`Zakat' becomes tax deductible beginning next year: Minister
The Jakarta Post, Jakarta
A tax that all Muslims are obliged to pay, zakat, will become fully deductible from income taxes as of 2002, Minister of Religious Affairs Said Agil Husein Al Munawar said on Tuesday.
Muslims are obliged to pay 2.5 percent of their wealth, measured in terms of both their income streams and wealth, in zakat. This is in on top of other donations they are encouraged to give to the needy.
Said said people who submit receipts of zakat payment with their tax returns would be entitled to a 2.5 percent discount from their regular income tax, which currently range between 5 and 35 percent.
Most Muslims who pay income taxes to the government currently pay the 2.5 percent zakat on top.
Various private groups administer the zakat, from local mosques to larger national organizations, collecting the money and distributing it to the needy.
Said claimed his office was setting up a new directorate to handle zakat and Muslim charity contributions (wakaf).
Five banks have been enlisted to facilitate the zakat payments, including Bank Syariah Mandiri, BNI Syariah and Bank Muamalat.
Those seeking more information should contact the Ministry of Religious Affairs.
The government has also set up the National Zakat Executive Agency with 22 regional offices, and smaller branches at district level which, according to Antara would be inaugurated Dec. 3.
It is not immediately clear how the zakat policy will impact on the government's tax revenues, as a majority of Indonesians still avoid paying income tax.
Muslim scholar Ali Yafie on praised the new zakat policy as Muslims would not necessarily pay double on their taxes.
Ali, former chairman of Nahdlatul Ulama's law-making body, noted that the policy was a follow-up to the law on zakat and non-obligatory donations (infaq).
Asked if it could increase zakat payments, while no sanctions are imposed, he replied: "It depends on the socialization of the policy... Any religious regulation should not necessarily require sanctions."