Salaam, I sell on Amazon using their fulfillment by Amazon service. I had a question about zakat on stock.
Wasslaam
Umair
Wasalam
May Allah bless you.
My opinion is that when you calculate your Zakat, you can deduct the FBA fees from the calculation once your stock has been handed to Amazon for processing.
For the referral fee, you cannot deduct the amount from the Zakat calculation unless the item has been sold and the fee has become due.
And Allah knows best!
If the ownership and liability of the stock have been transferred to you, then you will pay zakat on the value of the stock irrespective of where the stock is. Hence in connection to the 1st question, if you have full liability of the stock and it has not been received by Amazon yet, then you will have to pay Zakat on the full value of the stock without factoring in the FBA fee.
My opinion is that FBA can only be deductible once Amazon takes possession of the stock and not before that.
On the other hand, during the shipping process if the ownership/liability have not been fully transferred to you, then you will not pay Zakat on the stock.
And Allah knows best!
Jzk for this thread and the discussion.
However, how about if your stock is sold for various prices depending on the customer.
We also use FBA and sell via our own website, wholesale etc. So our selling price can vary quite drastically depending on the customer.
We can sell an item for £20 to a single consumer, but then for £10 in bulk to a wholesale customer.
The same goes for stock with our suppliers or in our warehouse. There is no “fixed” price we sell it for.
It seems to make more sense that Zakat would be calculated on the stock value based on the price we have paid for it from the supplier, rather than the selling price which is variable, not guaranteed, and impacted by FBA and referral fees.
Jzk
Paying Zakat on the cost price of business stock is not a widely accepted opinion. Therefore, the correct method is to calculate on the current retail market value.
If it is too complex to work out an accurate valuation of the stock, you can either work out its value by looking at the record of upto date transactions, cash flow and stock.
If this method is too difficult too, then you can work out the valuation by using the balance sheet. You will look at the cost of price of the stock and then apply a conservative gross margin percentage to the current stock. This will help you to determine the current market value of your stock.
To determine the gross margin percentage you will need to minus the ‘Cost of Goods sold’ from ‘Net sales’. This will give you a gross profit figure. You calculate the percentage of gross profit in relation to the net sales. Then you will apply this percentage to the value of the cost of the current stock. You will pay zakat on the value.
For example:
Zed has in his possession a stock of mobile phones for which he paid £10,000. His net sales is of £5000 and the cost of the stock which he has sold is £4000.
£5000 - £4000 = £1000 (this represents the gross profit figure)
£1000 (gross profit) is 20% of the £5000 (net sales)
The gross margin percentage is therefore 20%
Zed’s current stock cost him £10,000. He will add 20% (gross margin percentage) to this current stock value. That will be £12,000
Therefore Zed will pay 2.5% Zakat on his business stock valued at £12,000
@Mohsin_from_IFG and @Mufti_Faraz_Adam can add/correct if needed.
And Allah knows best!