Zakat is charged on any wealth you’re not using. Say you have money just sitting there in your bank account. 2.5% of that money is then given in zakat. It goes to mostly people in need; either the poor or those in debt. Unused wealth in Islam has to be distributed, not hoarded. Say you’re a successful Muslim Entrepreneur. You decide to use your wealth to build a company or lend the money to another entrepreneur. You’re putting your money to work. There is no zakat due on this money. Now isn’t that nice?
It means entrepreneurship strives in a free market following Islamic principles. Say you want to keep $10,000 in your bank (or under your mattress). If you paid the zakat due on those savings, you would lose almost $4,600 of that money over a 25-year period. That’s almost half of your savings gone!
That is huge. Could you avoid losing that much? Absolutely. By making your money work for you. You could either start a business, or invest in someone else’s business.Those not following this Islamic principle are at a disadvantage when it comes to entrepreneurship. You see the prevailing economic system encourages you to hoard wealth. You are rewarded for keeping your money stagnant instead of making it work. This is what interest is all about. In Islam, what you have instead is a system that rewards calculated risk-taking instead of hoping your wealth grows because of interest. As a Muslim, this is good news for you! You’re actually obeying Allah when you do what grows your money and community in the fastest way possible.
See how Islam enjoins you to be prosperous?
- From the book "10 success principles from the greatest Muslim entrepreneurs"