because listed companies on a conventional exchange do not discharge your zakāh for you. Verbatim (official): 'If the company, for any reason did not pay zakāh on its wealth it becomes obligatory on shareholders to pay zakāh on their respective shares.' The FIRST-BEST method is to use the company's own figures: if you can determine from the company accounts the exact zakāh that would have been due on your shares, you pay that. But when you cannot get that figure - the ordinary case for a retail holder of listed stock - the resolution splits by your INTENTION in holding the shares, and this split is the whole practical gem:

(A) THE INCOME / LONG-TERM HOLDER. If you hold to receive the annual return rather than to trade, you are taxed like the owner of a rented property - on the yield, not the asset. Verbatim (official): where the shareholder's 'intention of retaining the shares is to benefit from their annual return, not for the sake of trading them he should apply the rules of Zakāh on returns, in conformity with the Academy resolution no. 2 (2/2) concerning Zakāh on Rented Real Estates and Non-Agricultural Leased Lands. The owner of such shares is not required to pay Zakāh on the assets of shares, but only on the dividends, which is at a rate of ¼ of 1/10 after the elapse of one year from the date of the actual reception of the dividends'. The IRTI edition states the same and makes the rate explicit: 'the owner of such shares will not pay Zakat on the market value of shares, but only on the basis of the dividends, at the rate of 1/4 of 1/10 (2.5%) after the elapse of one year from the date of the actual reception of the dividends... This ruling is in conformity with resolution 2 (2/2) adopted by the Council of the Academy at its 2nd session'. So: a genuine buy-and-hold, dividend-seeking investor who cannot access the company's zakāh accounting pays 2.5% on the dividends received, NOT on the capital value of the holding.

(B) THE TRADER / DEALER. If you hold shares to trade them, they are inventory - commercial goods - and zakāh falls on their full market value. Verbatim (official): 'If, on the other hand, the shareholder has invested in shares for business purposes, then his shares are subject to Zakāh as commercial goods.' On valuation and rate: 'he shall pay Zakāh on their market value; however, if there is no stock market, he will pay Zakāh on their value as appraised by qualified experts. He will pay ¼ of 1/10 (2.5%) of their market value plus their dividends, if they yield any dividend' (IRTI: 'If, on the other hand, the shareholder has invested in shares for trading purposes, then his shares are subject to Zakat as commercial goods... He will pay 1/4 of 1/10 (2.5%) of their market value plus their dividends, if they yield any dividend'). So a trader pays 2.5% on the market value AND on any dividends.

FOURTH - SHARES SOLD DURING THE YEAR. Verbatim (official): 'If the shareholder sells his shares during the year, he will add their price to his wealth and should pay Zakāh on the total of his wealth at the end of the year. The buyer, on the other hand, shall pay Zakāh as mentioned above' (IRTI: 'If during the year, the shareholder sells his shares he will add their price to his wealth and should pay Zakat on the total of his assets at the end of the year'). Sale proceeds simply re-join your zakatable wealth and are assessed with the rest at your zakāh year-end. The official edition closes 'Indeed, Allāh is All-Knowing.'; the IRTI closes 'Verily, Allah is All-Knowing.'

HOW A RIBA-FREE INVESTOR ACTUALLY USES THIS. (a) Establish your intention honestly first, because it changes the base. A buy-and-hold, dividend/income holder who cannot obtain the company's zakāh figures pays 2.5% on the DIVIDENDS only; a trader pays 2.5% on the MARKET VALUE plus dividends. The resolution keys the difference to why you hold the shares - 'to benefit from their annual return' versus 'for business purposes' / 'trading purposes' - not to the type of company. (b) The first-best is always the company's own number: if the fund or company publishes a zakāh-per-share or a zakatable-asset figure, use it - that is 'the normal original way for determining the zakāh due amount' in the resolution's words, and the intention-split is only the fallback for when you cannot. (c) Sale proceeds are not a separate event - they 'add their price to his wealth' and are assessed at year-end. (d) The mixed-assets logic (Second) explains why zakāh-purification tools that scale zakāh to a company's zakatable assets rather than its share price are working with the grain of this resolution, not against it. (e) Do not over-read it: Resolution 28 sets a COMPUTATION method for zakāh on shares; it does not screen a company for permissibility, does not grade any product halal or haram, and names no specific share, fund, figure or rate beyond the zakāh rate itself. Whether the underlying business is Shariah-compliant is a separate question the corpus's screening and product rulings address on their own terms.

WHERE THIS SITS IN THE CORPUS. Resolution 28 is this corpus's primary-source anchor for ZAKĀH ON SHARES - the zakāh side of the halal-investing story, complementing the permissibility side. It leans by name on Resolution No. 2 (2/2) (zakāh on rented real estate and non-agricultural leased lands), importing the rented-property logic - tax the yield, not the asset - into the income-holder case; both editions carry that cross-reference. It is the settled answer to the postponed Resolution No. 14 (2/3). One honest edition difference bears directly on provenance: the OFFICIAL 2021 edition appends a footnote to the income-holder rate - 'Resolution no. 120 (3/13) concerning Zakāh on Shares and their dividends' - a LATER resolution (13th session, 2001) that refines this area; that footnote is a feature of the 2021 edition and is naturally ABSENT from the IRTI 1985-2000 printing, which predates Resolution 120. The pointer is noted as the official edition's own cross-reference, not imported here as a ruling. The cross-links in this entry are this corpus's own mapping of where a zakāh rule sits, offered as navigation, not as claims made by Resolution 28 itself.

GENUINE DIFFERENCES BETWEEN THE TWO EDITIONS (disclosed, not smoothed). The translations agree on all four operative points while differing in wording, framing and spelling. TITLE: official 'Zakāh on Company Shares' versus IRTI 'CONCERNING / PAYMENT OF ZAKAT ON COMPANY SHARES' (the IRTI adds 'PAYMENT OF'). ACADEMY NAME: official 'the International Islamic Fiqh Academy of the Organization of the Islamic Conference' versus IRTI 'the Islamic Fiqh Academy'. SESSION/DATE: official 'holding its 4th session in Jeddah, Kingdom of Saudi Arabia, on 18-23 Jumādā al-Akhira 1408h (6-11 February 1988)' versus IRTI 'holding its Fourth session, in Jeddah, (Kingdom of Saudi Arabia), from 18 to 23 Jumada Thani 1408 H (February, 6 to 11, 1988)' - 'Jumādā al-Akhira' and 'Jumada Thani' are two names for the same month (Jumādā II). POINT ONE FRAMING (the most notable divergence): official OBLIGATION - 'Zakāh on shares is an obligation upon their shareholders. The company must pay zakāh on their behalf if...' versus IRTI PERMISSION - 'Shareholders may pay Zakat on their shares. The company's management may pay Zakat on their behalf' - same four triggers, different modal framing; disclosed, not reconciled. 'GOVERNANCE' vs 'MANAGEMENT': official 'the company's governance' versus IRTI 'the company's management' / 'the Management of the Company'. EXEMPT-HOLDER LIST: official 'the Public Treasury, Waqf institutions, charitable organizations as well as non-Muslim shareholders' versus IRTI 'the Public Treasury, charitable institutions, philanthropic societies and non Muslim shareholders' (official names Waqf explicitly; IRTI names philanthropic societies). INCOME-BRANCH WORDING: official 'not required to pay Zakāh on the assets of shares, but only on the dividends, which is at a rate of ¼ of 1/10' versus IRTI 'will not pay Zakat on the market value of shares, but only on the basis of the dividends, at the rate of 1/4 of 1/10 (2.5%)' - the IRTI states the 2.5% explicitly in this branch, the official states '¼ of 1/10' here and spells out '(2.5%)' in the trading branch. 'BUSINESS' vs 'TRADING' PURPOSES: official 'invested in shares for business purposes' versus IRTI 'invested in shares for trading purposes'. CLOSING invocation: official 'Indeed, Allāh is All-Knowing.' versus IRTI 'Verily, Allah is All-Knowing.'. FOOTNOTE: the official 2021 edition adds a cross-reference footnote to Resolution 120 (3/13) at the income-branch rate; the IRTI 1985-2000 edition has no such footnote (Res 120 postdates it). SPELLING throughout: official 'Zakāh' versus IRTI 'Zakat'. Every verbatim quote used above was machine-checked against both source PDFs (line-wrap, hyphenation, inserted-page-number, fraction-glyph and diacritic aware, whitespace-normalised, 36/36 OK).

AN HONEST NOTE ON WHAT IS AND IS NOT HERE. This is a settled operative statement (the Academy 'Resolves' four points), not a deferral - indeed it is the ruling that resolved what Resolution 14 (2/3) had postponed. It sets HOW zakāh on shares is calculated (who pays; the mixed-assets company computation and its deductions; the intention-split into an income-holder taxed on dividends per Res 2 (2/2) and a trader taxed on market value; and the treatment of mid-year sales); it does not screen any company for Shariah-compliance and grades no product as permissible or prohibited. The quoted parts are the resolution's own words in the two editions; the framing question ('full value or just the dividends?'), the retail-investor / Islamic-equity-fund examples, and the how-to are plain restatements and honest applications of the resolution's own points, not new rulings added by this site. The resolution cites no specific Qur'an verse and no hadith number, records no madhab tally and no vote count, and names no bank, product, share, figure or rate beyond the zakāh rate itself (¼ of 1/10 = 2.5%), so none is reported here. The cross-links to Resolution 2 (2/2), the postponed Resolution 14 (2/3) and the later Resolution 120 (3/13) are drawn from the resolutions' own text (the Res 2 reliance and the official edition's Res 120 footnote) and this corpus's navigation, not claims manufactured here.