Is the value of trade goods based on the selling price or the purchase price?

The value of trade goods is worked out at the end of the
year, based on the price for which the owner would sell them. 

This is what is fair, for the value to be based on the
selling price, which may be lower or higher than the purchase price, because
at the end of the year, a person pays zakaah on the wealth that he has. 

Ibn Qudaamah said in al-Mughni (4/249) 

Whoever owns trade goods
and one year has passed, and they reach the nisaab, should work out their
value at the end of the year. If they reach the nisaab, he should pay
zakaah, which is one-quarter of one-tenth of their value. End quote. 

It says in al-Mawsoo’ah al-Fiqhiyyah (13/171): 

The trader should not work out the value of his trade goods
on the basis of the price of one who is forced to sell his products. Rather
he should base it on the price which he would get if he sold it without
being under great pressure. End quote. 

So the values should be based on the selling price at the end
of the year. 

Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) said: 

In the case of land which is bought in order to be sold, the
owners usually wait for the price to increase. These are trade goods, and
the value of trade goods should be worked out when one year has passed, then
one-quarter of one-tenth should be paid.  

It makes no difference
whether the value of the land is the same as the price you bought it for or
not. If we assume that a man bought some land for one hundred thousand, and
when one year has passed it is worth two hundred thousand, then he must pay
zakaah on two hundred thousand. If the opposite happened, and he bought it
for one hundred thousand and after one year has passed it is worth fifty
thousand, then he only has to pay zakaah on fifty thousand, because what
matters is the value at the time when zakaah becomes due. 

Majmoo’ Fataawa Ibn Uthaymeen,
18/205; see also 18/240 

The Standing Committee was asked: In the case of land that
has been bought for trade, how should the zakaah be worked out? Is it based
on the purchase price or on the market value at the time when one year has
passed and the zakaah is due? 

They replied: 

Land which has been bought to sell comes under the heading of
trade goods, and the general principle in Islamic sharee’ah is that the
value of trade goods should be worked out after one year has passed,
according to their market value, regardless of the purchase price, and
regardless of whether the market price at the time when zakaah becomes due
is more or less. The zakaah should be paid on their value, and the rate of
zakaah is one-quarter of one-tenth. In the case of land that is worth one
thousand riyals, for example, the zakaah is twenty-five riyals, and so on.
End quote. 

Fataawa al-Lajnah al-Daa’imah,
9/324 

It also says in Fataawa al-Lajnah al-Daa’imah
(9/319): 

The shar’i way is to
evaluate the trade goods that one has at the end of the year according to
their market value at the time when zakaah becomes due, regardless of the
purchase price. End quote. 

Based on this, if the trader sells wholesale or retail, the
value of the goods that he has should be based on the price for which he
sells them. 

Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was
asked: It is known that what matters is the value of the goods at the time
when zakaah becomes due. But even at the time when zakaah becomes due, the
price varies between wholesale and retail. Should we look at the wholesale
price or the retail price? 

He replied: 

If the trader deals in wholesale, he should look at the
wholesale price, and if he deals in retail, he should look at the retail
price. End quote. 

Majmoo’ Fataawa Ibn ‘Uthaymeen,
18/233 

See also question no.
26236.