'Zakat' ruling to boost tithing

Ahmad Junaidi, The Jakarta Post, Jakarta

The controversial new rule giving tax incentives for Muslims who give zakat (Muslim tithes) will boost the amount of donated from Muslims next year, and would also increase Muslims' participation in alleviating poverty, officials said.

While attending a fund-raiser here, the director of zakat affairs at the Ministry of Religious Affairs, M. Tulus, and Jakarta Governor Sutiyoso both expressed confidence that the new rule would entice individuals and corporations to allocate more for their tithe.

"Without tax incentives some people still give zakat. Moreover, with the incentives, I believe more people will contribute more zakat next year.

"Companies paying income tax could also receive a tax reduction if they pay zakat. This will encourage those companies to pay zakat," Tulus said in the gathering.

Sutiyoso also expressed optimism that the new rule would empower Jakarta's many Muslims, especially those living in poverty.

"We hope that with the new rule, we will help empower the people," the governor said at the gathering organized by the Muslim Charitable Donations Board (Bazis).

The tax incentives were incorporated in the decree by the directorate general of taxation No. KEP.542/PJ/2001 dated August 1, 2001.

However, according to Article 9 verse 1 letter g of Law No. 7/1983 on Income Tax as amended by Law No. 17/2000, those entitled to tax deductions would only be Muslims or companies belonging to Muslims.

The zakat, according to the law, should be given to agencies appointed or sanctioned by the government.

Sutiyoso noted that he would prepare a bylaw to support the new rule. "We should first look into the law, then we will produce a bylaw."

He also insisted that the management of money by agencies such as Bazis must be properly accounted for.

"Bazis could also be audited by a public accountant. I have no problem with that," Sutiyoso said before the gathering at the Tennis Stadium in the Bung Karno Sports Complex.

The governor said, to uphold transparency, the financial reports of the charitable board could also be announced regularly in the media.

Bazis Jakarta has never been audited by a public accountant and has yet to publicly report its financial situation.

"They would be committing a major sin if they 'ate' the money. I believe they would not do that," Sutiyoso remarked.

Bazis Jakarta has thus far collected Rp 5 billion (US$485,000) in Zakat and other charities as of Wednesday, including Rp 300 million from the evening's donations.

It has set a goal to collect a total of Rp 9 billion this year, up from Rp 8 billion last year.