Indonesian Zakat Forum Pushes for Direct Tax Credit Status

The Forum Zakat (FOZ) has declared its full support for the proposal to designate zakat payments as a direct tax credit, a move that would shift it from being merely a deduction from taxable income. FOZ views this potential policy change as a crucial transformation for the ecosystem of Islamic philanthropy and a significant boost to community welfare initiatives in Indonesia. Wildhan Dewayana, Chairman of FOZ, stated that the idea, previously put forth by the Indonesian Ulema Council's National Sharia Board (DSN-MUI), has long been an aspiration for zakat practitioners in Indonesia. "As the leader of an association that oversees hundreds of zakat management institutions nationally and regionally, I fully support and am ready to oversee the realization of this strategic policy," Wildhan told Republika. According to Wildhan, the current system, where zakat paid through official institutions only reduces gross income, does not provide optimal fiscal justice for Muslims. He emphasized that under a tax credit scheme, every rupiah of zakat paid to an official institution would directly reduce the amount of tax owed by the taxpayer. This policy is seen not just as an economic incentive but as a recognition by the state of zakat's contribution to social welfare functions. FOZ also considers the ongoing revision of Law Number 23 of 2011 concerning Zakat Management as the opportune moment to incorporate the clause for zakat as a direct tax credit. This proposed change aims to enhance the effectiveness and recognition of zakat within Indonesia's fiscal and social welfare framework.

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As the leader of an association that oversees hundreds of zakat management institutions nationally and regionally, I fully support and am ready to oversee the realization of this strategic policy.