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Distribution of gross and net profit in a partnership

Question:

ASSALAMALAYKUM

MY BUSINESS PARTNER INVESTED A CERTAIN AMOUNT AND HE WANTS ONE PERCENT OF THE PROFITS. BUT THE PROBLEM IS MY SALE IS 25 LACKS, MY PROFIT IS 5 % AND I HAVE EXPENCES, SALARES AND RENT.

I TOLD HIM I WILL GIVE PROFIT ON MARGIN BUT HE TOLD ME HE WANTS THE PROFIT ON SALE NOT ON MARGIN. IS THIS HALAL?
Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In a business partnership, upon mutual consent, the partners may agree to use either the gross profit or the net profit for profit distribution. Both methods are permissible.[1]

And Allah Ta’āla Knows Best

(Mufti) Abdul Azeem bin Abdur Rahman

April 9th, 2015

 

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[1] Introduction to Islamic Finance (Mufti Taqi Usmani Hafidhahullah), page 46

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