Towards A Unified Zakat System

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or indirect method. According to Al-Sultan (1997), thedirect method calls for analysis of the elements of theZakat base, i. e., cash, stock, debtors, creditors, andnotes payable. The indirect method calls for the analysisof the equity accounts. The two methods produce the sameamount of Zakat obligation. Both methods, however, overlookthe nature of investment in other firms, and whether thesefirms are subsidiaries to the parent company. If theseinvestments have been purchased for selling back or totrade in them, they and their Zakat base will then beincluded within the elements of the current assets andZakat should be levied. If, however, they were purchased tocontrol other subsidiary companies, they are included withthe elements of fixed assets, and any return they achieveis subject to Zakat. These two methods, for thedetermination of the Zakat pool of trade activity, suitcompanies with regular accounts. With regard to companieswith irregular accounts, however, the Zakat base can beestimated. The capital can be determined at the beginningof the year from the commercial register or the company'scontract. It may also be estimated from the activity'scurrent size'. Profits will be determined in the light ofoperations undertaken throughout the year and also othergeneral indicators. The commercial debts payable to theUsually they estimate profit as a percentage of cap 178 (10 percent of capital).
Zakat payer are added to the profits, unless he proves theunlikely hood of collecting them, or if there is a disputebetween him and the other parties. It was, therefore,important to investigate the perceptions, of the selectedgroup of respondents, regarding the Zakat accountingmethod.Research Question (13)" What are the various perceptions, of the selectedgroups of respondents, of Zakat accounting methods?5.2.14 Benefit of Zakat implementationAccording to Al-Qaradawi (1986) Zakat (alms), in thelanguage of the Qur'an and the Sunna, may be calledcharity. The root of the word charity is taken fromtruthfulness. This is why Zakat is called charity, becauseit is evidence of the truth of the belief of the one givingZakat and belief in The Day of Judgment. The Qur'an hasexpressed the religious aims for Zakat in two words;purification and sanctification.Take alms from their wealth in order to purify themand sanctify them with it. (Attawba, 103).This is because the wealth that a man gathers may not beclear (it may be from uncertain origins) or may be179
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Towardsa unified system ofZakat acc
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ACKNOWLEDGEMENTSIN THE NAME OF ALLA
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PAGINATION ERROR INORIGINALTHESIS
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ContentsPageDeclarationiDedicationi
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4.4.1.1 Zakat on pastoral animals 1
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6.2.5 The percentage of Zakat thats
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List of tablesPageTable 2.1 Economi
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GLOSSARY OF TERMSFai property acqui
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ChapteroneIntroduction
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interest investment model, where th
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egulating Zakat has been employed a
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four countries due to the limitatio
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Co-operation Council, location, cli
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Chapter seven summarises thefinding
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ChaptertwoGeneral background to the
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in the following section, various f
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have an oil-based economy. Its oil
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anking and investment institutions
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2.1.2 KuwaitKuwait is situated at t
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2.1.2.2 Social, Cultural and politi
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Saudi Arabia is a monarchy, with st
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In addition, Saudi Arabia is also p
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important to the everyday life of S
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and the city of Abu Dhabi is the ce
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2.1.4.2 Social, Cultural and politi
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The Omani economy mainly depends on
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In recent years, the government has
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sv2ýJbbQr N m N n O h CC o O n h O
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11 percent in 1995. In Kuwait, the
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general. All countries, except Qata
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with, they all share the same faith
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" Agreement on linking the electric
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2.4 An example of Zakat regulationA
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offices throughout the Saudi Kingdo
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future is uncertain. In trying to s
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ChapterthreePrinciples of Islamic E
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and equitable distribution of incom
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has two main sources: primary and s
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Although various Islamic schools an
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Muslim countries such as Pakistan a
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This definition also suffers from s
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elationship that a human being must
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The search for lawful wealth is reg
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from place to place and from time t
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Movement towards greater economic a
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3.4.5 Freedom of ownership and acti
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Public ownership is also recognised
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ates in his Code and suggested the
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These last verses clearly show that
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orrower for the period of time the
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choose and what maximises their uti
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eliminated at the outset in Islam.
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aspect of self-interest he or she s
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it can be said that an Islamic gove
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certain circumstances not. to cance
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3.9 Islamic Economics in Practice.A
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deficit for many years. Pakistan an
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It was argued that the goal of well
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economic activities, social and eco
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ChapterfourZakat and its position i
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Although these methods are currentl
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4.1.1 Goals of ZakatMany Muslim sch
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them to contribute positively to th
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een distributed to non-profit Musli
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sectors of the Sunni Islamic sect,
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4.3.2 WealthThe teachings of the pr
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Islam without regard to any debt on
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4.3.2.4 The passage of a yearThe pa
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oken bones, or gouged eyes (Joan, 1
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the total amount becomes due. The d
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example,today is the date that Zaka
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this item should be considered as p
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Prophet's obligations. The amount o
Page 147 and 148: 4.4.4.2 Starting point of Zakat dut
Page 149 and 150: such as income earned from practisi
Page 151 and 152: There is a widely known view of Mal
Page 153 and 154: amount (2.5 percent). In Saudi Arab
Page 155 and 156: 4.5.2 Department of General IncomeE
Page 157 and 158: He further describes some condition
Page 159 and 160: year. Zakat is payable on both the
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Page 163 and 164: therefore, make a list of the avera
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Page 167 and 168: Balance Sheet 31-12-19X230-12-XXX13
Page 169 and 170: literature behind the selection of
Page 171 and 172: Zakat system supposedly to be appli
Page 173 and 174: ChapterfiveResearchmethodology5.0 I
Page 175 and 176: 5.2 Research questions5.2.1 Zakat p
Page 177 and 178: distribution to those deserving it
Page 179 and 180: egulation, 1988). Companies, using
Page 181 and 182: 5.2.5 Zakat regulationRegulating Za
Page 183 and 184: capital owners (Article 70).The mea
Page 185 and 186: authorities and securities regulato
Page 187 and 188: 5.2.8 Variations in accounting meas
Page 189 and 190: applicability to part of the capita
Page 191 and 192: then they must be discounted since
Page 193 and 194: as well as with the standard for th
Page 195 and 196: 5.2.10 Percentage of ZakatWhen Zaka
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Page 203 and 204: eing to make it Islamic, strong, gr
Page 205 and 206: the present study would have been p
Page 207 and 208: a wide geographical area, involving
Page 209 and 210: The fifth and last part sought the
Page 211 and 212: academics, government officials, in
Page 213 and 214: Kuwait. Some individual investors c
Page 215 and 216: out of 80 (31 percent) and the Unit
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Page 221 and 222: ChaptersixStatisticalanalysisofthes
Page 223 and 224: analysis of respondents background
Page 225 and 226: Education and age are not the only
Page 227 and 228: years. Twenty-three percent reveale
Page 229 and 230: 6.2 Major results6.2.1 Zakat paymen
Page 231 and 232: Al-Sultan (1997) who argued that Mu
Page 233 and 234: Department of Zakat, but not to the
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Page 237 and 238: to the national banks where the mea
Page 239 and 240: difference in means is highly insig
Page 241 and 242: collect and distribute only 1.25 pe
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Page 245 and 246: Firstly, occupation seems to affect
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collection), as the chi-square stat
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financial statements such as profit
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like to be on the safe side as far
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It is uncontested that the degree o
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espondentsseem to share some doubt
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score to themselves on the suggesti
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statistics were not significant at
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Secondly, Gulf countries have not y
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Table 6.13(b)Reasons behind low lev
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Alms (Zakat) are for the poor, the
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Table 6.14(b) Appointment and pay f
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five out of seven items, suggesting
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discussed earlier remains unchanged
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4.61. The opinion of accounting fir
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6.5 SummaryThis chapter has empiric
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ChaptersevenSummaries,conclusionand
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7.1.2 Chapter twoThis chapter provi
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(profit) with the borrower. Any dea
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countries, Zakat is paid by all tho
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Another advantage is the accumulati
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This survey reveals that almost 40
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of the total Zakat amount due. Over
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Most respondents prefer a partnersh
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measurement and disclosure of Zakat
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measurement be re-defined in such a
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" Non-monetary elements, which incl
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Table 7.1A sample of the recommende
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7.3.2.2 AllowancesThe treatment of
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Zakat at 1.5 percent of the base ra
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Traditionally, Zakat was paid to th
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eason why the survey study covered
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should be set up to at least discus
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BIBLIOGRAPHYAbbas, F. 1988. "Anivar
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Al-Shafi'i,al-Imam, 1987. al-Shafii
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Gambling T. and Abdel Karim, R. 199
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Kuran, T. 1992. The Economic system
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Taylor, T. W., and Evans, J. W. 198
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CARDIFF BUSINESS SCHOOLDirectorProf
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S2. If the answer to question 1 is
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2. To what extent do you agree or d
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i" iii. 5. ijp'ji ý)ij;; -iK.d. 9.
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cycL. oll o: ri >ý_='°9 tMýa5l1
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G, i7'1 °ßi1 5'° C, .. c ýSý y
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e:;.-. roUS pL Ll LLAI L; 111 CIA:
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" Royal Decrees and Orders "
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ZAKAT REGULATIONS (1)Article I: The
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7- For those who do not keep reliab
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No: 17/2/28/8799(»Date: 8/9/1370 H
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No. 1 7/2/28/577Date: 14/3/1376 H19
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Royal OrderTo: Mohammed Sorour -Riy
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No. 6115/1(1)Date: 5/1/1383 H.With
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'Zakat & Income Tax Department Bran
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Kingdom of Saudi Arabia.Ministry of
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Ministry of Finance & National Econ
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