Tax engineering pertaining to zakat and waqf for poverty alleviation and micro-financing on South Africa

Even though the majority of the Muslims in South Africa do not live below the poverty line, they still have a duty to help the poor. Zakat and Waqf are two financial instruments that can help to reduce poverty. The conversion of Zakat into an economic stimulus for reducing poverty due to a proper application of the Income Tax Act 1962 (as amended) is argued in the paper. The paper assesses the amount of cash that requires payment of Zakat and makes an analysis of the manifestation of poverty in South Africa. By using the present tax system to optimize poverty alleviation, there is a possibility that a proper National Zakat Fund can be developed. The National Zakat Fund can be established as a Public Benefit Organization (PBO), thus creating room for tax engineering to generate more funds for poverty reduction.