Zakat

Zakāt (Arabic: زكاة‎ [zæˈkæːh], sometimes "Zakāh/Zekat"^[1]) or "alms giving", one of the Five Pillars of Islam, is the giving of 2.5% of one's possessions (surplus wealth) to charity, generally to the poor and needy. The Shia double this to 5% of one's possessions.^{[citation needed]}
It is often compared to the system of tithing and alms, but it serves principally as the welfare contribution to poor and deprived Muslims, although others may have a rightful share. It is the duty of an Islamic community not just to collect zakat but to distribute it fairly as well.
In European history, the Muslim administrations of Spain (Al-ʾAndalūs) collected Zakāt from large land owners in the form of land, and redistributed this land directly amongst the poor farmers. This helped greatly to reduce rural poverty and increase agriculture. It resulted in a rapid growth of the population and it made Islam the faith of choice for many of Spain's poor.^[2] Likely, this social and economic success of Zakāt was perceived as a threat to Europe's feudal and papal economy, which was heavily based on exploiting land monopolies, and much less successful in creating wealth.^[3] Also in Persia's early Islamic history, Zakāt on land property helped to achieve great social and economic progress.
As a mandatory requirement of the Sunni branch of the Islamic faith, every year 2.5% of one's wealth is given away to the poor. Shias however have a different system called the Khums.^[4]
Zakāt is different from sadaqah (plural, sadaqat). Where Zakat exclusively involves the sharing of one's material & financial wealth to help others, sadaqat in addition to that, can also involve the sharing of happiness among God's creation, such as saying kind words, smiling at someone, taking care of animals or the environment, etc. Unlike Zakat, sadaqah is not obligatory.
Zakat and sadqah are acts of worship undertaken as a means of spiritual purification, as it can absolve a Muslim of some of their sins. It is the only tax sanctioned to the state according to Islamic law or sharia.
Muslim jurists agree that zakat was and is obligatory on the Muslim who has reached puberty, who is sane, who is free, and who owns the minimum assigned nisab, throughout Islamic history; denying Zakat equals denying the Islamic faith. However, Muslim jurists differ on the details of zakat, which may include rate, the exemptions, the kinds of wealth that are zakatable. Zakatable refers to assets subject to zakat according to Islamic examples and directives. Some scholars consider the wealth of children and insane individuals zakatable. Some scholars consider all agricultural products zakatable, others restrict zakat to specific kinds only. Some consider debts zakatable. Similar differences exist for business assets and women's jewellery. Some require certain minimum nisab for zakatability. The same kind of differences also exist about the disbursement of zakat.^[5]
The Qur'an does not provide the definition of zakatable wealth nor does it provide the required percentages in zakat. It is left to Sunnah to give, by example or by directives. It must be realized, however, that the Qur'an mentions a few kinds of zakatable possessions, such as gold and silver, crops and fruits, earnings of trade and other business enterprises and what is drawn from beneath the earth (natural resources).

Muslims fulfil this religious obligation by giving a fixed percentage of their surplus wealth. Zakat has been paired with such a high sense of righteousness that it is often placed on the same level of importance as offering Salat.^[6] Muslims see this process also as a way of purifying themselves from their greed and selfishness and also safeguarding future business.^[6] In addition, Zakat purifies the person who receives it because it saves him from the humiliation of begging and prevents him from envying the rich.^[7] Its importance and centrality to Islam results in the "punishment" for not paying when able being very severe. In the 2nd edition of the Encyclopaedia of Islam it states, "...the prayers of those who do not pay zakat will not be accepted".^[6]