Zakat Under the Indonesian Income Tax System

According to the provisions of Article 4 paragraph (3) sub paragraph a.1.  of Law No. 36 of 2008 “zakat” received by the body of “amil zakat” agencies or institution of “amil zakat” authorized by the government and the “zakat” accepted by the eligible recipients, shall be excluded as income tax object for the recipient. Thus, for the recipient “zakat” is not subject to income tax.

Furthermore, pursuant to Article 9, paragraph (1) letter a.1. of Law No. 36 of 2008, ” zakat”  received  by  an  ”amil zakat”  board or  other ” amil  zakat”  institutions  established  or  approved  by  the government, may be deducted in determining taxable income of taxpayer paying the “zakat” provided that the tax payer is Mowlem.

The conclusion from the above provision, zakat does not reduce the tax payable of tax payers but it only reduces their taxable income. According to the provisions of Article 2 of Government Regulation No. 60 Year 2010, how to deduct expenses for the payment of “zakat” is by deducting the “zakat” against the gross income of the taxpayer.

What is interesting is that if zakat spending which is not paid to the body of “amil zakat” agencies or “institution of “amil zakat”  authorized by the government, can not be deducted from gross income.

Comment: 
In the practice, a big part of Muslims in Indonesia, is more favorable to give (pay) the “zakat” directly to  poor, orphans, orphans foundation, or for the construction of mosques, rather than to “amil zakat” bodies or institutions established or approved by the Government. This is due to the emotional connection between the receiver and the payer of the zakat. Beside, there is still  mistrust to pay “zakat” to the “amil zakat” bodies or institutions established or approved by the Government. 

Unfortunately the lawmakers, that is the Government and Parliament did not pay attention on how the payment of “zakat” tradition in the community. Therefore, it felt that there was discrimination treatment to a part of the “zakat” payer, because only the taxpayers who pay “zakat” to “amil zakat” bodies or institutions established or approved by the Government that can deduct the zakat to their gross income.  

In Law No. 36 of 2008 and Government Regulation mentioned above, it is also not regulated on how much the percentage of the “zakat” can be deducted against the gross income. Is it limited to 21/2%, in connection with the minimum obligation to pay the “zakat”, or may be more than 21/2% due to the situation that many people  pay the “zakat” more than 21/2%. It is encouraged to pay the “zakat” more than 21/2%.

Further related to “zakat’”on profession, which is usually paid monthly by the employer/ employee who wants to pay zakat on profession. Would be the “zakat” immediately deductible against gross income in the month the “zakat” was paid?

I will be very happy if you leave a comment on this topic.

About Jaja Zakaria

Nama saya Jaja Zakaria, saya tinggal di Depok, Jawa Barat, kurang lebih 40 km dari Jakarta Selatan. Saya alumni Fakultas Hukum Universitas Gadjah Mada, Yogayakarta, dan Opleidings Instituut Financien, Den Haag, Belanda di bidang Hukum Pajak Internasional. Saya pengarang beberapa buku, e-book, dan makalah-makalah perpajakan. Pengalaman saya antara lain pernah menjadi anggota delegasi Indonesia dalam perundingan Perpajakan dengan Denmark, Mesir, Kanada, Uni Emirat Arab, Kuwait, Turki, Brunei Darussalam, Pilipina, Vietnam, Mongolia, dan Taiwan; dalam Study Group on Asian Tax Administration and Research (SGATAR) meeting; dan dalam Joint Commission Indonesia - China. Saya juga anggota International Word Tax Expert.

Posted on May 23, 2013, in English Version, Forum, Taxation Topic and tagged , , , . Bookmark the permalink. 37 Comments.

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