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The Legal Challenges That Affect The Collection of

Zakat By A StateBy: Laila Abdul Latif

1ST BI-ANNUAL CONFERENCE OF ISLAMIC LAW IN KENYA

School of Law, University of Nairobi (UON)

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Introductory Remarks

Why this topic? What is its importance? Poverty alleviation strategy Welfare of the poor Equitable distribution of wealth Uniform application of rules on zakat: Prophetic era

and caliphate system

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What is zakat?

Definition Arabic meaning “purity” Duty enjoined by Allah (God) and a form of worship No equivalent practice in other religions

Assessed once a year

Specific beneficiaries (Quran; Chapter 5, Verse 60)

Different percentages

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Assessment of Zakat

2.50%2.50%

5.00%

10.00%

20.00%

Assessment of Zakat

Invested wealthUnivested wealthHarvest from cul-tivated landHarvest from uncul-tivated landFortuitous fortune

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Assessment continued

Camel Sheep/Goats Cows

5-9 Camels = 1 Ram/Goat

40-120 Sheep = 1 Ram/Sheep/Goat

30-39 Cows = A 2 year old calf

10-14 Camels = 2 Rams/Goats

120-200 Sheep = 2 Sheep

40-59 Cows = A 3 year old calf

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Collection and Challenges

Who should collect zakat? State, if objective is to be met Muslim versus secular state

Legal challenges; Affects collection of zakat Impacts and raises questions concerning the

effectiveness of zakat as a method of; Poverty alleviation and Equitable wealth distribution

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Methods of collecting zakat

Compulsory: State approach Case study; Sudan Used to be voluntary in 1984 (Sudanese Pounds 35million) Made compulsory in 1989 (Sudanese Pounds 504million) Case study; Pakistan (automatic deduction of zakat by

banks)

Voluntary/Zakat Fund: Through charitable institutions/Mosques in countries where the State does not collect zakat – Case study; Kuwait (Kuwait Zakat House)

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What are these legal challenges?

Different schools of thought hence no uniform application: Hanafi: Zakat can only be collected on ‘visible’ property

(livestock and crops, gold and silver). E.g., Saudi Arabia and Pakistan. Distribution limited to poor and needy.

Maliki/Shafi: Zakat can be collected on all property. E.g., Sudan and Yemen. Distribution not limited.

Assessment methods: Declaration system (Saudi Arabia and Sudan) – Payers

themselves calculate the zakat owed and pay it Deduction at source (Pakistan)

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Continuation

Unresolved jurisprudence issues: Saudi Arabia excludes from zakat fixed business assets;

other countries require conditions to be met to impose zakat on fixed business assets (condition of growth whether real or potential to be satisfied)

Imposing zakat only on self employed individuals leaving out salaried professionals, even if latter earn more

Lack of a transparent and accountable system in assessing zakat – declaratory method not transparent and effective

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Continuation

Lack of experience of officials assessing zakat, poor accounting practices by companies

Neglecting responsibility to collect zakat and distribute to poor and needy, assessment made on crops and livestock but distribution not discussed (Saudi Arabia)

Non official channels (Malaysia – inconvenience, lack of confidence in government administration, inefficiency, giving to known people)

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Continuation

Lack of knowledge and information about the law on zakat because the law is not specific (Kuwait)

Lack of effective administrative laws (Sudan lacking adequate storage and transportation facilities)

Lack of implementation strategy (no database on eligible beneficiaries of zakat)

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Recommendations Proposed

Review and harmonise the opinions of the different schools of thought

Educate Muslim public on zakat; coverage and assessment

Train government officials in collecting zakat

Implement efficient zakat administration system (Pakistan experience as a guide, regional offices)

Promote and regulate non official channels

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Continued

Offer tax incentives to zakat payers

Promoting accountability in the collection of zakat (show how zakat is being spent)

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Conclusion

Since zakat is a method by which poverty can be alleviated and wealth can also be equitably distributed in a society it is important to have a zakat collection system that is free from legal challenges

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End of the presentation