Al-Zakat: Taxation Model in Public Finance

Abstract

Al-zakat is a Quranic term, which is considered as a religious financial worship. From traditional point of view a fixed percentage i.e. 2.5% is imposed as a religion tax on the Muslims which have a certain quantity of gold, silver and some animals. The heads on which this amount may be spent and the rate is considered as fixed. But the actual fact is that, Quran has used this term for the taxation system of an Islamic state. Different reasons from Quran can be given to prove this claim, e.g. Quran has separated al-zakat from al-sadaqat and expenditure in the way of Allah and do not consider it as a donation, imposition of al-zakat is associated with getting of power, Quran did not appeal to pay it but the order is given for the same, the heads and rate of al-zakat are not given in Quran.

Keywords: Quran; Verse; al-zakat; Donation; Sadaqa.