economic thought in the qur"àn and sunnah 77- It is levied on Muslims individuals only, which is implied in the
features of Zakàh as a religious duty. Non-Muslims may be sub-
ject to a similar tax. (Historically, non-Muslims were subject to
the Jizyah tax instead). - Zakàh is a capital tax imposed on total net accumulated wealth
(net assets); all debts are deducted from total wealth when calcu-
lating Zakàh. - The wealth (the assets) is not subject to Zakàh until it meets the
following conditions:
a. Growth; with the exception of money items the assets must
have the ability to grow, either by itself or someone’s action.
b. Quantity; it should be more than the minimum level (thresh-
old) stipulated in the Sunnah. Also, the quantity owned must
exceed the necessary amount of assets the income of which
provides for the basic needs of the owner and his family.
c. Period; with the exception of agricultural production, the owner-
ship of the asset must remains with the holder for one year
before Zakàh can be due. Agricultural production is Zakàh
taxed at harvest. - The Zakàh rate is 2.5 percent on the net worth, which includes
industrial assets and real estate. Agricultural production is taxed,
however, at two different rates, 5 percent and 10 percent. The
first applies to land irrigated operationally, while the second is
applied to land irrigated naturally.
From the above, it could be noted that the effect of Zakàh is twofold:
firstly, the social impact, where it helps reduce the gap between the
rich and the poor, or the re-distributional effect of the tax, secondly,
the economic effect, where it “penalises” the idle wealth. This wealth
would have to be invested at the rate of: Zakàh rate/1-Zakàh rate
per annum in order to merely maintain its value at the end of the
period. Furthermore, it is interesting to note that Zakàh is regarded
as the right of the poor to the wealth of the rich, “Of their wealth,
there is a right for the poor and the beggar” (Qur"àn, 51:19). Zakàh
is not regarded as charity, even if its revenue is spent in the man-
ner mentioned above, mainly for the benefit of the poor and the
needy. This differentiates it from alms; while alms are paid volun-
tarily, Zakàh is paid by force of law.