A Comparative Study of Zakah and Modern Taxation

Abstract

Abstract. This paper critically discusses the concept of zakah and taxation. The main objective of the paper is, first, to compare and contrast zakah and taxation, especially on the legal, economic, social, ethical and spiritual aspects. Secondly, the paper aims to examine issues related to the implementation of zakah in modern time by reviewing the practices of zakah and taxation in the early Islamic period and exploring the issues in the context of Malaysia. The paper indicates that zakah greatly differs from the taxation system.

Factors on Zakat (Tithe) Preference as a Tax Deduction in Aceh, Indonesia

“…This can be an incentive because the zakat payer can deduct tax paid since 2005 (Bakar 2007). This should increase the number of zakat payments (Bakar and Rahman 2007). H1: Satisfaction has a significant effect on the preference for zakat as a tax deduction.…”

Mobilisation of Income Zakat Payment In Indonesia

“…Some studies on zakat management indicate a lack of coordination between zakat institutions (Jahar, 2010;Sari et al, 2013). Mainly is an activity program such as zakat as a tax deduction (Abu Bakar & Abdul Rahman, 2007;Andriani & Fathya, 2013;Badan Amil Zakat Nasional, 2018;Kahf, 1999) and the mechanisms of activity reporting Raquib, 2011), transparency (Suryanto, 2014;Wahid, Ahmad, & Kader, 2009) Thus, zakat management in Indonesia must separate clearly the roles of between government and zakat institutions. The government acts as a regulator and supervisor.…”

Social Welfare and the Role of Zakah in the Family System

“…Although there are certain similarities between conventional taxation and Zakah, there exist a number of differences. According to Abu Bakar and Abdul Rahman (2007), the two differ in their concepts, respective legislative sources, in their theoretical foundation, their objectives, rates, exemptions, and in their expenditures. Qardawi (1999) argues that there is no and should never be any replacement for the term Zakah, as the term Zakah carries unique meanings and significance, and translating it (not explaining) could result a diversion in its meanings and purposes from its original context.…”

“…For example, any wealth below the nisab is exempted from the Zakah obligation, but the concept of exemption in the case of taxation is applicable only when the government or tax authorities specifically stipulate it. Thus, Zaim (1989) quoted in Abu Bakar and Abdul Rahman (2007) reiterates that the rate and the way of payment of Zakah, which are clear and definite, cannot be altered but tax is relatively changeable, and, the methods of distributing and spending of Zakah is definite, while tax is not. Further, taxation law can be amended or even abolished, while Zakah cannot.…”