Zakat is the third pillar of Islam. It is a form of compulsory charity for every Muslim in a financial position above a certain specified minimum. Etymologically, the word Zakat means purification and growth. Zakat thus falls within the principle of sharing of wealth as preached by Islam. Indeed, tangible assets are considered a gift of God which requires of man the responsibility to know to manage them. One objective of Zakat is thus to purify the human soul from avarice, greed and lust and limit the accumulation and concentration of assets in a minority of riches. Moreover, Zakat was the first organized legislation that will ensure complete social security, which stimulates the economy and contributes to reduce the gap between the social classes.
Zakat constitutes a well determined part of the assets of a Muslim, it must carry it out once every year in favor of a category of people who deserve it. Islamic law states that the main beneficiaries of Zakat are the poor, needy, alms collectors, new converts and indebted persons; it also states that it can be used for freeing Muslim slaves or in favor of travelers and paths of God. The latter category includes public utility projects such as construction of hospitals, schools or purchase of supplies for the mosques.
The Muslim must fulfill Zakat from the moment that the amount of its savings exceeds a certain threshold that we call “nissab.” This nissab is indexed on the price of gold or silver. Concretely, it corresponds to the monetary value of 85 grams of gold (595 grams of silver for Hanafi school). Thus, a person becomes taxable if the amount of savings accumulated throughout a lunar year is greater than or equal to nissab.
The value of Zakat is calculated according to the different categories of assets: precious metals, cash, livestock, agricultural products and trading capital. Generally, the amount of Zakat corresponds to 2.5% of the total saved during the year.