Al-Muwatta Hadith 17.20

Yahya related to me from Malik from Yahya ibn Said that Zurayq ibn Hayyan, who was in charge of Egypt in the time of al-Walid, Sulayman, and Umar ibn Abd al-'Aziz, mentioned that Umar ibn Abd al-Aziz had written to him saying, "Assess the muslims that you come across and take from what is apparent of their wealth and whatever merchandise is in their charge, one dinar for every forty dinars, and the same proportion from what is less than that down to twenty dinars, and if the amount falls short of that by one third of a dinar then leave it and do not take anything from it.As for the people of the Book that you come across, take from the merchandise in their charge one dinar for every twenty dinars, and the same proportion from what is less than that down to ten dinars, and if the amount falls short by one third of a dinar leave it and do not take anything from it. Give them a receipt for what you have taken f rom them until the same time next year." Malik said, "The position among us (in Madina) concerning goods which are being managed for trading purposes is that if a man pays zakat on his wealth, and then buys goods with it, whether cloth, slaves or something similar, and then sells them before a year has elapsed over them, he does not pay zakat on that wealth until a year elapses over it from the day he paid zakat on it. He does not have to pay zakat on any of the goods if he does not sell them for some years, and even if he keeps them for a very long time he still only has to pay zakat on them once when he sells them." Malik said, "The position among us concerning a man who uses gold or silver to buy wheat, dates, or whatever, for trading purposes and keeps it until a year has elapsed over it and then sells it, is that he only has to pay zakat on it if and when he sells it, if the price reaches a zakatable amount. This is therefore not the same as the harvest crops that a man reaps from his land, or the dates that he harvests from his palms." Malik said, "A man who has wealth which he invests in trade, but which does not realise a zakatable profit for him, fixes a month in the year when he takes stock of what goods he has for trading, and counts the gold and silver that he has in ready money, and if all of it comes to a zakatable amount he pays zakat on it." Malik said, "The position is the same for muslims who trade and muslims who do not. They only have to pay zakat once in any one year, whether they trade in that year or not."