Modelling zakat as tax deduction: A comparison study in Indonesia and Malaysia

Provita Wijayanti (Universitas Islam Sultan Agung Semarang)
Farikha Amilahaq (Universitas Islam Sultan Agung Semarang)
Osmad Muthaher (Universitas Islam Sultan Agung Semarang)
Nurul Syuhada Baharuddin (Universiti Teknologi MARA Cawangan Terengganu)
Nur Raihana Mohd Sallem (Universiti Teknologi MARA Cawangan Terengganu)

Journal of Islamic Accounting and Finance Research
Vol 4, No 1 (2022)

Purpose - This study aims to analyze the differences in compliance and implementation of paying zakat and taxes with zakat regulatory antecedents such as tax deduction.Method - 129 respondents from academicians and managers in Indonesia and Malaysia were taken by convenience sampling method and analyzed using the Mann-Whitney test and linear regression.Result - The result shows that there are differences in zakat payment compliance between Indonesia and Malaysia. The implementation of zakat as tax deduction regulation has a significant effect on zakat and tax compliance behavior in both countries. Meanwhile, zakat as a tax deduction regulation executed in Malaysia makes tax compliance behavior higher than in Indonesia.Implication - Socialization from both the tax officials and zakat officials that zakat can be used to reduce taxable income is needed. It is suggested to apply zakat as a tax deduction for Indonesia as well as Malaysia.Originality - This research contributes to the Indonesian government in exploring the potential of Indonesian Muslims in paying zakat and taxes.