View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Brunel University Research Archive PRINCIPLIZING ISLAMIC ZAKAT AS A SYSTEM OF TAXATION By Abdullah Wahib Allami LL.B (Saudi and Islamic Law, King Abdul Aziz University, Jeddah) LL.M (International Economic and Trade Law, Brunel University, London) Brunel Law School College of Business, Arts and Social Sciences Brunel University, London (A Thesis Submitted for the Degree of Doctor of Philosophy) October 2015 1 ABSTRACT This thesis examines the problems of implementation of the Islamic “zakat” as a system of taxation. In doing so, it seeks to establish coherent and consistent principles for zakat assessment, collection and disbursement, and to measure the Saudi zakat system against these principles. The Kingdom of Saudi Arabia is regarded as the cradle of Islam and it would therefore have been expected that Saudi Arabia would implement zakat correctly. However, this thesis argues that the current implementation of zakat in the Saudi legal system is fundamentally flawed, because it does not comply with a significant proportion of the fundamental principles of zakat. This thesis highlights the problems inherent in Saudi Arabia’s arguably excessive reliance on fatwas for the implementation of zakat. It is argued that these fatwas have rendered contemporary practice of zakat distant from the fundamental principles of zakat. This issue is examined with reference to original sources on zakat (Quranic verses and related statements by the Prophet Muhammad), and Islamic jurisprudence generally. The contention herein will be that the Zakat Regulation in Saudi Arabia requires reform in accordance with the principles identified in this thesis. This thesis begins by examining the concept and principles of zakat, and then establishes the principles of zakat collection, zakat application and zakat disbursement, the zakat practice in Saudi Arabia and its problems, and finally offers recommendations that would render Saudi law conformant with zakat principles. 2 AFFIRMATION This thesis, submitted for the Degree of Doctor of Philosophy, is my own work and has not been submitted previously for any other Degree elsewhere. 3 ACKNOWLEDGMENTS I would like to thank my parents for granting me the opportunity to live abroad to pursue my academic studies. I am greatly indebted to my supervisor Prof. Abimbola Olowofoyeku for his indispensable advice, and for his guidance during the period I spent writing this thesis. I am also grateful to Prof. Ben Chigara, Prof. Hossam Loutfi and Dr. Abdulbari AlTamni for their invaluable assistance. I would also like to thank my brother Ibrahim and my sister Hajer for their encouragement. Especial thanks to Lina Strebulyte for her support. I wish to thank my friends Abdulgader Banaja, Abdulkareem AlSanie, Alaa Banaja, Alan Grocott, Badr Saleem, Eleni Miller-Dobosz, Emad AlHarbi, Eyad AlBakri, Khaled AlDarmaki, Muneer AlJassas, Raluca Carligean, Santiago Rossi and Will Renwick. Finally, I extend my gratitude to the Saudi Ministry of Higher Education for granting me a scholarship to continue my studies, and the Saudi Cultural Bureau in London. 4 Contents ABSTRACT ..................................................................................................................... 2 AFFIRMATION .............................................................................................................. 3 ACKNOWLEDGMENTS .............................................................................................. 4 ABBREVIATIONS ....................................................................................................... 10 CHAPTER ONE............................................................................................................ 11 INTRODUCTION ......................................................................................................... 11 1.1 The Importance of Zakat ....................................................................................... 11 1.2 The Originality of the Thesis................................................................................. 11 1.3 The Thesis Structure .............................................................................................. 15 1.4 Methodology.......................................................................................................... 19 CHAPTER TWO........................................................................................................... 26 THE CONCEPT OF ZAKAT ...................................................................................... 26 2.1 The Definition of Zakat ......................................................................................... 26 2.1.1 The Traditional Definition of Zakat ................................................................ 26 2.1.2 Zakat as Taxation............................................................................................ 27 2.1.3 The Distinction between Zakat, Alms, and Zakatufitr..................................... 31 2.2 Historical Background of Zakat ............................................................................ 31 2.2.1 The Pre-Islamic Era........................................................................................ 32 2.2.2 The Emergence of Zakat Enforcement in Medina........................................... 37 2.2.3 Post-Prophet Muhammad Eras....................................................................... 39 2.2.4 The Abbasid Caliphate.................................................................................... 40 2.2.5 The Decline of Zakat Enforcement during the Ottoman Empire .................... 43 2.2.6 Contemporary Zakat Practices ....................................................................... 50 2.3 Zakat Sources ........................................................................................................ 53 2.3.1 The Primary Sources....................................................................................... 53 2.3.1.1 The Quran .................................................................................................... 53 5 2.3.1.2 Prophet Muhammad’s Statements ............................................................... 55 2.3.2 The Secondary Sources (Ijtihad)..................................................................... 58 2.3.2.1 Ijma’ ............................................................................................................. 58 2.3.2.2 Qiyas ............................................................................................................ 61 2.3.2.3 Fatwas .......................................................................................................... 60 2.4 Zakat Payers .......................................................................................................... 66 2.4.1 Imposing Zakat on Non-Muslims .................................................................... 63 2.4.2 The Position of Incapacitated Persons ........................................................... 68 2.4.3 Should Public Bodies Pay Zakat? ................................................................... 71 2.4.4 Zakat: A Personal Tax or a Tax on Wealth? .................................................. 74 2.5 Conclusion ............................................................................................................. 76 CHAPTER THREE ...................................................................................................... 77 THE PRINCIPLES OF ZAKAT COLLECTION AND ASSESSMENT ................ 77 3.1 Wealth as the Subject of Zakat .............................................................................. 77 3.2 The Definition of Wealth....................................................................................... 80 3.2.1 The Exchangeability Feature .......................................................................... 82 3.2.2 The Required Value......................................................................................... 85 3.2.2.1 The Zakat Allowance Requirement .............................................................. 86 3.2.2.2 The ‘Consumables Items’ Issue ................................................................... 88 3.2.2.3 The Fallacy of the ‘Productivity’ Feature ................................................... 91 3.2.3 The Lasting Value Feature.............................................................................. 95 3.3 Zakat Evasion ........................................................................................................ 97 3.4 Zakat Avoidance.................................................................................................. 100 3.5 Conclusion ........................................................................................................... 103 CHAPTER FOUR ....................................................................................................... 104 APPLICATIONS OF ZAKAT COLLECTION AND ASSESSMENT PRINCIPLES............................................................................................................... 104 6 4.1 The Importance of the Zakat Collection Principles............................................. 104 4.2 Zakat Applications............................................................................................... 106 4.2.1 Gold and Silver ............................................................................................. 107