Incentive Zakat Agency Mechanism, A Comparison Between Indonesia and Malaysia

The objective of the research is to compare the incentive zakat agency mechanism between Indonesia and Malaysia. In Indonesia, private institutions are permitted to collect zakat and have the agency to support zakat collection, while in Malaysia only state institution collects zakat. To enhance zakat fund collectability, they need agencies located in specific institutions. However, both countries share a similar mechanism of incentive zakat agency allocation. The method of the research is based on a qualitative study. Some respondents are questioned and interviewed on a specific topic of incentive zakat agency mechanism. The result shows that the agency mechanism in private zakat institutions in Indonesia is more flexible than Malaysia. The agency is authorized to get zakat allocation to be disbursed to surrounding zakat recipients and develop the allocation report. On the other hand, a zakat rebate can be a supporting factor for Muslims to pay zakat more in Malaysia than in Indonesia. This is the first study which compare the incentive zakat agency mechanism between Indonesia and Malaysia. Most of previous research does not investigate and compare the zakat incentive. International Journal of Islamic Business and Economics Available at http://e-journal.iainpekalongan.ac.id/index.php/IJIBEC ISSN 2599-3216 E-ISSN 2615-420X Vol 5 No 1 2021

Libya, while Malaysia practices the decentralized characteristics like UEA, Yemen, and Arab Saudi (Lubis, Ridho Lubis, & Almaarif, 2019). However, both countries have similarities in zakat rebates and management. Zakat would be effectively managed if it is under a government structure (Dodik Siswantoro, 2017).
Fundraising in the government and private sectors has different types. The government's zakat institution would take zakat from the salary of state employees, while private zakat institutions would create an innovative program and accountability (Kholis, Sobaya, Andriansyah, & Iqbal, 2013). Other institutions like the Zakat unit of Wonoketinggal village is combining two models of fundraising, namely direct and indirect fundraising. The first is more effective since the UPZ (Zakat unit) has received support from the local government. They actively collect zakat from farmers (Ridwan, 2016).
The latest developments of Islamic charities and their role as the major non-state actors in Indonesia's field of social welfare shows that Islamic charity is no longer primarily associated with social welfare and social justice but increasingly with economic gain (Kailani & Slama, 2019). Zakat management and credibility have contributed to the development of the zakat institution. This condition is also supported by the community as a mutual contribution (Cokrohadisumarto, Zaenudin, Santoso, & Sumiati, 2019).

Methods
The research method is based on a qualitative study that employs cases in Indonesia and Malaysia. Two Malaysian zakat institutions, including zakat units and zakat payers in Malaysia, were interviewed. In Indonesia, two zakat institutions, zakat units, and stakeholders participated in the research.
The analysis would identify the comparison of incentive zakat agency mechanisms in Indonesia and Malaysia. Both countries may share similar characteristics as they rooted in the same tradition of Melayu ethnic. The main difference is that Indonesia was under Dutch colonialization while Malaysia was under British colonialization with different legal systems and monarchies.
The research method of data collection is information gathering from the zakat agency website about the coverage structure of zakat institution, zakat unit listing, category, payment, sharing ratio, and waiting type, zakat rebate. The data analysis is comparing coverage structure, listed in registered zakat institution, category of zakat unit, payment type, waiting time, sharing ratio, and zakat rebate for zakat unit in Indonesia and Malaysia.
The research has applied trustworthiness to ensure the reliability and validity aspects. Validity includes credibility and transferability, credibility by choosing competent resources and triangulation and transferability by description. Reliability consists of dependability by saving and analyzing data and confirmability by providing research phases.

Result and Discussion
The analysis of the issue of zakat fundraising incentive for zakat unit in Indonesia and Malaysia would be discussed in some topics as follows (see table 1).  (2019) a. Coverage Structure of zakat institution The structure of zakat institutions in Indonesia consists of three levels: national, provincial and local. This includes private and state zakat institutions. The requirements of private zakat institution for national level the minimum zakat fund collection is Rp50 billion in one year; at the provincial level it is Rp20 billion in one year; and at the local level, it is Rp3 billion. Besides, they must have three branches in their sub-regions. Such terms and conditions do not apply to the state zakat organization as they can establish any zakat institution without any requirements. In Aceh province, the structure of zakat is similar to that of other provinces, but they have a smaller structure until the district (kampong). In Indonesia, the zakat unit is called Unit Pengumpul Zakat (UPZ). UPZ can range from Masjid to SOEs zakat institutions which were transformed to zakat unit due to the regulation. Any illegal zakat collection without permission would be fined up to Rp500 million and sentenced up to 5 years based on the Act No. 23/2011 on zakat. The issues here are: 1) There would be conflicts in the level of province and city/regency for state zakat institutions as they share similar coverage. 2) Conflicts may also occur among zakat institutions as they share similar zakat coverage.
The issue here is double zakat receivers if zakat institutions share have similar coverage in zakat distribution. Therefore, masjid as a zakat unit plays an important role in distributing zakat to the precisely needy and poor (see figure 1). Each masjid has smaller coverage for zakat distribution. Meanwhile, to empower people and the economy, masjid may have limitations to carry out this program.  (2019) In Malaysia, states have different authorities to collect and disburse the zakat fund. To raise the zakat fund, some agents are based on online, bank, company, university, and school. Each state may only collect and disburse zakat fund in their community in their state.
b. Zakat unit listing In Indonesia, the list of zakat units is not always available in zakat institution information such as website and brochure. This presents a problem for zakat payers who want to give their zakat as zakat rebate as it is only given if zakat is paid under the registered zakat institution including zakat unit. Only under the registered zakat institution can the payment of zakat be claimed for zakat rebate (zakat as taxable income deduction). Therefore, there is a way to check if the zakat unit is under zakat institution or otherwise. Table 2 shows that only Baznas West Java provides zakat units.  (2020) In Malaysia, zakat units which are called agents or assistants are registered in zakat institution information. Therefore, zakat payers would choose the closest zakat unit to give their zakat fund. This would ease and enhance the reliability of zakat payers as they would give zakat to the right place. Figure 1 shows the list of zakat units of Zakat Selangor, while the zakat unit of Pusat Pungutan Zakat (PPZ) can be seen in appendix 1. In Zakat Selangor, an agency can distribute zakat as well especially in university and school. The beneficiaries are students from related zakat units. This, however, would create a sense of belonging to the institutions where students study.
c. Category In Indonesia, the zakat unit can collect and disburse the zakat fund. By regulation, the zakat unit is under Act No. 23/2011. Zakat unit is only mentioned under the government zakat institution at the levels of sub district (kecamatan) and village (kelurahan). Based on the government regulation No. 14/2014, the government zakat institution can establish zakat units in any places such as government offices, companies, schools, and masjids, at the national, provincial, and local levels. Zakat unit only collects zakat funds based on that regulation. UPZ is also supervised by the national zakat institution (Baznas). This refers to the regulation of the Ministry of Religious Affairs No. 30/2016. Detailed regulation on the zakat unit is elaborated in the national zakat institution regulation No. 2/2016. Zakat units can also distribute zakat funds after they fully transfer to the zakat institution. The maximum distribution is 70%, while masjid can distribute 100% of the zakat fund (article No. 35).
However, the zakat units under private zakat institutions are not explicitly regulated, but it is permissible to establish a zakat unit.
Meanwhile, in Malaysia, there are two types of institutions. They only collect the zakat fund (penology amil) and collect and disburse the zakat fund (ejen). Each state has different regulations on the zakat unit. Zakat only collects and distribute in the specified state, and no across zakat distribution is allowed. In Indonesia, the mechanism of zakat fund payment to zakat institution can be classified into private type and government type. In private type, zakat units can only give partial zakat funds to the zakat institution. For example, zakat units can collect Rp100 million. Then they only give Rp 30 million to the zakat institution. There is no waiting time as the zakat unit only gives a part of zakat to the zakat institution. In general, zakat units can only give 30% or less to the zakat institution based on the agreement of both parties. In government type, all zakat funds must be given to zakat units. If there are some distributions, zakat units can propose to the zakat institution. It takes about 5 days for the zakat fund to be distributed to zakat units. The maximum portion that zakat units can distribute is 70% for institutions and 100% for the masjid. This can be applied to any zakat unit institution.
In the case of Malaysia, zakat units must give fully Rp100 million and in return, zakat units will get Rp50 million. The amount includes the 6.5% portion for the amil (zakat manager) in general. In Indonesia, the maximum portion for amil (zakat manager) is not explicitly stated in the agreement. Zakat units have to wait for around 2 months. This process continues so that the fund would come to zakat units any time since the first transfer. The mechanism of zakat fund type among zakat units, zakat institutions and zakat recipients can be seen in Figure 2. e. Zakat rebate Zakat rebate can be an incentive for zakat payers as they give zakat to the registered zakat units. In Indonesia, zakat payment can deduct taxable income. The process usually takes place after annual tax payment. When zakat payers want to propose a zakat rebate, they must propose restitution by filling the tax report. Over tax payment would be paid after the restitution process. Table 3 shows the difference between taxable income deduction and tax deduction.
In Malaysia, zakat deducts tax directly. For example, a Muslim pays zakat of RM15, while his tax is RM30. Therefore, he would have to pay tax only RM15 in that month. In Malaysia, zakat rebates can be conducted anytime within a year.

Conclusion
Incentive zakat mechanism can be classified into two parties: (a) zakat units are legalized and authorized to distribute zakat fund to the surrounding areas that would create a sense of belongings to zakat payers and result in a zakat rebate; (b) zakat institution would also get bigger zakat fund from zakat units. Zakat institution would get partial funds from zakat units. This would increase the coverage of potential zakat. In general, the participation of zakat units in the collection and distribution of zakat funds would benefit the surrounding community. In the long run, all zakat recipients would be covered by zakat units. This can be the originality of the research. The limitation of this study is only from public information and only comparing coverage structure of zakat institution, zakat unit listing, category, payment, sharing ratio, and waiting type, zakat rebate. For that, the data analysis is comparing coverage structure, listed in registered zakat institution, category of zakat unit, payment type, waiting time, sharing ratio, and zakat rebate for zakat unit in Indonesia and Malaysia. Future research should broaden the information and also confirming the information by interviewing the officers from the zakat unit from both countries. Also, next study should broaden and deepen the information analysis by empirical analysis.