afternoon with Abuya: zakat and corporation

someone posed this question to the President during Q&A session during President Policy Address function.

Q: Why is the Company not paying zakat for all the revenue received throughout the year?

i was taken aback with the question, and later in the same week, a friend of mine IM-ed and asked, "is it true that the Company does not pay any zakat?". all i could tell her at that moment was based on President's answer, the Company does not pay any zakat. however, i am sure, i told her, that the people in Finance or Treasury is looking into that thing.

when i raised that question to Abuya the other day, he told me that, the Company does not have to pay any zakat.

1st reason: Corporation = A legal designation given to a company recognized as its own entity, independent of its directors and founders. Because everyone within a corporation is an employee, no single individual is liable for the company's debt of failure. and zakat is compulsory for all individuals. individual = people. therefore, since Company is not an individual, therefore there is no obligation for the company to pay zakat.

the catch is, normal company is owned by numbers of shareholders. and this group of people are the ones that has to pay their income zakat (zakat pendapatan). and the practice is, whenever the company is paying zakat, it is actually performing the syariah obligations on behalf of the shareholders. thus resulting, the dividends paid to all shareholders are already cleaned, and they have completed one of Rukun Islam.

the good analogy is like this.
when you do not pay zakat = hell is the place you will be.
when a company does not pay zakat = for sure that company is not going to hell. how could it?
however, company is owned by shareholders.
therefore -> company does not pay zakat = shareholders' wealth is unclean = balasan neraka di akhirat kelak for the shareholders.

get it?

wallahu'alam.

2nd reason: the Company is fully owned by the government = government is the shareholders. and government-owned bodies are exempted from paying zakat.

unlike other GLCs, the government is the only shareholders of the Company (100% ownership). in MAS (or any other companies where government only owns a majority number of shares) the government is the main shareholders. therefore, these GLCs have to pay zakat on behalf of other non-government shareholders.

however, for the subsidiaries (public listed or co-owned by other companies), they have the obligations to pay zakat for their non-government shareholders. (e.g JV, Gas, Dagangan, etc)