Zakat base
The pool of qualifying wealth on which zakat is calculated, after including zakatable assets and deducting what the method allows.
The zakat base is the pool of zakatable wealth on which zakat is computed. For a company it is derived from the balance sheet by including zakatable assets such as cash, receivables and trading inventory and deducting eligible liabilities, according to the method adopted. AAOIFI's accounting standard on financial reporting for zakah addresses how institutions present and disclose zakat, and zakat authorities in several countries prescribe their own base calculations.
Sources
- AAOIFI, Financial Accounting Standards (issued standards list): FAS 39 Financial reporting for Zakah
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
ZakatAn obligatory annual contribution on qualifying wealth above a minimum threshold, paid to specified categories of recipients.NisabThe minimum amount of wealth above which zakat becomes due; for money it is set by reference to gold or silver.HawlThe full lunar year for which qualifying wealth must be held above the nisab before zakat becomes due on it.