This paper focuses mainly of business
Keywords: Business zakahzakah collectionzakah administration
The national law provides that
Consequently, the move to establish and privatise the
Currently, all states in Malaysia have institutionalised and privatised their collection centres. They are authorised bodies and subsidiaries of the SIRC
The effectiveness of
In the state of Selangor, the total
The amount of business zakah collection was compared to the amount of business tax collected by the Inland Revenue Board (IRB). In 2014, IRB reported a total tax collection of RM133.7 billion, of which RM69.95 billion was collected from businesses, representing 52.3% of the total tax collection. This figure is considerably higher, compared to the proportion of business
Mohd Rizuan (2015) has conducted a research on the issue of business
What are the challenges faced by the business zakah payers in Selangor?
What are the suggestions to overcome such challenges by business zakah payers in Selangor?
Purpose of the Study
This paper intends to identify the challenges against the potential of business
This study conducted a Mini-Focus Group Discussion (M-FGD) with four Muslim business owners’ in Selangor. It intends to understand the issue from the perspective of the business owners, who are also the business
In ensuring appropriate selection of the respondents, they must fulfil a list of criteria that was set and agreed upon, in which the participants must: (a) have experience in dealing with business for more than 10 years, (b) already have an established business, and (c)
The M-FGD was held on Saturday, January 9, 2016, at 10.00 a.m. at Bangi-Putrajaya Hotel, Putrajaya with four respondents. All four respondents have had business experiences ranging between 15 to 25 years. The respondents were also zakah payers and have extensive experiences in dealing with the payment of business zakah. The identity of the respondent and business background are kept confidential to protect the good name and privacy of the respondents. All the feedback received was recorded for analysis. Table 01 shows the background of respondents. Two respondents were involved in the services industry and another two were in the manufacturing industry. The business size for all respondents is medium. They have engaged in the business for more than 15 years and they were business zakah payers in Selangor.
Various issues related to the collection and distribution of business
Business owners’ knowledge of business Zakah.
The business owners’ lack of knowledge on business zakah is identified as one of the main factors for the low contribution of business zakah to overall zakah collection. Business owners face challenges in assessing the amount of zakah payment to be made, which potentially may affect the number of those paying business zakah. Payment of business zakah requires technical understanding in assessing the amount of business zakah to be paid. Not all businesses have the same detailed assessment due to the determination of the relevant details of the business that requires technical knowledge appropriate to the type of business. Hence, fit is very important to ensure that business owners are well-educated on this subject. Due to this situation, several recommendations have been identified through the M-FGD to tackle this issue and these are presented in the next paragraph.
First: Authorised zakah institutions may conduct educational activities with various well-established business associations in Malaysia such as the Association of Millers, Fishermen, Construction, Exporters, Importers, Textile and many others. This is consistent with Abdul Muhaimin (2009) to state that zakah has a significant role in developing the economy and society and if authorised zakah institutions not giving the educational activities, development of Muslim economy and social will be failed.
Second: Business owners should be educated on the importance of purifying their property through the payment of zakah. This should be imparted at early stages of business. Payment of zakah, if it is done with good and sincere intentions, will bring blessing throughout the course of the running of business. If God’s willing, this shall lead to a good business performance. As stated by Abdul Muhaimin (2009), Zakah portrays one’s relationship with their creator, and with the society
Third: Business owners need to be trained on how to calculate business zakah. Authorised zakah institutions are responsible in providing guidance to businesses on the correct method to calculate business zakah. In order to maximise the efficiency of zakah collection, Authorised zakah institutions has to create awareness among zakah payers in Malaysia (Azman et al., 2012).
The relationship between business owners and the authorised Zakah institutions.
The relationship between business owners and the authorised
First: Through a good rapport, zakah institutions initiatives and related information can be channelled to business owners properly. Besides that, business owners are more likely to reciprocate positively to activities organised by the authorised zakah institutions, albeit for the purpose of enhancing relationship between both parties and gaining aids for the needy. This may lead to the increased in business zakah collections in the future and this is consistent with Abdul Muhaimin (2009), to state Zakah shall be issued by the eligible payer to the authorised zakah institutions and to be distributed to the entitled recipients.
Second: Appointing the business zakah payers themselves as agents for collecting business zakah may invite more zakah payers as they have extensive experience in dealing with zakah payment process and influence in the world of business. However, this is only possible if the business zakah payers have strong relationship with the zakah institutions.
Third: Having good connection with audit firms may further expand the authorised zakah institutions’ relationship with potential business zakah payers. Audit firms may extend their services to business owners, beyond auditing financial records, to include business zakah assessment. This added service by audit firms indirectly connects business owners to zakah institutions. However, this is only possible if such connection exists between authorised zakah institutions and audit firms.
Financial records of businesses.
Incomplete business financial records will prompt some corrective actions to be taken by the management of the business itself. This includes complying with statutory requirement that obliges complete financial records for auditing purposes, bank loans applications and corporate tax assessment. Incomplete financial records may also create problem in assessing the business
First: Businesses should put in place a proper record of cash inflow and outflow at the very least. This shall be a minimum effort toward preparing financial statements in accordance with the Generally Accepted Accounting Principles (GAAP). With this record, all documents are traceable for business monitoring and appropriate business
Second: Business owners should be educated about the importance of complete financial records through discussion sessions, briefings, workshops and other channels that are available. In addition to learning on the positive impact of complete financial records, businesses are also in compliant with local regulatory requirements.
Researchers in opinion, through privatisation of Authorised Zakah Institutions will improve the effectiveness and efficiencies of
The issue on zakah is never-ending. This is the law of God and it should always be remembered as one of the missionary practices in Islam. Business zakah affairs in Malaysia have not yet reached a level that can be considered as complete and excellent. There are challenges that impede the collection of business zakah, which still occur in various states in Malaysia. Authorised zakah institutions may educate the business community to improve their understanding on the concept of blessing and the importance of business zakah so as to attract more businesses to come forward and pay business zakah. The transparency and effectiveness of the zakah distribution raise the confidence of business owners with the country’s management of zakah, and solidify their intention of paying business zakah. Apart from that, complete financial records that are organised and up to date will lead to an increase in the collection of business zakah. Therefore, the authorised zakah institutions shall look further into business zakah and be mindful of the factors that contribute to the increased in the level of readiness and comfort of business owners with respect to the manner and method of calculating the business zakah.
We would like to thank to Tabung Amanah Zakat Uniten, Universiti Tenaga Nasional, Malaysia for the fund granted. We hope this may assist to improve the business zakah collection in Selangor, Malaysia.
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31 July 2018
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Business, innovation, sustainability, environment, green business, environmental issues, industry, industrial studies
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Mohaiyadin, N. M. H., Ibrahim, M. I. M., Ridzwan, I. U., & Kadir, M. R. A. (2018). Challenges In Zakah Collection: In Case Of Business Zakah Payers In Selangor. In N. Nadiah Ahmad, N. Raida Abd Rahman, E. Esa, F. Hanim Abdul Rauf, & W. Farhah (Eds.), Interdisciplinary Sustainability Perspectives: Engaging Enviromental, Cultural, Economic and Social Concerns, vol 44. European Proceedings of Social and Behavioural Sciences (pp. 31-37). Future Academy. https://doi.org/10.15405/epsbs.2018.07.02.4