An appraisal on the obligation of companies to pay zakat: The Malaysian law and shariah perspectives

Zuhairah Ariff, Abd Ghadas and Nazri, Ramli (2019) An appraisal on the obligation of companies to pay zakat: The Malaysian law and shariah perspectives. International Journal of Law, Government and Communication, 4 (15). 08-17. ISSN 0128-1763

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Abstract

Zakat is one of the five pillars of Islam, obligatory upon human beings who believe in Allah and His Messenger (pbuh). It refers to the determined share of wealth prescribed by Allah as an act of worship to be distributed to a certain group of beneficiaries (al-Asnaf). The consideration of its great objectives (al-Maqasid) in Islam, among others, public interest and social justice to the Muslim society influences contemporary Muslim jurists to uphold the obligation of companies to pay zakat as issued in their fatwas and resolutions. In Malaysia, several fatwas and resolutions issued by the religious fatwa councils clearly impose this religious obligation on the corporations as their business zakat (Urudh al-Tijarah) which are legally registered under the Companies Act 2016. This paper discusses the obligation of companies to pay zakat from Malaysian law and Shariah perspectives. It aims to analyse whether it is legally viable for corporations registered under the Companies Act 2016 which adopts the English common law to be obligated to pay zakat. The finding shows that the current legal structure of a corporation does not conform to the Shariah principles in relation to zakat obligation. It demands for certain modifications to the current framework and hence, the current fatwas in imposing zakat on the corporations in Malaysia are proposed to be reviewed and revisited. Research methodology applied in this paper are doctrinal and statutory analysis.

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