IDEAS home Printed from
   My bibliography  Save this paper

Debate on Policy Issues in the Field of Zakat on Islamic Bank Business


  • Ismail, Abdul Ghafar

    (The Islamic Research and Teaching Institute (IRTI))

  • Tohirin, Achmad

    (The Islamic Research and Teaching Institute (IRTI))

  • Ahmad, Muhammad Ali Jinnah

    (The Islamic Research and Teaching Institute (IRTI))


Purpose – The purpose of this paper is to discuss zakat for business entities, in this regards Islamic banking institutions. There is a debate on whether or not business entities are obliged to pay zakat. However a sort of consensus has been concluded that a business entities owned by Moslems should pay zakat, at least for the Moslems’ owner. Design/methodology/approach – This paper is conceptual in nature describing why business entities should pay zakat based on the rationale that business entities play a role to create value added for the welfare of the community. Should zakat be applied to gross income, gross-profit, net-profit of the business entities or only the profit attributed the Moslem owner only or else. These are the unsettled area that deserved exploring Findings – Discussion in this paper attempts to shed lights on matters pertaining zakat such as zakat chargeability, and their calculation, determination of zakat base and zakat eligibility of assets and liabilities. From practices exposed in this paper, such as Bahrain, United Arab Emirates and Malaysia business zakat on the Islamic banks entities are implemented. In the first two countries zakatable items is clearly mentioned, i.e. the banks’ reserve, and retained earnings, while for Malaysia no specific items being explicitly mentioned but business zakat. Research limitation/implications – This paper proposes application of zakat on business entities, however consensus on this matter has not been established yet. Originality/values – The paper initiates a new policy issues on zakat implementation especially on the Islamic bank businesses.

Suggested Citation

  • Ismail, Abdul Ghafar & Tohirin, Achmad & Ahmad, Muhammad Ali Jinnah, 2015. "Debate on Policy Issues in the Field of Zakat on Islamic Bank Business," Policy Papers 1435-3, The Islamic Research and Teaching Institute (IRTI).
  • Handle: RePEc:ris:irtipp:1435_003

    Download full text from publisher

    File URL:
    File Function: Full text
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ismail, Abdul Ghafar & Taufiq, Umar, 2015. "Zakat on Financial Instruments," Policy Papers 1436-1, The Islamic Research and Teaching Institute (IRTI).

    More about this item


    Zakat; nisab; net wealth; Islamic bank; business entities;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:irtipp:1435_003. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Research Division (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.