`Zakat' to be deductible from net income tax<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The Directorate General of Tax confirmed on Friday that zakat, or
\nthe religious tax that Muslims are obliged to pay, will become
\nnet income tax deductible starting next year.<\/p>\n
\"In determining the size of taxable income, zakat on income
\n(as against wealth\/property) will be deductible from net income,
\nrather than from income tax owed,\" said Moch. Soebakir, acting
\ndirector of the tax information office.<\/p>\n
The new policy on tax deductions applies to both individual
\nand corporate income taxpayers, he said in a letter distributed
\nto the media.<\/p>\n
Muslims are obliged to pay at least 2.5 percent of their
\nincome and wealth in zakat, in addition to giving alms and other
\nforms of social contribution.<\/p>\n
To date, many Muslims who pay state income taxes -- ranging
\nfrom 5 percent to 30 percent -- have also paid the 2.5 percent
\nzakat either to government-appointed bodies, mosques, orphanages
\nor directly to the poor, without claiming rebates.<\/p>\n
A 1999 law on zakat management, passed during the last days of
\npresident B.J. Habibie's administration, however, makes it
\npossible for Muslim individuals and corporations to deduct the
\namount of zakat they have paid from their net taxable income.<\/p>\n
The policy comes into force in January.<\/p>\n
While the law states that zakat is obligatory for Muslims, it
\nfell short of stipulating its enforcement, stating that the
\nmatter is to be left to each individual to assess the amount of
\nzakat they want to pay and to whom.<\/p>\n
President Megawati Soekarnoputri is scheduled to inaugurate a
\nnew zakat management agency on Monday, which will become a parent
\norganization for provincial, regency and district agencies that
\ncollect and channel zakat.<\/p>\n
The 1999 law states that the national agency must report to
\nthe House of Representatives while the regional offices must
\nperiodically report to the local legislative councils.<\/p>",
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