Fiscal Policy Design in Malaysia and Indonesia about Zakat and Taxes

Abstract

This paper aims to compare zakat and taxation relations in two countries in Southeast Asia where the majority of the population is Muslim, namely Malaysia and Indonesia. This type of research is normative, empirical legal analysis with a comparative approach. There are several aspects showing the difference between zakat and tax. First, zakat is a form of Muslim obedience to religious teachings. While taxes are the obedience of a citizen to the policies of the state. Second, the amount of zakat has been determined in the Qur'an and Hadith. While taxes are determined by the provisions of state law. Third, zakat is only given by certain Muslim groups. Meanwhile, taxes are issued by every citizen regardless of their religious status. Fourth, taxes are used for state expenditures and for economic, social, and political goals to be achieved by the state. At the same time, zakat is distributed to those Muslim individuals who are entitled to receive zakat (mustahik zakat). The results show relational and functional differences in the position of zakat and taxes in Malaysia and Indonesia. Malaysia uses zakat as an individual tax deduction, even up to 100%. Meanwhile, in Indonesia, paying zakat can reduce taxable income.