Taxation
In Malaysia, there is a rebate in income tax for money paid to the government in form of "zakat", or the obligatory alms Muslims must give to the poor. However, money paid to other causes in the name of other religions under similar circumstances is given only income tax relief, and such relief is given only if the particular beneficiary has obtained approved status from the Malaysian Government, which is difficult in practice. Money donated to such approved beneficiary is only deducted from the income on which the amount of tax is based, while zakat is deducted from the amount of tax itself. For example, suppose a person earning RM 50,000 owes a tax of RM 3,000 and donates RM 1,000 to zakat, the whole of the RM 1,000 is directly deducted from the RM 3,000, whereas donations to other approved beneficiary would permit only a deduction of the RM 1,000 against the RM 50,000. The former being a tax credit and the latter being a tax deduction.
Zakat (or tithe) monies, however, are paid by Muslims directly to official organisations run by state governments. Receipts are issued out and must be submitted to apply for tax relief. The zakat organisations themselves are governed by specific Islamic rulings defining the categories of people who qualify to receive the alms as well as the amount to be paid out by Muslims based on their income.
In contrast, charities in Malaysia are run privately by voluntary organisations, collecting voluntary donations from the general public, not compulsory tithes – thus the difference in treatment by the government.
Additionally, income tax relief granted to companies for donation made to tax exempt charities is restricted to 5% of the agggregate income of the company. Not all non-Muslim charities are granted tax exempt status, it is only given to registered and approved charities, partly to prevent abuse. There are stringent requirements to gain this advantage. Having earned this advantage these charities are further disadvantage in that their prospective donors are discouraged from donating monies to these charities because the donors are given tax relief for up to 5% of their aggregate income only.
Read more about this topic: Freedom Of Religion In Malaysia
Famous quotes containing the word taxation:
“Whether talking about addiction, taxation [on cigarettes] or education [about smoking], there is always at the center of the conversation an essential conundrum: How come we’re selling this deadly stuff anyway?”
—Anna Quindlen (b. 1952)
“Every diminution of the public burdens arising from taxation gives to individual enterprise increased power and furnishes to all the members of our happy confederacy new motives for patriotic affection and support.”
—Andrew Jackson (1767–1845)
“The Government is able to afford a suitable army and a suitable navy. It may maintain them without the slightest danger to the Republic or the cause of free institutions, and fear of additional taxation ought not to change a proper policy in this regard.”
—William Howard Taft (1857–1930)