How is Zakat on wealth calculated for commercial projects? Is it calculated on the establishment costs, or on the gross income, or on the net profit only? Is it permissible to give Zakat to a poor brother to start a project that will generate income for him?

The method for calculating zakat on commercial assets is for the merchant to enumerate the trade goods they possess and appraise them at their current market value. To this, fixed, collectible debts are added. From this total, all outstanding debts owed to others are subtracted. From the remainder, one-quarter of one-tenth (2.5%) is to be given as zakat. As for uncollectible debts, zakat is paid on them once they are received. Zakat is obligatory on both the capital and the profit. Items not intended for trade, such as storage machinery and the like, are not included in the calculation. It is permissible to give zakat to a poor brother; in fact, it is more meritorious as it combines charity and maintaining kinship ties. There is no objection to him establishing a project with it, provided he owns it and is eligible to receive it.