"In Indonesia, zakat is only a deductible factor from taxable income,” Minister Umar stated in Jakarta on Friday.
Umar believes that allowing zakat payments to serve as a tax reduction would lead to an increase in zakat revenue.
He cited Malaysia as an example, where zakat payments are already used to reduce the amount of tax payable.
"Our neighbor Malaysia, for example, allows zakat to be a tax deduction. They consider zakat payment receipts as a factor that reduces tax payments," he remarked.
"If that can be adopted in Indonesia, who knows, we might be like other countries. Thus, the language of religion collaborating with the language of the state to eradicate poverty would be amazing. We will continue to initiate this," he affirmed.
In Indonesia, zakat can be deducted from taxable income by providing proof of payment, but it is not yet recognized as a direct tax deduction.
This aligns with Article 22 of Law Number 23 of 2011 on Zakat Management, which stipulates that zakat paid by muzaki (zakat payers) to the National Amil Zakat Agency (BAZNAS) or Amil Zakat Institutions (LAZ) is deductible from taxable income.
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Translator: Anita Permata Dewi, Kuntum Khaira Riswan
Editor: Primayanti
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