UK-based National Zakat Foundation Worldwide (NZF Worldwide) is developing zakat standards for its member organisations in non-Muslim jurisdictions or in countries where Muslims are minorities.
The organisation is planning standards broadly in the areas of zakat calculation, collection, distribution, governance and ethics as well as accounting and auditing, reported Salaam Gateway.
Within those areas, there will be a number of standards. For example, in the calculation of zakat, there will be separate standards for zakat on cash, investments, crops, and other assets.
NZF Worldwide is keen to enhance global zakat management and delivery especially in jurisdictions where Muslims are in the minority, its managing associate Mufti Faraz Adam told Salaam Gateway.
Three standards have already been developed and will be launched soon. They are zakat distribution standard No.1: The fuqara and masakin; zakat governance and ethics standard No.1: Code of ethics for amileen; and zakat accounting and auditing standard No.1: Principles and objectives of zakat audit.
The standards will be published on the NZF Worldwide website. They will be open to everyone and will be updated according to changing market circumstances.
There is an increasing need to develop and standardise zakat particularly in non-banking areas, according to Mufti Faraz Adam.
“Whilst there is a lot of focus on Islamic finance, zakat and Islamic social finance require the same level of focus and attention to thrive,” he said.
NZF Worldwide has five member organisations in five countries: Canada, UK, Australia, Netherlands, and Switzerland. It plans to launch four more zakat institutions in 2021 in the West Indies, Germany, Belgium, and New Zealand.
In the countries where NZF Worldwide operates, there are no government zakat standards and the sector in those jurisdictions are generally unregulated.
“In Muslim-majority jurisdictions, zakat rules and regulations are usually done by ministries of Islamic affairs or endowments or treasuries,” he said.
Existing efforts
Islamic finance infrastructure body, the Bahrain-based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), has published governance and shariah standards on zakat. These are unique for use by Islamic financial institutions such as banks and takaful operators.
AAOIFI noted that the accounting treatment of zakat can impact the net income of an institution. M