MUI: Zakat Could Be a Tax Deduction Not Yet Optimally Utilised

Jakarta – In the financial system, alongside taxes and non-tax measures, philanthropy becomes the third instrument. In some countries such as Australia, zakat or donations can be tax-deductible. In Indonesia, zakat can currently reduce the tax object, but this facility has not been utilised optimally, particularly by companies, according to Cholil Nafis, Deputy Chairman of the Majelis Ulama Indonesia (MUI), speaking at the MUI building in Central Jakarta on Tuesday.

‘Therefore, in his view, there is a need for massive socialisation so that entrepreneurs can implement a policy of disbursing zakat before calculating their taxes, so that double burdens do not occur.’

‘Additionally, to ensure Sharia compliance in accordance with religious provisions, and to channel zakat to the right targets, Cholil Nafis suggested there be explicit policy in law regarding Sharia advisers.’

‘He also noted that although there is no rigid rule about distribution percentages, there is a need for space of ijtihad (the determination of Shariah law) to determine the priority scale in distribution.’

‘Sharia advisers play a role in maintaining Shariah compliance while determining which recipients deserve prioritisation.’

‘The main reason is the low level of public literacy. Therefore, the mobilisation and strengthening of Lembaga Amil Zakat must be reinforced, including the addition and optimisation of existing institutions,’ Noor said.

‘Therefore, he urged efforts to make corporate zakat a tax deduction, considering that many companies have yet to fulfil zakat obligations.’

‘Therefore there should be exhortations for companies to carry out this obligation,’ Noor added.