Blog Business Islamic Economics Muamalah Fiqh

Ethics of Profit-Sharing Negotiations in Islam

Devin Halim Wijaya26 December 2025

15 3 minutes read

In Islam, profit sharing negotiations are never solely focused on results. It has to do with reaching a consensus with full agreement from each party. Our Ethics, character and intention are all reflected in the process itself, in the way we conduct ourself in the negotiation, in the way we value our business partner and their effort in profit percentage, and the way we react when we don’t get what we want. Fairness and mutual consent are highly valued in Islamic financial transactions. It is never appropriate to transfer wealth through coercion deceit or uncertainty and Allah ﷻ reminds us that:

يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا أَمْوَالَكُم بَيْنَكُم بِالْبَاطِلِ إِلَّا أَنْ تَكُونَ تِجَارَةً عَنْ تَرَاضٍ مِنْكُمْ

“O you who believe, do not consume one another’s wealth unjustly, but only through trade conducted with mutual consent.”
(Qur’an 4:29)

This verse establishes a clear foundation for business partnership: mutual understanding and clarity are the cornerstones of any business agreement. We will learn from this article how to do Ethical profit sharing negotiation.

Also read: Profit Sharing System Based on DSN MUI: Accrual Basis and Cash Basis

Decide the terms and conditions from the beginning

Many business disputes arise from unclear agreements at the outset rather than from venture failures. While expressions like “we’ll see later” or “well adjust as we go may seem accommodating” sounds good at beginning, they frequently lead to issues later on. This is the illustration:

“Two partners launch a company together. A partner manages day-to-day operations while the other provides the capital. They agree to split profits fairly in the beginning without any clear terms and numbers. But after the business turned out massive profits, the partner who manages the business asked for 80% profit sharing and the other partner disagreed because he felt that was unfair.”

From this illustration, we know that tension arises in business because there was no clear agreement at the beginning. This is why prior to the start of the business, it is important to decide on timing of profit sharing, profit sharing percentages and the distribution basis. This isn’t about mistrust rather it’s about preserving the bond and averting further disputes.

Also read: How Does Bad Cashflow Influence Profit Sharing in Mudharabah?

Acknowledge and Respect Real Work Contribution in Profit Sharing

There is more to input to profit sharing than just capital contribution. Real contributions in a business also include time, effort, responsibility and decision-making. Recognizing who truly does the work is a key component of ethical negotiation. Imagine if one partner manages employees, clients, operations and day-to-day problem solving while the other just invests money and waits for reports, which one deserves more of the business? Resentment will gradually increase if profits are split without taking this work into account. Partnerships feel balanced and long-lasting when contributions are duly acknowledged so everybody feel respected and rewarded at the same time.

Be Truthful with Your Financial Records

In Isla, transparency is not only a technical problem but also a moral one. Any profit sharing in Islam must based accurate and truthful financial reporting. Sometimes, a partner who handles finance can actually cheat his partner by reporting less sales, overinflating the cost, or even more so by manipulating cashflow so he can transfer some of the money into his own pocket. At first this bad behavior might go unnoticed but once it is found, the relationship and business crumbles even amongst the families and close friends.

Also read: Profit Sharing or Usury? Know the Difference from the Start

Don’t Unilaterally Alter the Terms and Respect the Agreement

Islam views agreements as commitments rather than lighthearted pledges. Changing business agreement terms without consulting the other partners damages trust and is unethical. For example, you cannot just change your profit share from 50% to 60% without agreement from your partners. But sometimes, we still can ask for reevaluation of the terms because of circumstances change. But rather than abrupt demands or emotional coercion, changes must be the result of honest communication and mutual agreement. The business relationship can develop without ongoing suspicion thanks to the sense of stability that being provided by honesty of every agreement changes.

Also read: Profit Sharing in Mudarabah and Musyarakah, Is It Allowed?

Conclusion

Islam teaches us that business is more than just numbers through the ethics of profit-sharing negotiations. The cornerstones of a successful partnership are commitment to agreements, honesty in financial records, clarity from the start, respect for work contributions and a cooperative mindset. The best companies are those that endure without undermining trust not those that make quick profits.

Wallāhu a‘lam.

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