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How to pay zakat on domain name?

Last updated: 3rd April 2023
Question ID: #8369
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I am a domain investor and my question is regarding calculating zakat on domain names. I could not find an answer to this question anywhere, so your answer would help a lot of Muslims around the world. I buy and sell domains for a profit (sometimes at a loss as well). The problem is: domains are not liquid assets, and there is no scientific/objective way to calculate the price of domain names. There is a common saying in the industry that the domain is only worth what the seller is willing to pay.  A new domain name, which no one has registered yet, can be bought for a fixed price (which is usually around $10 if we talk about .com). As for selling, there is no way to tell what a domain will sell for (or if it will even sell). To give you an example of this: let's say I buy a new domain for $10, someone might come and buy that domain for $500. Another company could come and buy that for $2000. If a really large company is interested in acquiring that domain, they could pay $10,000 or higher for that domain.  Another example: let's say you bought a premium domain name at a very good price (say $5000) in an auction and you list it for sale for $10000. A buyer may come and negotiate with you, and the final deal may be done at $6000 (so the final selling price is almost half of the initially-listed selling price -- this makes matters more complicated).  There is also a very big possibility that the domain may never sell. In fact, the common STR (sell-through rate) of most domain investors is only 2-3%. To put it simply, this means that if you have 100 domain names, you can only expect to sell 2-3 names each year. Similarly, if you have 1000 names, you may only sell 20-30 domains out of these in an year. This means that the majority of your domain names (95-97%) will not sell in a year.  How can one possibly calculate zakat in a scenario like this? In this case, is it permissible to give zakat on the purchase price instead of the selling price? (as nobody can predict what the domain will sell for or if it will even sell).  Also, paying zakat on listed selling prices is almost impossible. For example, let's say I buy 200 new domains for a total of $200 ($10 each) and list each domain for sale for a fixed price of $1500 each. In most cases, you can only expect to sell 2-6 domains in a year (remember STR?).  There is also a possibility that I may not sell any domains. There is also a possibility that I may sell 3 domains at different prices (one for $10, one for $500, and one for $900).  If I pay zakat on the listed selling price ($1500), my zakat would be 2.5% of (1500*200) = $7500 (which is impossible to pay as ALL of these domains were bought for a total of $200)  Also, keep in mind that most domain investors keep large domain portfolios (usually 1000 to 5000 domains) to see predictable sales.  Please provide a logical, reasonable way to calculate zakat in this scenario. Jazak Allah



بسم الله الرحمن الرحيم

الجواب حامداومصليا


Domain name are a legitimate article of sale it will increase and decrease in value like any other tradable goods.

Hence, you will calculate Zakat on the market price of the domain name.

When Zakat is due at the end of the year you will include all Zakatable assets (gold, silver, cash, merchandise goods etc,) after deducting from expenses and debts.

And Allah knows best

04 Dhul Qa’dah 1444/ 24 May 2023

Mufti
Answer last updated on:
29th May 2023
Answered by:
Ulamaa ID 04
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