A Review of Zakat Practices of Islamic Financial Institutions in Malaysia

Moutaz Abojeib, Burhanuddin Lukman, Mezbah Ahmed, Mahadi Ahmad

2019

Abstract

The practice of Islamic social finance components needs to be strengthened for the revival of Islamic social finance in the contemporary time. In this regard, zakat as the most important component and Islamic financial institutions (IFIs) as the payers of zakat deserves an immediate attention. The research has examined the financial reporting disclosures of 16 Islamic banks and 10 takaful operators. The research found that the IFIs in Malaysia have adopted a diverse range of zakat calculation methodologies, the applicable zakat rates are different, application of 2.5% lunar rate for solar calendar year, application of 2.5% in statement of profit or loss approaches, a mixed understanding of zakat on business or on shareholders, some do not pay zakat, and overall there is a lack of disclosures on zakat policy. Based on the above observations of financial reporting disclosures as well as discussions with market observers, the study has identified and elaborated on 11 related issues. The recommendations put forward by this research opens the avenue for further discussion among the industry players, regulators and academia. Further research needs to be conducted in addressing each of the identified issues.

Paper Citation

in Harvard Style

Abojeib M., Lukman B., Ahmed M. and Ahmad M. (2019). A Review of Zakat Practices of Islamic Financial Institutions in Malaysia. In Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance - Volume 1: 7th AICIF, ISBN 978-989-758-473-2, pages 136-144. DOI: 10.5220/0010115900002898

in Bibtex Style

@conference{7th aicif19,
author={Moutaz Abojeib and Burhanuddin Lukman and Mezbah Ahmed and Mahadi Ahmad},
title={A Review of Zakat Practices of Islamic Financial Institutions in Malaysia},
booktitle={Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance - Volume 1: 7th AICIF,},
year={2019},
pages={136-144},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0010115900002898},
isbn={978-989-758-473-2},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance - Volume 1: 7th AICIF,
TI - A Review of Zakat Practices of Islamic Financial Institutions in Malaysia
SN - 978-989-758-473-2
AU - Abojeib M.
AU - Lukman B.
AU - Ahmed M.
AU - Ahmad M.
PY - 2019
SP - 136
EP - 144
DO - 10.5220/0010115900002898