Abstract
The study of zakat and taxes is still a highly regarded topic, especially in relation to the public’s perception of zakat as a tax reduction. The aim of this study is to examine the influencing factors towards the perception of Muslims on the zakat policy as a form of tax reduction based on an adopted research model. To assess the quality of the models and hypothesis, the Partial Least Square (PLS) - Structure Equations Model (SEM) is used in this study. There is a total of 152 respondents involved in this study whereby the respondents are almost evenly divided between Malaysians and Indonesians. The Malaysian citizens are a total of 77 people (50.7%) and the remaining 75 people (49.3%) are Indonesian residents. Based on the SEM results of the formation factors in the test produced by the method of Exploratory Factor Analysis, it can be said that only the knowledge about tax, religiosity and satisfaction variables have a significant and positive influence or impact on the perception towards tax through zakat system. The results of this study can reduce the gap in perception and understanding among the Muslim community regarding the perception of Muslims towards tax breaks through the zakat system and will surely play an important role for countries, policy makers and zakat or tax institutions both in Malaysia and Indonesia as well as around the world in utilizing practices which can be considered highly and positively beneficial to the Muslim society.
Highlights
Islamic philosophy centers its main goals around the interests of society rather than personal or group interests
Based on the Structure Equations Model (SEM) results of the formation factors in the test produced by the method of Exploratory Factor Analysis, it can be said that only the knowledge about tax, religiosity and satisfaction variables have a significant and positive influence or impact on the perception towards tax through zakat system
This study uses three technical stages of comprehensive analysis through demographic description of respondents based on Distribution Frequency, followed by factor testing which is carried out using Exploratory Factor Analysis (EFA) to select and determine the number of factors and related items, in the final stage, data analysis is carried out in the form of modeling technique
Summary
Islamic philosophy centers its main goals around the interests of society rather than personal or group interests. Western philosophy differs from Islamic philosophy in which it is based on self-interest and is individualistic, leaning more towards glorifying individual freedom and prioritizing individual ownership, or in another sense, communists who prioritize government ownership and empower the government to oppress the people (Taha, Adam, Ali & Ariff, 2017). Islam establishes clear and firm rules to be implemented throughout times for the government to manage the country fairly and wisely in order to ensure the welfare of the people. One of the Islamic regulations that allows the government to obtain a source of funds to run the country is tax and zakat, which are two different entities with zakat being a religious responsibility. Individuals who believe in the obligation to give zakat and are financially capable to do so, yet are reluctant to pay or fulfill these obligations, may be subjected to the interference by the government and have their zakat forcibly taken from them
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