Undisclosed potential of Zakat Payment Deficit
The purpose of this paper is to scrutinize the potential deficit in the zakat payment of any Muslim business when it is applying a non-shariah accounting system that is based on the Gregorian calendar. As the Gregorian calendar is about 11.5 days longer than the Islamic calendar, the potential defic...
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| Format: | Conference or Workshop Item |
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| Online Access: | http://eprints.uthm.edu.my/2890/ http://eprints.uthm.edu.my/2890/1/Undisclosed_Potential_of_Zakat_Payment_Deficit.pdf |
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| Summary: | The purpose of this paper is to scrutinize the potential deficit in the zakat payment
of any Muslim business when it is applying a non-shariah accounting system that is based on the
Gregorian calendar. As the Gregorian calendar is about 11.5 days longer than the Islamic
calendar, the potential deficit is accumulating into one year of unpaid zakat for every thirty-year
operation of the business. DESIGN/METHODOLOGY/APPROACH - The study starts with an
overview of scientific and shariah analyses of the astronomical phenomena in defining a lunar
month in the Islamic calendar. The most current case study and data are provided. This is to
stimulate a critical thinking and show that unless Muslims accept astronomical calculation as a
sole method, an Islamic calendar will never exists. The study then develops a robust analytical
model for the estimation of the zakat deficit when Muslims do not apply an Islamic calendar for
their accounting system. Three different datasets are used for the empirical study to bridge the
hypothetical assumption, theoretical model, and the empirical findings. FINDINGS - Finally, the
paper confirms the hypothetical assumption to find that the zakat loss for the possession of the
above assets can be at the tune of US$ 9 million. This robust estimation procedure can be applied
to rectify any inadvertent past mistakes and transform them into a shariah compliant payable
zakat for Muslims’ business in the future. RESEARCH LIMITATION/IMPLICATION – The
research has not used financial statements of Muslims businesses as input; however, this can be
easily accommodated once they are available. It is imperative that Muslims construct a reliable
Islamic calendar and swiftly reformulate their accounting system based on it; otherwise, the zakat
deficit is snowballing and will be burdened by the next generation. ORIGINALITY/VALUE –
This is an original and funded research work. |
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