KUALA LUMPUR – Muslims need not worry about paying tithe on their savings in the Pilgrims Fund Board or Tabung Haji (TH) as the institution has been managing that responsibility every year, according to an economist from Putra Business School Prof Dr Ahmed Razman Abdul Latiff.
He said this is one of the advantages of saving money in the Haj management agency and the deposits are 100 per cent guaranteed by the government.
“Depositing your savings with TH has its advantages especially for Muslims in Malaysia compared to any other bank, financial institution or investment scheme.
“In fact, TH is the only financial institution that pays tithe on behalf of depositors and they (depositors) no longer need to pay tithes on their savings including the profit distribution that they receive,” he told Bernama recently.
Ahmed Razman said based on the terms and conditions of TH’s ‘Wakalah’ contract, depositors who opened an account at the Islamic financial institution are deemed to have appointed TH as a representative to manage the funds in their account.
“As everyone is aware, it is mandatory to pay tithe on investment savings. Investment institutions can pay tithe on behalf of investors based on the concept of ‘khultoh’ (mixed assets), where tithe payment is not calculated based on the balance of each individual’s savings.
“However, if the investment institutions do not pay tithe, then the depositors will have to settle the tithe payment based on their respective savings.
“”For example, if a person has an investment saving that meets the nisab requirement or amount eligible to pay tithe, and receives a dividend of five per cent, then he needs to pay tithe of 2.5 per cent on his savings, so the net income received is 2.5 per cent,” he said.
Elaborating, Ahmed Razman said the distribution of profits to depositors takes into account zakat payment, as contained in the terms and conditions of the Wakalah contract between TH and its depositors.
“For example, the 3.1 per cent profit distribution received for year 2021 is a net amount and depositors are not required to withdraw funds to pay tithe on their TH savings.
“TH has allocated RM100 million for all State Islamic Religious Councils to settle tithe payment,” he said adding that not all syariah-compliant investment institutions pay tithe on behalf of their investors.
Based on TH website, its obligation to pay tithes on behalf of depositors is in line with the decision made during the 17th Fatwa Committee Meeting of the National Council for Islamic Religious Affairs Malaysia on May 3, 1979.
Meanwhile, Universiti Malaya Islamic Studies Academy, Syariah and Management Department senior lecturer Dr Ahmad Sufian Che Abdullah, said that TH is a rather ‘unique’ financial institution because it has no shareholders.
Like other financial institutions, Ahmad Sufian said, TH depositors are considered ‘shareholders’ of the institution as they delegate the management of their funds, investments, Haj pilgrimage, distribution of profits and tithes to the organisation.
“In this way, the depositors are more convinced with the management of their business tithe distribution,” he said.
In the Islamic jurisprudence context, Ahmad Sufian explained that as the depositors are seen as ‘shareholders’, the tithes on TH profits have directly purified their wealth and property..
According to him, TH differs from other financial institutions because it is funded by customers’ deposits and it was established with the purpose of helping the Muslim economy.
“With over RM3 billion (income in 2021) minus the operating costs of over RM100 million a year, the zakat contribution of Muslims through TH’s businesses in various fields has a significant impact on the socioeconomic development of Muslims.
“With that amount, no other Islamic financial institution in Malaysia is able to pay that much in tithes in the country. This is different from savings in trust units where the investors have to pay tithe themselves.
“If calculated based on individual capacity, some individual deposits may not meet the requirement to pay tithe, but through consolidation of funds from all depositors and having paid business tithe, collection of tithe is possible on the investment entity itself,” he said.
Ahmad Sufian also proposed that TH work with the State Islamic Religious Councils more effectively to diversify its distribution channels through programmes such as the entrepreneur scheme for the poor and tithe recipients and the Qard Hasan loan scheme for the B40 group. – Bernama
