In Islam, there is nothing to control the profit margin as the issue is left, by and large, to the trade conditions in general and the circumstances of the merchant himself in particular. However, every trade should be void of illegal means such as cheat, fraud, swindling, deception, and monopoly, and hence the trustworthy merchant who is kind, content and generous will have a great reward in the Hereafter.
The Islamic Fiqh Academy Board, witnessing its fifth conference in Kuwait, 1-6 Jumada Al-Ula 1409 A.H./10-15 December, 1988 AC., after reviewing and discussing the submitted researches pertaining to the topic “Profit Margin Control”, has decided the following:
First: The original principle set down by the legal texts and rules allowed the people to act freely with regard to their properties and riches in terms of selling, buying and other mercantile acts within the frame of the honorable and lofty Islamic rules. This goes in conformity with Allah’s Statement that reads: “O ye who believe! Squander not your wealth among yourselves in vanity, except it be a trade by mutual consent.” (An-Nisa’: 29)
Second: There is nothing to control the profit margin gained by merchants through their dealings. Rather, this is left for the trade conditions in general and the circumstances of the merchant himself in particular. Moreover, ethical and legal manners such as kindness, contentment and generosity should be observed. As an evidence for this, the Prophet (peace and blessings be upon him), is reported to have said: “A truthful and honest merchant will be with the Prophets, the most truthful people and martyrs.” (Reported by At-Tirmidhi)
Third: Islamic Law texts are interwoven to show the necessity of rendering the transactions void of illegal means such as cheat, fraud, swindling, deception, and monopoly that hurts the public and private interests.
Fourth: Authorities are not given the right to interfere by controlling the prices unless there is an obvious defect in the markets arising from artificial and fabricated factors. So, if there is something that destabilizes the markets or prices, the authorities should interfere to bring about equilibrium.