Zakat and Tax

Topics: Tax, Taxation, Income tax Pages: 10 (3367 words) Published: April 29, 2013
To date, zakat is not a new thing in our daily life especially for muslims. Zakat is well known since thousand years back ago from the teaching of prophet Ismail, followed by Prophet Ishaaq, Yaakob and Isa A.S. as mention in the Quran. Besides that, Allah also revealed the obligation of the Jews to pay zakat from Surah al-Baqarah verse 83. Under the reign of Prophet Muhammad S.A.W, zakat was become fard to all muslims in the second year after Hijrah. Prophet Muhammad S.A.W had used a comprehensive legal framework in order to implement it practically. The zakat workers used to be sent out to collect and to distribute the zakat by Prophet Muhammad S.A.W. In Malaysia, the implementation of zakat is practically the same as what had been done by Prophet Muhammad S.A.W. Generally, every state in Malaysia has its own zakat institution and has its own duty regulations. However, the effectiveness of the duties is based on several factors namely expansion of new resources for zakat, the collection of zakat from tangible and intangible properties, systematic zakat management, efficient zakat distribution and the thoroughness of implementation of Islamic rules. Nowadays, nevertheless, the payment of zakat has become issue to the payers. Basically, the payers in Malaysia have an obligation to pay zakat as well as income tax. Although the zakat payers may receive deduction of tax payment due to zakat amount, there are some thought that their obligation to pay is on income tax while zakat in only a voluntary form to the individual. As a result, some of them refuse to pay zakat regardless of their religion rules. In a nutshell, the issue would rise widely among Muslims in the next incoming years. The factor might be the Muslims themselves lack of knowledge on Islamic teaching and also they unaware on the cause and effect of neglecting the obligation. Thus, this will comprehensively discuss on this issue, the overview of zakat and tax as well as their importance.

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3. History of zakat. Date of retrieval april 21, 2013,
Overview of Zakat
"Take from their wealth a portion for charity, in order to clean them thereby, and sanctify them." Literal Meaning, zakat means grow (in goodness) or 'increase', 'purifying' or 'making pure'. So the act of giving zakat means purifying one's wealth to gain Allah's blessing to make it grow in goodness.  In general, zakat is transferring ownership of an amount of material wealth specified by the Lawgiver to a poor Muslim who is neither Hashimi nor their client, without material benefit returning to the giver in any way, for the sake of Allah Most High. In more detail, It is a condition that there is a transferring of ownership. (Simply put: your zakat has to be given). As such, it is not valid to forgive a debt someone owes you as zakat. Zakat has to be given to the poor and needy. It is not valid to give zakat for projects, mosques, and virtuous activity, unless the zakat itself will be given to the poor and needy. Zakat must be given to a Muslim. Unlike charity, it is not valid to give zakat to a non-Muslim. Zakat cannot normally be given to Hashimis (those from the family of the Prophet (Allah bless him and give him peace)). The giver cannot materially benefit from giving their zakat. As such, one cannot give zakat to ones parents, children, or spouse, because benefits between these people are shared. The Zakat is a form of giving to those who are less fortunate. It is obligatory upon all Muslims to give 2.5 % of wealth and assets each year (in excess...
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