Khums - A Guide to Islamic Tax

Khums is an important pillar of the Islamic economic system and an essential obligation for a Muslim. It is the most common tax in the Shi’ah law of Islam since it applies to the savings and the profits on an annual basis. It was introduced by the grandfather of the Holy Prophet, Abdul Muttalib upon a command given to him by Allah and has been emphasised repeatedly by the Holy Prophet and all the Imams.

"Know that whatever of a thing you acquire, a fifth of it is for Allah, for the Messenger, for the near relative, and the orphans, the needy, and the way-farer" The Qur'an 8:41.

Khums is an important pillar of the Islamic economic system and an essential obligation for a Muslim. It is the most common tax in the Shi’ah law of Islam since it applies to the savings and the profits on an annual basis. It was introduced by the grandfather of the Holy Prophet, Abdul Muttalib upon a command given to him by Allah and has been emphasised repeatedly by the Holy Prophet and all the Imams.

Pay Khums Online

"Know that whatever of a thing you acquire, a fifth of it is for Allah, for the Messenger, for the near relative, and the orphans, the needy, and the way-farer" The Qur'an 8:41.

Why?

Islam wants to prevent the excessive accumulation of wealth in the hands of a few people, and this tax enables a balance between the extreme rich and poor.  To bring about this equality in economic conditions Islam encourages charitable and ethical acts like Sadaqah. But to guarantee economic equality collective action is required and this is through the obligatory taxes, primarily Khums & Zakaat.

An obligatory act

Khums is not a charity but an obligation like Salaat and Sawm for which we will be questioned. Not Paying khums amounts to misappropriation of the money which rightfully belongs to the Imam and the needy. Imagine a person being buried in the grave wearing the kaffan bought from wealth on which the khums has not been paid. This kaffan can be desribed as ghasbi.

How?

“Glory be to Allah, do you not believe in the day of Judgement or do you not fear the exaction of account? Fear Allah and return to the rightful person their property”. Imam Ali (as)

The big question is how and on what basis to pay this obligatory tax. Khums literally translates to “one fifth” or “20%”.
There are seven items eligible for khums including mines and minerals, precious stones and spoils of war. Perhaps the most
common to all of us though is khums paid on profit or surplus of income.

The surplus in this case is based on what remains from the past year’s inome or profit. It becomes wajib at the beginning of the new financial year- not to say you can’t pay it before if you know what it will be! It is always easier to count the year from the day you start earning but you may set your own year end. In terms of definitions:

• “Income” relates to whatever is earned from business, wages/salary, divided income, or by other means of possession recognised by shariah. Most mujtahids say it is precautionary wajib to pay khums on gifts, prizes & legacy (upon will of a friend or unrelated person) but not on dowry or inheritance, except when one inherits unexpectedly.
• “Profit” is whatever remains after deducting the annual expenditure of oneself and one’s dependents. In case of a business person,profit equals whatever remains after deducting the annual business expenses which includes the person’s salary
• The “expenditure” which is to be deducted is of two types: household and commercial:
  
  Household expenses according to ones status include:

1. Food, drinks, transportation, furniture , medical expenses etc
2. Paying debts and mandatory pension (does not include non mandatory retirement savings plans or permanent life insurance not set up for meeting a debt)
3. Car, medical or protection insurance. All new unused household items or groceries that have not been used by the end of your khums year must be counted as your savings.
   
   
   Commercial expenses include:
   
   

   1. Business expenditure including wages, rent, insurance & taxes.
   2. Investment capital expenditure.
   3. Depreciation in commodity or loss of a commodity.
      
      

Shares of Khums

There are two shares of the khums, the share of our living Imam (given to his representative) and the share of Sadaat (The Sayyids - Those who descend from Janabe Fatema Zehra).

Special circumstances

Special rules exist for a person who has not paid khums before and where legitimate wealth has mixed with illegitimate wealth. you may consult marja’s office or Islamic Cultural Affairs Committee for further clarification.

Do the math

This leaflet has a simple tabulated khums calculation form for individuals and business. To accommodate centralised collection CoEJ, which is the regional body in Europe collects your khums through your jamaats. Or you may pay directly to the CoEJ
offices or online at www.coej.org. This is then forwarded to our Marjaae Alam through our parent body, The World Federation. In order for you to know your khums has been succesfully sent, CoEJ issues a receipt for your khums remmitance from themselves and the Marjae Alam.

You can pay your khums online at www.coej.org or post you cheque to The Council of European Jamaats at:

22 Estreham Road, London, SW16 5PQ
Telephone: +44 (0) 845 330 6012 - Fax: +44 (0) 845 330 6014
Email: secretariat@coej.org - Website: www.coej.org
Registered Charity in UK No: 1096111

Click to download the leaflet in English, in French

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