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‘Time now to reform tax law’ – ‘Deserving should get Zakat’

Ten years ago the National Assembly passed the ‘Zakat Tax’ Law or the ‘Baqer Law’, which obliged all joint-stock companies, listed and unlisted to pay tax 1 percent of the net profits to the State.

The law allowed the companies to direct this Zakat tax, or part of it to one of the services or public associations through the Ministry of Finance, according to Article 14 of the executive regulations of the law, which also included the security, justice and defense institutions.

The secret behind placing these three institutions within the services is not known and why the companies were allowed to contribute financially towards these institutions because it is originally one of the tasks of the State. At that time there were objections from several sources because the law was not applied appropriately. The approval of this law is tainted by political, legal and doctrinal controversies and criticism continued to pour in even after the National Assembly gave its nod.

Enough time has elapsed since the application of this law, and now the time has come to reconsider and modify it keeping abreast with reality because of defects in its application.

Reconsidering and amending this law shall definitely take some time but it is necessary to focus on how some institutions mentioned in the text of the Zakat Law will benefit from what has been deducted from corporate profits.

This reconsideration will channel the payments in the right direction and more effectively benefit the development of society, such as science, culture, art, theater and therapy centers and so on.

The law allows a company that pays taxes to direct what it pays to services that are considered appropriate from the point of view of the company according to provisions of the law, but until now the Ministry of Finance has not announced the entities that have benefited from the taxes paid by companies in spite of the application of the law over the years. Where this money has ended up is anyone’s guess.

In order to make the best use of the law, and apply its provisions, it is necessary to activate the right of tax payers to make donations to social charities that serve the society in a proper manner and to consider this payment as tax exempt as is the case in all countries of the developed world, and same rule is applied to the donations received by the Kuwait Foundation for Advancement of Sciences.

To the best of my knowledge, various tax payers and other charity organizations that deserve part of the Zakat tax have addressed the Ministry of Finance to know to whom tax or part of it shall be sent, but have not received any response.

Therefore some of them are currently preparing to file lawsuits against the Ministry of Finance to force it to implement the terms of the Zakat law in a more humane manner and with more accuracy.

Many charity and social projects such as the ‘Beit Abdullah’, the ‘Sultan Educational Foundation’ the ‘LoYAC Society’ the ‘Ruqaya Al-Qatami Society’, and many other non-profit organizations largely serve the society, promote the principles of social responsibility and the foundations of civil society and true citizenship.

They deserve part of the Zakat money that is lost in the corridors of the Ministry of Finance, and nobody knows anything about it.

By Ahmad Al-Sarraf

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