A proposed model for Zakah on financial instruments: accounting approach

Muhannad Ahmad Atmeh, Bassam Mohammad Maali, Usama Fendi
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Abstract

Purpose

This paper aims to propose a model of Zakah treatment for financial instruments. The model depends on the link between the financial assets and liabilities that emerge from a financial instrument contract.

Design/methodology/approach

The determination of Zakah on contemporary financial instruments is controversial, with various conflicting Fatwas being presented. This paper introduces a theoretical model that integrates Fiqh rules, accounting, finance and economic principles to propose a method for calculating Zakah on financial instruments. This theoretical model can be the foundation for future empirical and statistical testing.

Findings

The proposed model advocates omitting the financial assets/liabilities when determining the Zakah base for companies, as the Zakah burden relies on the owner of the real asset. The paper elaborates on the implementation of the model on debts, investments and cash accounts.

Research limitations/implications

The paper does not investigate whether or not the accounting approach in dealing with financial contracts is deemed acceptable by Fiqh scholars, nor does it discuss whether or not this may affect the Zakah fatwas regarding these types of accounts.

Practical implications

The paper establishes a conceptual framework for the Zakah on financial assets. This will pave the way for future empirical research and testing to validate the framework in different contexts. In addition, if regulators adopt this model and apply it to all companies, it would promote fairness and justice at the national level.

Social implications

The proposed model advocates omitting the financial assets/liabilities when determining the Zakah base for companies, as the Zakah burden relies on the owner of the real asset. The paper elaborates on the implementation of the model on debts, investments and cash accounts.

Originality/value

To the best of the authors’ knowledge, this is the first attempt to utilize the accounting approach in order to determine the amount of Zakah.

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金融工具天课的拟议模式:会计方法
目的 本文旨在提出一种处理金融工具天课的模式。该模型取决于金融工具合同所产生的金融资产和负债之间的联系。设计/方法/途径当代金融工具天课的确定存在争议,各种相互矛盾的法特瓦都有提出。本文介绍了一个理论模型,该模型综合了教法规则、会计、金融和经济原理,提出了一种计算金融工具天课的方法。该理论模型可作为未来实证和统计测试的基础。研究结果该建议模型主张在确定公司的天课基础时省略金融资产/负债,因为天课负担依赖于实际资产的所有者。本文详细阐述了该模型在债务、投资和现金账户上的实施情况。研究局限性/影响本文并未调查处理金融合同的会计方法是否被伊斯兰教律学者所接受,也未讨论这是否会影响有关这些类型账户的天课教令。这将为未来的实证研究和测试铺平道路,以便在不同情况下验证该框架。此外,如果监管机构采用这一模式并将其应用于所有公司,将在国家层面上促进公平和公正。社会影响所提议的模式主张在确定公司的天课基础时省略金融资产/负债,因为天课负担依赖于实际资产的所有者。据作者所知,这是首次尝试利用会计方法来确定天课的数额。
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来源期刊
CiteScore
5.40
自引率
10.00%
发文量
45
期刊介绍: The International Journal of Islamic and Middle Eastern Finance and Management (IMEFM) publishes quality and in-depth analysis on current issues within Islamic and Middle Eastern finance and management. The journal welcomes strong evidence-based empirical studies and results-focused case studies that share research in product development and clarify best practices. The title is also keen to consider work from emerging authors. IMEFM has just also accepted into Clarivate''s SSCI in 2018, and its IF will be available in summer 2019, with citations dating from 2016. The coverage includes but is not limited to: -Islamic finance: Fundamentals, trends and opportunities in Islamic Finance, Islamic banking and financial markets, Risk management, Corporate finance, Investment strategy, Islamic social finance, Financial planning, Housing finance, Legal and regulatory issues, -Islamic management: Corporate governance, Customer relationship management and service quality, Business ethics and corporate social responsibility, Management styles and strategies in Shariah environments, Labour and welfare economics, Political economy. The journal is the only title aiming to give an interdisciplinary and holistic view on Islamic finance and business management practices in order to inform these two intertwined communities.
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