Debt is usually described as borrowing money from a third party, such as an individual or institution, for the benefit or use of someone. It is the borrower’s or debtor’s responsibility to refund the money within the time frame agreed upon by the parties concerned.
Despite this, there are certain responsibilities that must be met by a person, and failure to do so results in a debt. A mukalaf (who is a Muslim, is healthy, has reached puberty, and is accountable for carrying out the demands of Islam and avoiding all of its prohibitions), for example is required to fast during Ramadan. Should he misses a day, he must make it up any time after the current Ramadan until the next. If he does not make up his fasting debt in the current year, he must qada’ (completing in another time) the fast later and has to pay the fidyah, a sort of fine. The government determines the fidyah rate. If the situation is not resolved, it becomes a burden, specifically a debt to God.
The same applies for certain property owners or entrepreneurs who are required to pay zakat if they meet the Shariah-compliant standards. When the conditions are ideal, gold and silver; savings; livestock such as goats, sheep, cattle, and camels; minerals; and basic crops such as wheat and rice are all property or goods entitled to zakat according to their proportion. The command is similar to what Allah SWT mentioned in Surah al-Nur (24) verse 56, which says, “And fulfil the prayer and perform the zakat; and obey the Messenger; surely you will have mercy.”
When a person fails to pay zakat, he is regarded to have committed an offence and owes the government until he fulfils his commitment. Indeed, one of the first things Saiyidina Abu Bakar did as caliph was to fight against individuals who refused to pay zakat.
Zakat is a component of the Islamic government’s taxation system. If a government needs additional financial resources, shar’iyyah allows the government to levy specific taxes to make up the difference. In this regard, certain scholars, including present academics such as Sheikh Mahmud Shaltut and Sheikh Dr. Ahmed al-Raysuni, have allowed the government to impose taxes (only) to meet financial necessities whose goal is to fund the general administration of the country. In accordance with an Islamic legal maxim that states, “The Shariah is built on the basis of satisfying human maslahah while keeping mafsadah away from them.”
According to the 106th National Council for Islamic Religious Affairs (MKI), as long as there are justifiable needs and concerns for the nation and its citizens, government is allowed to collect taxes.
This is the case where the Malaysian government charges income tax on its citizens, residents, and non-residents whose income accrues or arises in Malaysia, or is received in the country from outside Malaysia, for each assessment year. Income tax is a yearly tax paid by individuals who receive revenue-generating income such as earnings from business or employment, dividends, rent, royalties, pensions, or the like.
Furthermore, one of the responsibilities of income tax is to create, restore, and improve infrastructure for the people’s convenience and benefit. Tax revenues are also utilised to implement programmes that benefit the impoverished and the disabled. The tax is levied on people who earn a particular amount of money each year. Even if an individual’s income is less than the prescribed level, it is honourable and ethical to declare one’s earnings to the Lembaga Hasil Dalam Negeri (LHDN), the Ministry of Finance’s principal revenue collection agency. This move demonstrates the openness of persons who work and seek halal money.
Unfortunately, some who are eligible do not perform their responsibility to pay their taxes, resulting more than 180,000 individual tax payers being subject to LHDN limitations on travelling abroad, as reported in April. In addition to sanctions against other countries, defaulting taxpayers may face penalties, judicial actions, confiscation of personal belongings, and incarceration. Indeed, failure to carry out the responsibility of paying taxes causes the country to suffer enormous losses as it involves a substantial sum of money up to billions of Ringgit.
Economic stability and the well-being of the people in terms of physical and material requirements are a part of the maqasid shariah, and the work of realising them is a social responsibility that people must shoulder. The act of evading taxes until arrears accumulate is inconsiderate. Deliberately misleading and providing false information to avoid paying taxes is a crime and a serious sin. As taxes are a significant source of income in the administration of the country, it will be unable to carry out its functions well, efficiently and effectively should it falls short of the expected tax collection.
In a Hadith from Abu Hurairah RA, the Messenger of Allah SAW said as follows, “Delaying for people who are able to fulfill their rights (paying debts) is unjust.” (Narrated by al-Bukhari).
Delaying debt payments or tax payments simply demonstrates a person’s inability to manage his money or property. Therefore, individuals who are having difficulty paying their taxes have the option of settling the debt by contacting the LHDN and requesting services such as installment payments and others.