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Institutional Framework of Zakah Dimensions and Implications

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Institutional Framework of Zakah Dimensions and Implications Seminar Proceedings No.23 INSTITUTION AL FRAMEWORK OF ZAKAH: DIMENSIONS AND IMPLICATIONS ISLAMIC DEVELOPMENT BANK ISLAMIC RESEARCH AND TRAINING INSTITUTE JEDDAH, SAUDI ARABIA ISLAMICRESEARCHANDTRAININGINSTITUTE(IRTI) Establishment of IRTI The Islamic Research and Training Institute was established by the Board of Executive Directors of the Islamic Development Bank (IDB) in 1401H (1981). The Executive Directors thus implemented Resolution No.BG/14-99 which the Board of Governors of IDB adopted at its Third Annual Meeting held on 10 Rabi Thani 1399H (14 March 1979). The Institute became operational in 1403H (1983). Purpose The purpose of the Institute is to undertake research for enabling the economic, financial and banking activities in Muslim countries to conform to shari'ah, and to extend training facilities to personnel engaged in economic development activities in the Bank's member countries. Functions The functions of the Institute are: (A) To organize and coordinate basic and applied research with a view to developing models and methods for the application of Shari'ah in the field of economics, finance and banking; (B) To provide for the training and development of professional personnel in Islamic Economics to meet the needs of research and shari'ah-observing agencies; (C) To train personnel engaged in development activities in the Bank's member countries; (D) To establish an information center. to collect, systematize and disseminate information in fields related to its activities; and (E) To undertake any other activities which may advance its purpose. Organization The President of the IDB is also the President of the Institute. The IDB's Board of Executive Directors acts as its supreme policy- making body. The Institute is headed by a Director responsible for its overall management and is selected by the IDB President in consultation with the Board of Executive Directors. The Institute consists of three technical divisions (Research, Training, Information) and one division of Administrative and Financial Services. Location The Institute is located in Jeddah, Saudi Arabia. Address Telephone: 6361400 Fax: 6378927/6366871 Telex: 601407 - 601137 Cable: BANKISLAMI - JEDDAH P.O. Box 9201 Jeddah 21413 Saudi Arabia ISLAMIC DEVELOPMENT BANK ISLAMIC RESEARCH AND TRAINING INSTITUTE JEDDAH, SAUDI ARABIA INSTITUTIONALFRAMEWORK OF ZAKAH: DIMENSIONSANDIMPLICATIONS Edited by: AHMED ABDEL-FATTAH EL-ASHKER MUHAMMAD SIRAJUL HAQ Seminar Proceedings No.23 Seminar Proceedings No.23 © ISLAMIC RESEARCH AND TRAINING INSTITUTE ISLAMIC DEVELOPMENT BANK The views expressed by different authors in this book are not necessarily those of the Islamic Research and Training Institute, nor those of the Islamic Development Bank. References and citations are allowed only with proper acknowledgements. First Edition 1416H/1995 Published by : ISLAMIC RESEARCH AND TRAINING INSTITUTE ISLAMIC DEVELOPMENT BANK TEL: 6361400 FAX: 6366871 TLX: 601407-601137 ISDB SJ P.O. BOX 9201 JEDDAH 21413 SAUDI ARABIA In the Name of Allah, the Most Merciful, Most Beneficent These are proceedings of Third Zakah conference held in Malaysia on 19-22 Shawwal, 1410H (14-17 May, 1990) and sponsored by : 1. The Islamic Center of Malaysia. 2. The Zakah and Income Tax Department of the Ministry of Finance and National Economy of Saudi Arabia. 3. The Zakah House of Kuwait. 4. The International Shari'ah Board for Zakah of Kuwait. 5. The Islamic Research and Training Institute of the Islamic Development Bank, Jeddah, Saudi Arabia. CONTENTS Page FOREWORD ..................................................................................................................9 INTRODUCTION ..........................................................................................................................................................................11 PART ONE A COMPARATIVE STUDY OF ZAKAH ADMINISTRATION SYSTEM IN MUSLIM COUNTRIES • General, Administrative and Organizational Aspects - Fouad Abdullah Al Omar ……………………………………………. 21 • Legal, Administrative and Financial Control - Muhammad Akram Khan ……………………………………………. 65 • Legal, Administrative and Financial Control - Ahmad Ali Muhammad A l-Sawory ………………………………… 103 • Zakatable Funds of the State and Modes of their Collection - Ahmad Ali Abdullah ................................................................................ 119 PART TWO OBLIGATORY VS NON -OBLIGATORY ZAKAH COLLECTION SYSTEMS Empirical Economic Effects of Obligatory and Non-Obligatory Payment of Zakah to the State Abdin Ahmad Salama ...............................................................................151 7 Page The Relationship Between Obligatory Official Zakah Collection and Voluntary Zakah Collection by Charitable Organizations - Faiz Muhammad ................................................................................. 163 Applied Institutional Models for Zakah Collection and Distribution in Islamic Countries and Communities - Monzer Kahf ............. ............................................................................197 PART THREE CASE STUDIES • India: Fazlur Rahman Faridi…………………………………… 163 • Kuwait: Abd Al Qader Dahi Al-Ajeel ............................................. 259 • Malaysia: Mohamed Bin Abdul Wahab, Syed Abdul Hamid Al-Junaid, Mohd. Azmi Bin Omar, Aidit Bin Ghazali, Jamil Bin Osman, Muhammad Arif…………………….. 297 • Pakistan: Parvez................................ Ahmad Butt ……………………………………............................................................... 37929 • Saudi Arabia: Abdul................................ Aziz Mohd. Rashid................................ Jamjoom…………………….............................40337 • Sudan: Mohammad Ibrahim Mohammad………………………. 417 • Yeman: Muhammad................................ Yahya Al................................-'Adi …………………………….............................. 43941 PART FOUR RECOMMENDATIONS OF THE CONFERENCE ................................................. 473 PART FIVE OPENING AND CLOSING STATEMENT………………………………………..…..479 APPENDICES ............................................................................................................. 491 8 FOREWORD Historically Muslims have demonstrated a considerable individual interest in implementing the obligation of zakah, the third pillar of Islam. These first years of the fifteenth century of Hijrah have witnessed a rising awareness and serious interest among the OIC member states in the organization of the zakah system at the national level. As a result two international zakah conferences were held. The first, initiated by the Kuwait Zakah House, was held in Kuwait in 1404H (1984) and the second one, sponsored by the Zakah and Income Tax Department of the Ministry of Finance and National Economy of Saudi Arabia, was held in Riyadh in 1406H (1986). As a follow-up action on the recommendation of the second conference a third conference on zakah was co-sponsored by (1) the Islamic Centre of Malaysia, (2) the Zakah and Income Tax Department of the Ministry of Finance and National Economy of Saudi Arabia, (3) the Zakah House of Kuwait, (4) the International Shari 'ah Board for Zakah of Kuwait, and (5) the Islamic Research and Training Institute (IRTI) of the Islamic Development Bank of Jeddah. In fact, the third conference was co-sponsored by IRTI within the framework of its objective to undertake research to enable the economic, financial and banking activities in Muslim countries to conform to Shari'ah and to extend training facilities to personnel engaged in development activities in the Bank's member countries. The third conference hosted by the Islamic Centre in the Prime Minister's Department of Malaysia was held in Kuala Lumpur, Malaysia, on 19-22 Shawwal, 1410H (14-17 May, 1990). The conference was attended by 21 member countries, the Organization of the Islamic Conference and its Rabat based organ, the Islamic Educational, Scientific and Cultural Organization (ISESCO). The Conference aimed at studying the institutional aspects of Zakah from different perspectives to enhance the participants' understanding of the institutional systems of Zakah and their socio-economic and organizational dimensions. It also sought to promote an understanding of the economic significance of various institutional 9 frameworks, and, further, to discover the effect of mandatory zakah payment upon the State. The Conference provided an opportunity to exchange views and experiences among participants. Case studies of zakah collection and distribution in some OIC member countries and some Muslim communities, as well, helped the participants of the Conference to have an insight into the application of zakah. While publishing the proceedings of this Conference we would like to register our gratitude to the organizations that co-sponsored the conference in the best possible way. Here especially, the Government of Malaysia is acknowledged with deep gratitude for hosting the conference to the complete satisfaction of all concerned. Further, we would like to register our appreciation to all those who wrote papers, commentators and other participants for their valuable contributions to the conference. We would fail in our duty if we did not express our appreciation to the editors of these proceedings for carrying out this onerous task. Thanks are also due to those in IRTI's Research Division who typed and assembled this book .with singular devotion and skill. This book, we hope, will serve the purpose of general readers as well as government officials concerned with the Zakah administration.
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