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RESOLUTION NO. 46(8/5)

CONCERNING LIMITATION OF THE PROFIT MARGIN OF TRADERS

Quote -The Council of the Islamic Fiqh Academy, holding its Fifth Session, in Kuwait City (State of Kuwait), from 1^st to 6^th Jummada al-Oula 1409 H (10 to 15 December 1988);

Having reviewed the papers presented by the members and experts on “Limitation of profit margin for traders” and having listened to the discussions held on the subject;

RESOLVES

First:  The basic principle in the Qur’an and the Sunnah of the Prophet (PBUH) is that a person should be freed to buy and sell and dispose of his possession and money, within the framework of Islamic Shari’a, in accordance with the divine command: (“O ye who believe consume not each other’s property in vanities, unless there is trade based on mutual acceptance”).

Second: There is no restriction on the percentage of profit which trader may make in his transactions. It is generally left to the merchants themselves, the business environment and the nature of the merchant and of the goods.  Care should be given, however. to ethics recommended by Shari’a, such as moderation, contention, leniency and indulgence.

Third:  Shari’a texts have spelt out the necessity to keep the transactions away from illicit acts like fraud, cheating deceit, forgery, concealment of actual benefits monopoly, which are detrimental to society and individuals.

Fourth: Government should not be involved in fixing prices except only when obvious pitfalls are noticed within the market and the price, due to artificial factors.  In this case, the Government should intervene by applying adequate means to get rid of these factors, the causes of effects, excessive price increase and fraud.

Verily, Allah is All-Knowing - Unquote

(From the Book "Resolution and Recommendations of the Council of the Islamic Fiqh Academy (1985-2000)”:

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