I have been reading a lot about zakat and shares. It is a topic with no clear answer, but your view (on this site) on it is the most logical.
When i buy shares, i plan to keep them for a long term, to increase my capital, and then sell (dividend only investors possess the same benefit, whether they intent or not). According to many scholars, this qualifies my shares as tradeable goods and i should pay 2.5% on the market value.
This seems illogical as: 1. goods for trade are not kept for long term, but are sold as soon as they can possibly sell
2. Fluctuations in share price can be extreme
3. No monetary gain is realized until shares are sold
4. The entire market value is not all of your’s to keep, and capital gains tax must be paid on it, and thus you are paying zakat on money you won’t have.
It seems scholars miss all of these points. Their opinion on market value zakat is only logical if you partake in constant trading (multiple times in a year).
Their view is also unjust. If i were to buy a house and rent it out, i only pay zakat on rental income profit. However, the price of land and the home can appreciate, like a share, and can be sold at a future date. Why should that person not have to pay zakat on what is basically their net worth, but i must, especially when many of my shares do not offer a dividend, so i am in a worse position than the other (no additional monthly income).
The law should be just for all. If i am expected to pay zakat on my net worth, so should everyone else. Why should a man with 100 million dollars worth of rental property pay 0 zakat on the value of his properties, but i must pay zakat on my shares?
It is logical that even investors only interested in dividends are also interested in the share price, and can one day sell for a profit without paying zakat on the market value for all previous years.
But i, keeping shares for many years, have to pay zakat on it because i eventually intend to sell? Is your long term investment view incumbent upon receiving a dividend?
Lastly, can you provide the evidence for you conclusion on paying zakat as part owner, as opposed to market value, this way i can discuss with a local scholar?
I feel like the market value approach is an old and misunderstood approach to zakat, given by scholars who lacked proper financial understanding.