Philanthropy Association Proposes Zakat Tax Credit Scheme

The National Amil Zakat Agency (BAZNAS) has recorded that the national zakat potential of Rp 327 trillion has only been realised at around Rp 40 trillion. To close the gap of approximately Rp 287 trillion, the Indonesian Philanthropy Association (PFI) believes a tax credit scheme for zakat could be the key.

The tax credit concept for zakat is a scheme where zakat payments can directly reduce the amount of a tax bill. PFI Expert Council Chair Amelia Fauzia explained that the tax credit policy would trigger larger donations from the financially established middle and upper classes. "However, currently, they tend to distribute their zakat informally," she said in a written statement on Tuesday, 14 July 2026.

Citing the National Survey of Zakat, Infaq, Alms, and Waqf (ZISWAF) by the Social Trust Fund (STF) of Syarif Hidayatullah State Islamic University (UIN) Jakarta, together with the Commission on Asian Philanthropy and Indonesian Political Indicators, out of Rp 343.08 trillion in Indonesian Muslim philanthropy, 73 percent is still channelled through informal routes. Consequently, only 27 percent, or around Rp 100 trillion, is managed by professional amil institutions.

Amelia explained that the tax credit policy could shift the pattern from direct giving to institutionalised distribution, increase zakat compliance, and strengthen national philanthropic governance. PFI is optimistic this policy can boost zakat compliance through progressive fiscal policy. "At the same time, it transforms the community’s philanthropic pattern from direct giving to more organised and institutionalised distribution," she said.

Amelia continued that the tax credit scheme could become a strategic instrument encouraging middle-class participation in social development. According to her, this incentive is not just about economics, but a form of state recognition of the Muslim community’s social contribution. She cited Malaysia as an example, which has proven successful in increasing zakat collection and public trust through a similar policy.

Previously, Minister of Religious Affairs Nasaruddin Umar had proposed that proof of zakat payment be used as a factor to reduce tax payments. "Our neighbour Malaysia, for example, treats their zakat as a tax-reducing factor. Whereas in Indonesia, our zakat is only a factor that reduces the taxable object," he said some time ago.