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(2014715621)
(2014970723)
MARCH-JULY 2015
TABLE OF CONTENT
TABLE OF CONTENT........................................................................................... i
ISLAM AND TAXATION............................................................................................ 1
1.0
Introduction.................................................................................................. 1
2.0
2.1
2.2
2.3
Effects of taxation..................................................................................... 5
2.4
3.0
3.1
Islamic taxation........................................................................................ 6
3.2
3.2.1
Kharaj................................................................................................. 6
3.2.2
Jizyah.................................................................................................. 7
3.2.3
Ushr................................................................................................... 8
3.3
Others Taxation............................................................................................ 9
3.3.1
3.3.2
3.3.3
4.0
4.1
4.2
5.0
Conclusion.................................................................................................. 17
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1.0
Introduction
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2.0
The types of taxes imposed by government are generally divided into two;
direct and indirect taxation. In its early years of development, Malaysia
dependent heavily on indirect taxes as sources of revenue. The upsurge in
rubber production after 1900 and the imposition of a tax on rubber
exports in 1907 further increased the dependence on export duty
revenue. Other forms of taxation included excise and import duties and
land taxes. However, the introduction of income tax in 1917 on a
temporary basis in Malaya (as it was then known until 1963) was clouded
with uncertainty as its faced strong opposition from general public. For
instance the draft bill for imposing a tax on income that was introduced by
the Straits Settlement Legislative Council in 1910 was withdrawn the
following year as it did not receive the support of the tax paying public.
Income taxes were introduced at various times and for various purposes
over the preceding 30 years: (Kaipillai, 2010).
1917-1922
1923-1940
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During this period, there was no income tax in the Straits Settlements.
(Kaipillai, 2010)
Post 1945
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The Inland Revenue Board of Malaysia (IRBM) is one of the main revenue
collecting agencies of the Ministry of Finance. The Department of Inland
Revenue Malaysia became a board on March 1, 1996, and is now formally
known as IRBM.
1.
2.
3.
4.
5.
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6.
Based on the Act 533 INLAND REVENUE BOARD OF MALAYSIA ACT 1995
they list out the function of the Inland Revenue Board:
5. May act as a collection agent for and on behalf of any body for the
recovery of loans due for repayment to that body under any written
law.
2.3
Effects of taxation
2. Corporate income tax its gives the result to lower corporate profits
and dividends. The income of business may reduce so that they will
increase their profit by raising the process of the products. (Johari,
Ibrahim, Radzi, & Ibrahim, 2014)
2.4
1. Cash- means that its generally pay in cash, the payment other than
cash is
than cash.
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3.0
practice.
3.1
Islamic taxation
Zakat is the heart of the Islamic tax system. Nothing can be said about
taxation in an Islamic system without firstly knowing the nature of the
zakat system. There have similarities between taxes and zakat. Principle
of taxation is acceptable but the ruler should give a clear explanation to
implement taxes. The tax policy would be able to further oppress Muslim if
there no any reference to Shariah in any decision-making.
3.2
3.2.1
Kharaj
Literally Kharaj means lease, rent or simple yield. From the terminology,
definition Kharaj is the levy on land produce in the non-muslim state
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which was conquered by the Islamic state as payment to the Islamic state.
Kharaj was firstly introduces by the Caliph Umar ibn Al-Khatab. There is no
clear direction in the Holy Quran or traditions of the Prophet (SAW) about
the rates and methods in the collections of Kharaj (Azmi, 2009). So the
ruler has authority to change the rate and its method whenever
appropriate.
There are some condition Kharaj was imposed includes facility of land,
types of crops and system of irrigation. Jurists have classified two basis
charged on Kharaj which are fixed Kharaj levied at a fixed amount per unit
of area and proportional Kharaj which is charged on portion of the
production as half or one quarter and other. Once the land was declared
as Kharaj land, it will remain as such even though the owner land sells the
land to a Muslim or become a Muslim. Kharaj is not to be charge on the
habitations or the land-owners houses.
3.2.2
Jizyah
Jizyah comes from root word Jaza which means recompose. It is a kind of
tax where imposed on non-Muslim by Islamic state as a protection given
to them and their properties as well. Al-jizyah is also called poll-tax
(Ahmad, 2015) Which is a poll tax imposed to non-Muslim because there
were neither paying Zakat nor serving army like Muslim citizens. The
groups of non-Muslims are called Zimmis which means protected or
covenanted group.
Al-Quran mentioned about the authority of Jizyah which commands the
believers: (At-taubah 9:29).
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3.2.3 Ushr
Literally means one-tenth. It is a tax on agricultural products. He Muslim
Jurists and Fiqh of Scholars has been developed this concept. There are
some area under Ushr land are Makkah, Madina, Taif, Hijaz, Yemen and
other Arab Territories. The term Ushr cannot found in the Quran. However
there is verse refer to Ushr.
Eat you of the fruit thereof when it fruiteth, and pay the
due thereof upon the harvest day, and be not prodigal (Alan am 6:141)
There are two different types agricultural product classified by jurists.
Firstly, farm produce like corn and vegetable and secondly, garden
produce like fruits, honey and other. In the Quran (6:141) above
mentioned that the time for payment Ushr at the time of harvest.
Minimum limit for agricultural product is 5 vasqs or 948kg. Ushr is liable to
the owner, the owner must be a Muslim who is adult or a minor, may be a
man or a women. The Ushr will be charge if he or she cultivates the land
on their own. If their agricultural destroyed due to natural calamities or
theft, no Ushr is charge.
3.3
Others Taxation
In our tax system in Malaysia, there are some difference types of taxes.
From the report on Tax in Malaysia prepared by (Zakaria, 2010), he
discussed more on personal and income tax, value added tax, customs
duty and local tax. Every difference tax has difference function and
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objective. Tax in Malaysia is divided into two categories which are direct
tax and indirect tax. While, the direct tax consists of income tax, real
property gain tax, petroleum income tax and stamp duty. Besides, the
indirect taxes consist of sales tax, service tax, import duty, export duty
and excise duty.
3.3.1
3.3.2
This tax special for resident companies are subject to tax on income
accruing in or derived from Malaysia. Income received in Malaysia from
outside Malaysia is exempted from tax, except for companies carrying on
the business of banking, insurance or air transport. The tax is subjected to
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4.0
Some Muslim people still questioning either tax such as Income tax,
wealth tax, property tax and so on are possible to charge to Muslim. This
issue is not easily resolved since there are no clear instructions either in
the Quran and the Sunnah in the support of or against to it. Muslim jurists
have different opinion regarding the concept of taxes in Islam whether the
government should collect taxes from people or not. There are some
reasons allowing and rejecting of taxation.
4.1
Some Ulama allow the existence of tax policy. This is because, according
to
the
original,
everything
is
permissible.
The
important
thing
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Egyption Muslim scholar, has allowing the tax obligations of charity. There
are some requirements for tax collection. Firstly, the Government really
needs funds and no other source that can cover their needs. Secondly, the
division of the tax must equitable. Thirdly, spent the amount collected for
Maslahah people.
It can be concluded that, taxes are permissible if there is no other
opportunity to gain the revenue for public interest. At the same time, the
taxes should be collected from people are affordable to pay it, not from
poor people. This is because the amount may be burdening them.
However, the ruler should give a clear explanation and make sure the
taxes are not contradicted with the Shariah principle. So, the taxes will
benefit to society in term of development.
4.2
Every person with have their own opinion in some issues. Same goes to
tax policy. There have second view who are argues that the tax is haram.
This is because in the history of Islam during the Prophet Muhammad and
the Caliph was never to tax to the Muslims. They are obliged to pay Zakat
only. The Fuqaha or Ulama worry if taxes are allowed it will abuse and
become tool of oppression. To makes its economic system significantly in
Islam, Islam very serious emphasis on social and economic justice
(Affandi, 2002).
It clearly stated in Quran all forms of levies is prohibited. Allah says in
Surah Al-Baqarah (2:188). And eat up not one another property
unjustly (in any illegal way stealing, robbing, deceiving, etc), nor
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5.0
resources
for
6.0 Conclusion
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After we discuss some topic with Islam and taxation. We can see the differences between the
concept of Islamic taxation and other taxation in current practice. There are some benefits of
implementing taxation in our country. From the perspective of Islam, Islamic taxation or
zakat will give a big impact to Muslim society. For example, it may eradicate poverty,
increase social development and helping poor people. By having zakat in islam it also can
increase Islamic economy in our country. The obligation to pay zakat is the command from
Allah. So as a Muslim, we are obliged to pay zakat.
In addition, most of the country implements taxation to increase their income. From an
Islamic perspective, the collection of taxation is not prohibited, but the rulers should give the
clear explanation in term of a portion, usage and so on. The taxation to Muslim should be not
compulsory because Muslim are obliged to pay zakat. But, the ruler has their own opinion to
collect taxes. There are some requirement for government in implementation of taxation.
When there are no other funds to cover their needs, the distribution should be equitable and
the uses are for Maslahah.
REFRENCES
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