JEDDAH, 1 October 2007 — A seminar organized by the Islamic International Foundation for Economics & Finance has urged the government to collect retrospective Zakah for the past 19 years for bonds and securities from banks and companies. “Paying Zakah for bonds and securities is compulsory in Shariah...and measures should be taken to collect Zakah for them with retrospective effect from 1409AH when they were exempted from Zakah,” said Dr. Abdul Rahman Saleh Al-Atram, secretary-general of the organization.
He said that if the government had collected Zakah for bonds and securities, the money could have supported its campaign to eradicate poverty from the country. He said during the past 19 years some banks and companies had only paid Zakah on their profits. “This accounts for only 30 percent of Zakah due,” he pointed out. Atram also called for a new executive bylaw for collecting Zakah based on Shariah. According to him, the Zakah for bonds and securities should be paid annually when they exceed the value of 595 grams of silver at the rate of 2.5 percent. “It is better for a person to pay Zakah for his wealth including salaries, business revenues, rents and bank balance in a particular day of the year, after deducting debts,” he said.
Zakah is an important part of the Islamic economic system. Scholars have emphasized the role of Zakah in combating poverty in the Muslim world. “Zakah can bring about total changes in the economic and social conditions of Muslims if it is implemented properly as it was during the time of the Prophet (peace be upon him) and the four Caliphs,” one scholar said. In many Muslim countries Zakah is not collected and distributed in the proper way and thus it does not serve the purpose for which it was meant. In many countries it creates beggars, even though it was designed to combat poverty. Scholars have said that Zakah should not be distributed individually.
Zakah is an obligation whereby Muslims give a specific amount of their wealth to eight beneficiaries specified by the Qur’an. It exemplifies Islam’s strong concern for realizing social and economic justice. It also ensures equitable redistribution of wealth and income in society.
There are two types of Zakah in Islam: A flat fee imposed on each person, called Zakat Al-Fitr, and a tax on wealth, called Zakat Al-Mal. Zakat Al-Fitr refers to the obligation of every Muslim (except those who are absolutely destitute) to contribute a certain amount of staple food or pay an equivalent monetary amount in the month of Ramadan before Eid Al-Fitr prayers.
Unlike Zakat Al-Fitr, Zakah Al-Mal is levied only on Muslims whose wealth exceeds a threshold called nisab.
