Tuesday, July 14, 2009


Business tax deduction and business zakat accounting needed harmonization. One of the option is to change the business zakat accounting method. To accomplish this task, twelve zakat scholars in Malaysia were selected as respondents (experts) representing the three categories for survey purpose. The first category is the jurist, the second category is the economist, and the third category is the practitioner. This survey is to seek experts’ opinions on weather business zakat can be charged or not on business income. If the business zakat can be charged on business income, therefore, tax deduction can be utilized.

The findings showed all zakat scholars in Malaysia agreed that adjusted working capital was established based on the report by Maimun ibn Mahran (Abu Ubayd, 1991: 362). They also agreed that this method should be used, however, other methods cannot be denied. In addition, they expressed the same opinion that business zakat accounting method should not be rigid, therefore, it could be changed according to the requirement of the current situation.

Furthermore, business zakat itself is quoted as general term in the Quran and Sunnah as argued by all Malaysian scholars. To them, since ‘business zakat’ term in both Quran and Sunnah is considered non-specific explicitness, business zakat accounting is not so rigid, thus it can be changed. This view is supported by the economist. He drew a specific comment as below:

“Although we agree that adjusted business zakat accounting method should be used, but the scope of interpretation of goods for trade also is very broad. There must be a serious task should be taken for the interpretation of the definition of good for trade.”

Business zakat accounting is established on the basis of ijtihad as agreed by all scholars. They are in the same opinion that one of the alternatives is business zakat which can be charged on business income. In this case, according to the scholars, zakat on business income can be derived (qiyas) from zakat on agriculture yield. This opinion is in line with the affinity that business zakat accounting method can be changed according to the requirement of the current situation such as the conditions of economy and local laws. For them, this is one of the highly recommended options in order to harmonize business zakat accounting method and business tax deduction currently practiced in Malaysia. Therefore, if the business zakat accounting relies on the income base, the entrepreneurs can fully get benefits from tax deduction allowable to them under the section 44(11A) of the Income Tax Act 1967.

To be fair to entrepreneurs, therefore, they are allowable to use any methods, either adjusted working capital or business income based. In the case of business operation running at loss, entrepreneurs are recommended to use business income for their business zakat accounting as being practiced in Acheh Darussalam, Indonesia.


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