Why new tax law may not work as expected -Al-Habibiyyah

Why the new tax law may not work as expected -Al-Habibiyyah

The Al-Habibiyyah Islamic Society (AIS), has called on the Federal Government to remove tax on Zakat, charity items and other forms of endowment to make the new tax law work effectively.

The National Chief Imam/Executive Director of AIS, Sheik Fuad Adeyemi, made the call on Sunday in Abuja at the 23rd Annual National Unity Ramadan Lecture.

The lecture was themed, “Making the New Tax Work: The Zakat and Waqf Concern.”

Sheik Adeyemi said that in some developed and countries, the tax on charity property was usually removed to avoid double taxation and injustice as Islam prohibited such taxes.

“The issue is that when you have a property that you are using for charity, do you pay tax on it? In some other developed countries, the tax on that is removed.

“We want to call attention of the government that tax should not be paid on charitable property. So, this Ramadan lecture is imperative to make the tax work.

“If the government insists that tax must be paid on charity things, the tax will not work. So, there should be a meeting point where either tax is reduced or is removed on such property,” Adeyemi said.

Asked on the seeming concern that Muslims and other Nigerians involved in charitable deeds and other forms of philanthropy, would be subjected to double or multiple taxation, Sheikh Adeyemi noted that since the recent tax law is new, it cannot diplace Islam, which has a lot of charitable works or charitable tools that is inbuilt in it that in most claims when they do it they don’t pay tax on it.

“Because it has a percentage which you take from a particular amount that you remove from the tax. As can be referred to as tax. In some other places we say Zakat and work concern. Let’s say we have a building that is for charity. That the gain or need is for charitable purposes. Are you still going to pay tax on something that is charity?

“So the concern now is how do we marry the new tax regime with these tools in Islam that are already charity. How is it going to be used?

“How is it going to be recognized? How is it going to be married together in such a way that the new tax regime will work, the Zakat and work will also work?

“When you pay your Zakat or when you have a property that is on charity, we will have a way, how do we work on it in such a way that the tax or need will either be removed or minimized,” Imam Adeyemi added.

The Guest Lecturer and Director, International Institute of Islamic Banking and Finance, Bayero University, Kano State, Prof. Usman Shuaib, said that the essence of the lecture was for the Muslim Ummah to meet the new tax law.

“There is taxation of Allah which is Zakat, and there is the taxation of the tax authority in accordance with the Nigeria Tax Act 2025. We are conversing for making Zakat a tax deductible donation.

“This is because some of the donation within the corporate landscape, in corporate organisations, if they make donation is treated as Zakat, as tax deductible donation.

“It will be treated as such as part of the allowable deduction and they will not be subjected to taxation on the donation they made to charitable causes.

“If you give those allowances to certain other expenses, we are saying Zakat also should qualify as allowable deduction before determining the income that is taxable by the tax authorities,” Prof. Shuaib said.

On her part, Hajiya Maryam Idris Othman, National President, Women in Da’wah, said that it is good for Muslims to take appropriate actions on issues in the country.

“Whenever there is a new policy or a new law, we try to understand it from the Islamic point of view and give the ummah something to really work on.

“Something that we know, that Islam is a complete way of life. It covers everything and then this is one aspect that we really need to have a lot of knowledge about and work on inshallah,” Hajiya Othman said.