The zakah base (receptacle) is typically determined by an Islamic bank by applying 2.5% for a lunar calendar year or 2.5775% for a solar calendar year based on the amount of net invested funds available to the bank. According to the method of net invested funds, the zakah base (receptacle) can be determined as in the following formula:
Zakah base = equity and equity-like items – CAPEX and losses
More specifically,
Zakah base = (paid-up capital + reserves + provisions not deducted from assets+ retained earnings + medium-term and long-term liabilities) – (net fixed assets + investments not acquired for trading + accumulated losses)
Investment not acquired for trading include real estate and equipment available for lease.
The following example illustrates how zakah can be calculated using the net invested funds method:
Suppose an Islamic bank has reported the following at the end of a given financial year (figures in millions of dollars):
| Paid-up capital | 110 |
| Reserves | 10 |
| Provisions | 5 |
| Retained earnings | 15 |
| Medium- and long-term debts | 60 |
| Net fixed assets | 70 |
| CAPEX investments | 90 |
| Accumulated losses | 5 |
Zakah base = (110+ 10+ 5+ 15+ 60) – (70 +90+ 5) = $35 million
Zakah amount for the fiscal year = zakah base × 2.5775% = $35 million × 2.5% = $902,125
This means the Islamic bank would have to pay $902,125 in zakah to those eligible (the needy, the poor, etc)
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