Purpose: This paper aims to ascertain the SharÄ«Ê¿ah (Islamic law) stance on the imposition of goods and services tax (GST) on tabarruÊ¿-based takÄful (donation-based Islamic insurance) products in Malaysia. The paper aims to do so by analysing the philosophy, purposes and structure of GST on takÄful products and comparing the imposition of GST on tabarruÊ¿-based takÄful with its imposition on conventional insurance while probing into the SharÄ«Ê¿ah texts and opinions of classical and contemporary scholars about taxation in Islam. Design/methodology/approach: The paper uses a qualitative research methodology. In addition to the literature and text on websites, the information on how GST is applied in practice is also obtained through interviews, discussions and documents from takÄful operators. To determine the SharÄ«Ê¿ah position on GST, reference has been made to classical and contemporary SharÄ«Ê¿ah literature, including local and international SharÄ«Ê¿ah advisory bodies’ resolutions and standards. Findings: This study finds that a strict interpretation of SharÄ«Ê¿ah does not allow for the imposition of GST; however, there is still room for the government to justify it using a broader interpretation of maá¹£laḥah (public interest). TakÄful has become a need for the society and is subscribed to by all income groups, and not only by the rich. Hence, the government should consider exempting takÄful products from GST. The basis of tabarruÊ¿ in takÄful does not provide conclusive SharÄ«Ê¿ah evidence for takÄful to be exempted from GST. Originality/value: This research paves the way for the industry to propose further measures on GST for takÄful products such as the exemption of GST on the tabarruÊ¿ amount or imposition of a zero rate of GST on the relevant takÄful fees and charges that are currently burdensome to consumers. © 2017, Burhanuddin Lukman and Saba’ Radwan Jamal Elatrash.
Year
2017
Country
Malaysia
Language
English
Abstract
English
ISSN/ISBN
1281976
No. of Pages
205-209
Number
2
Volume
9
Select type of work
Name of the Journal
Affiliations
CIS Program Old
References
CIS publications
No
CIS Thesis
No