Zakat taxation within the context of vast Saudi wealth is able to exist without yet destroying the fabric of Arab society. The Saudi economy functions in spite of the zakat it has mandated. But remove zakat from the petro-wealth context, and the abject misery, chaos, and violence that zakat creates is quickly evident.
All one must do is look to Pakistan, whose adoption of an Islamic tax system has exacerbated local poverty, has induced wide-scale zakat corruption, has resulted in one of the most hated and impotent tax systems in the world, and inspired the Taliban’s interest in traditional Islamic tax collection measures (to include the ushr on opium and the jizya against Sikhs). In many ways, we have Pakistan’s adoption of an Islamic financial system to thank for the rise of the Taliban and the type of funding that led to 9/11.
Nevertheless, Ernst & Young recently claimed of Saudi Arabia that, “Tax and Zakat are basic components of the country’s fiscal and economic development. It is a discipline that offers fiscal stability and ensures financial prudence.” Ernst & Young, would you still advocate for Koran-based revenue measures if your employees were kidnapped and held for fida’ (Islamic ransom)? Would you still champion the cause when your employees cannot worship safely at Christian churches without fear of jizya when they work in the Middle East? Would you still extol the benefits of zakat when it is redirected into jihadist accounts for the next terrorist attack against the West?
From the Saudi Gazette on Feb. 24:
JEDDAH: Ernst & Young (E&Y) recently hosted the 8th Annual Tax Seminar on the updates in Saudi Arabia’s new Corporate Income Tax Law, its by-laws and Zakat, as well as clarifications issued by the Department of Zakat and Income Tax (DZIT). Recent appeal decisions, tax treatment of complex tax issues and proposed amendments to Saudi companies [sic] regulations were also discussed.
Ahmed Reda, office managing partner, Ernst & Young Jeddah, said: “Tax and Zakat are basic components of the country’s fiscal and economic development. It is a discipline that offers fiscal stability and ensures financial prudence. The main objective of the seminar was to update and enhance the knowledge and understanding of the New Saudi Income Tax Law (NITL), Zakat regulations and double tax avoidance treaties recently signed by Saudi Arabia.”
The seminar is an annual event organized by Ernst & Young to ensure that its clients are kept abreast with latest developments in Tax and Zakat matters as well as other relevant business regulations…