ZAKAT: Where Does All the Money Go? [Archives:1998/27/Business & Economy]

June 6 1998

Mr. Abdullah Nasser Al-Dhurafi is the Director of Maslahat Al-Wajibat. Literally translated, this stands for Duties Authority. But since its main job is to collect the Zakat, we will just call it the Zakat Authority. Zakat is sort of an Islamic tax.
Mr. Dhurafi had occupied several important posts in the legislative and executive authorities.
Mohammed Bin Sallam of Yemen Times talked to him and filed the following report.
Q: Could tell us briefly about the Zakat Authority?
A: The Zakat Authority was established immediately after the revolution of September 1962, in response to the great injustice that prevailed during the reign of the Imam in levying Zakat or other taxes. During the rule of the late Ibrahim Al-Hamdi and his prime minister Abdullah Al-Hajri, 25% of Zakat money was diverted directly to NGOs and cxharities, in particular. In 1978 when President Ali Abdullah Saleh came to power, this was increased to 75%. But this was later abolished by the new Zakat Law.
Zakat is an important source of revenue for the state. Before the Revolution, the state depended on the levying of Zakat, almost exclusively. It was then levied primarily on agicultural and livestock. Now it covers a whole new range of commercial activities.
When I was first appointed, our annual revenue was around YR 700 million. With the enactment of the Zakat Law, the revenue rose to YR 2.2 billion. We hope to levy YR 2.7 billion during this year.
Q: Allegations are rife that the state uses the Zakat money to buy cars and build villas for its officials. What do you say to that?
A: This is absolutely untrue. All our revenues go towards social security benefits.
Q: People say that some of your employees receive bribes in return for lowering the estimate of due Zakat payments. To what extent is this true?
A: We send one notification after another to people obliged by law to pay Zakat. Some of them respond positively, while others pay a small part of the due amount. We sometimes have to send the police with Zakat collectors.
Also we are in the process of instituting a comprehensive reform program to weed out all possible corrupt elements here.
Q: How many people work in this Authority?
A: The are more than 10,000 people working for us, if we include mosques, Imams, community elders and district chiefs as well as the administrative staff and treasurers in every directorate in every governorate.
Q: How much of Zakat money is spent by way of salaries for all of these employees?
A: Of the Zakat money, 12% goes to the administrators, 8% to the sheikhs, and 5% to community elders and district chiefs.
Q: In what proportions is the bulk of the Zakat money distributed to needy people?
A: I must first make it clear that the Duties Authority levies the Zakat, but do not distribute the money. The money is distributed according to the state’s budget: 50% is given to poor families, 10% to the disabled, and 5% is distributed according to other budgetary allocations.
Q: Can the citizen give out Zakat money according to his/her discretion, without the intervention of the state?
A: From the Islamic Sharia point of view, this is not allowed. The Yemeni law has given the citizen the right to spend 25% of the Zakat money imposed on his earnings on his family.
The Zakat money that should be paid annually by any big businessman is around YR 50 million. He may only distribute YR 5 million according to his own discretion, and pay the rest to the state. The opposite usually happens. He says that he himself can distribute the bulk of the money, which is really against the Islamic Sharia.
Q: How do you deal with people who refuse to pay Zakat?
A: The Zakat Law specified certain punishments for Zakat evasion. If some businessmen claim that they have not made good profits during the last fiscal year, they have to come to the Zakat office to swear to that effect.
Q: How is Zakat collected on cattle, crops or real estate?
A: Zakat inspectors usually count the size of the cattle or sheep herd, say, or the number of trees in an orchard. According to this inspection, they estimate the Zakat money to be levied. About YR 200 million is levied per year from qat growers.
It must be borne in mind that Zakat is only imposed on those who own, for one whole year, 85 ounces of gold or its equivalent.
Q: What about arms merchants? Are you able to levy Zakat from them?
A: The arms business in Yemen is an impregnable fortress. It is almost impossible to deal with them, let alone asking them for Zakat money.
Q: What about real estate? How do you levy Zakat on that?
A: This is done in cooperation with the Surveying Authority in figuring out the size of the people’s property. But problems also arise when we try to levy the tax from the rich and influential people. We are currently improving the collection methods, generating about YR 90 million a year from this field.
Q: How do you levy the “Fitr” Zakat towards the end of the Holy month of Ramadhan?
A: Fitr Zakat is levied from public employees at the rate of YR 80 per family member.
Q: Is the Zakat money levied by your authority entered into the state’s central budget?
A: Zakat is considered a major part of the state’s revenue, as stated in the constitution and the relevant laws. It can only be dispensed with through the Ministry of Finance.
Zakat money is deposited at the Central Bank of Yemen, and not anywhere else.
Q: What are the conditions for Zakat exemptions?
A: According to the Zakat Law, people obliged to pay Zakat are exempted by 25% of the amount due for them to give out at their discretion.
Q: How far are you able to levy Zakat on the fisheries income?
A: The fish wealth represents an important income for the state. Unfortunately, since the fisheries sectors is divided into the public, private and mixed sectors, it is somewhat difficult to keep track of their income.
Q: Do you think the Zakat law is sufficient to serve the purpose for which it is intended?
A: The law was discussed and formulated by a committee of Yemen’s elite religious scholars. It was later issued by the President and endorsed by the Council of Ministers. It is now, however, being discussed by parliament, which is proposing a number of amendments.
MPs think that people pay the Zakat normally, not knowing the full extent of the problems we face in collecting this tax.
Q: What do you think of giving a large proportion of Zakat money to the increasing number of NGOs around the country?
A: First of all, I must point out that these charities and NGOs are being created haphazardly. Not all of them are really for charitable cause, though. People may give the 25% Zakat exemption to such organizations if they see fit. But our authority has commitments to a number of social security public establishments.
Q: But people do not seem to give any money to these NGOs. Why?
A: It is because some of these organizations are not really doing charity work. In the past, people used to work as volunteers for charities and spend on them out of their personal assets. Nowadays people want salaries, cars, travels abroad, etc. NGOs have become status symbols and prestige enhancers.
There are much worthier causes to which Zakat money and other donations must be channeled: orphanages, old-people homes, hospitals, poor families, the disabled, etc.
Q: How much does a poor family get from the Zakat money?
A: Each family gets YR 250 a month. I wish we were able to get more Zakat money to give to needy people.
Q: What should be done to make the Duties Authority 100% efficient in collecting Zakat money?
A: If the law is properly implemented and people are made fully aware of the importance of paying Zakat and other taxes, then our authority can proceed with its work in a better manner. People will have to know first where and how the money is spent so that they are rest assured that their money goes where it should.
The Duties Authority must be modernized and provided with efficient and competent tax collectors to function well.