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- PublicationShariah view on consumption tax: Malaysian GST and SST as case studiesSaba' Radwan Jamal Elatrash; Burhanuddin Lukman; Mahadi Ahmad (Malaysian Consumer and Family Economics Association (MACFEA), 2019)
A consumption tax is a levy on the purchase of goods and services made by consumers as a source of revenues for the governments. This research aims at investigating the Shariah point of view on the compatibility of imposing a consumption tax like the GST and SST on goods and services purchased by consumers. The research used a qualitative method and relied on Islamic primary, secondary sources, relevant laws of Malaysia and other relevant materials. The findings of the research showed that tax is permissible with conditions, but consumption tax is not encouraged in Islam, whether on goods and service bought by the end-users except if the government is compelled by necessity to resort to it.
- PublicationUnearned wakalah fee in the takaful industry in Malaysia: a critical analysisSa'id Adekunle Mikail; Fares Djafri; Burhanuddin Lukman; Mahadi Ahmad; Sa'id Adekunle Mikail; Fares Djafri (International Shari'ah Research Academy for Islamic Finance (ISRA), 2021)
The issue of unearned wakalah fees (UWF) arises due to the statutory requirements in the Islamic Financial Services Act (IFSA 2013) that mandate takaful operators to refund any undue contribution with the corresponding wakaah fee in the event of surrender or termination of a takaful certificate. The relevant statutory provisions and Bank Negara Malaysia (BNM) guidelines on the valuation basis for liabilities of family and general takaful are open to more than one interpretation, and the exact definition and components of money not due are not clear. The implementation of the statutory provisions and regulatory guidelines on the refund of UWF has raised the following issues for the Malaysian takaful industry: 1. How to determine UWF and its components from money not due that must be refunded as stated in the statutory provisions and BNM guidelines? 2. What are the Shari'ah justifications, if any, to support the requirements for refund in the event of surrender? 3. How to resolve any Shari'ah and technical issues pertaining to the implementation of the refund of UWF due to lack of clarity regarding its definition and components? Accordingly, this paper delineates the concept and components of the wakalah contract, its salient features, contractual relationship, subject matter, including the wakalah fee, and juristic deliberations regarding it. It also examines the background and means of identifying UWF by explaining its subject and components, differences between earned and unearned wakalah fee, and the treatment of UWF. Further, it studies Shari'ah and technical issues related to recognition, calculation and refund of UWF and other surrender values.
- PublicationShari'ah analysis of zakat on sukukMezbah Uddin Ahmed; Moutaz Abojeib; Mahadi Ahmad; Mezbah Uddin Ahmed (International Shari'ah Research Academy for Islamic Finance (ISRA), 2021)
Sukuk in its contemporary form as a financial instrument has gained prominence only over the last one to two decades. Like a share, a sukuk is defined as an instrument representing undivided ownership over the underlying assets. Naturally, the question arises whether sukuk are subject to the same zakat rulings as shares. Accordingly, this research has identified the similarities between shares and Sukuk. The zakat rulings applicable to shares are also identified, and the research has made an attempt to apply those rulings in the context of sukuk. However, the research has identified the peculiarities of sukuk as it is currently practiced in the global market and provided fresh insights on how these may impact the applicability of zakat to sukuk. While the research includes theoretical Shari'ah analysis and discussion on various relevant zakat matters, it also reviews today's practices. Accordingly, relevant Shari'ah standards and requirements of various jurisdictions are identified, and several sukuk prospect uses are examined in relation to zakat calculation and disclosures. By this the research aims at enabling a coherent understanding of the theory and practice.
- PublicationAn empirical study of the challenges facing zakat and waqf institutions in Northern NigeriaMahadi Ahmad (Emerald Publishing Limited, 2019)
The purpose of this paper is to unearth the factors inhibiting the development of zakat (the Islamic obligatory alms) and waqf (endowment) institutions in Northern Nigeria, with the aim of proffering appropriate solutions. This paper uses a qualitative research methodology whereby data was sourced from relevant stakeholders in Northern Nigeria. To select the appropriate interviewees, maximum variation and homogenous purposeful sampling techniques were used. The findings of the paper show that zakat and waqf institutions in Northern Nigeria have not achieved their inherent Shari'ah objectives because members of the public have little or no trust or confidence in the institutions. Also, the potential zakat payers and waqf donors dislike political office holders' involvement in the appointment of the institutions' administrators. Finally, the administrators lack adequate managerial and administrative knowledge of the two institutions. The current research focuses on causes of low performance of zakat and waqf institutions solely in Northern Nigeria. It is envisaged that subsequent researchers may conduct research on the possibility of having a federal law that will strengthen the overall establishment and development of zakat and waqf in Nigeria. This will affect both Muslim-majority and Muslim-minority communities. This paper represents a referenceable work in the field of zakat and waqf in Northern Nigeria, as it uses an approach that sources primary data in the form of participants' point of view instead of relying on literature or document analysis. It is not a mere theoretical study of the literature but an empirical investigation of the problem.
- PublicationSocial impact bond (SIB): a Shari'ah appraisalYahaya Yunusa Bambale; Mahamad Ibrahim Adam Zain; Mahadi Ahmad (IIUM Press, 2019)
Social Impact Bond (SIB) is a funding mechanism for social projects whereby the payment for the projects is anchored on meeting the outcome metrics, otherwise the investors risk losing their money. The mechanism emerged since 2010 in the United Kingdom and has quickly spread to other parts of the world. In the past, there has not been any popular fatwa on this mechanism from a Shari'ah point of view. Therefore, this article will examine the funding and payment arrangement and then conduct takyif fiqhi (jurisprudential adaptation) to ascertain the degree of Shari'ah compliance and determine the most appropriate Islamic contract most suitable under the arrangement. The article adopts a qualitative method of research by making in-depth analysis of Islamic contracts including the primary and secondary sources of Islamic law. It also relied on literature on SIB from conventional point of view and internet materials. Major findings of the research show that SIB, whilst its pay-for-success mechanism does not contain riba, it contains excessive gharar. The excessive gharar, however, was found ineffective to void al-ja 'alah-based SIB and hibah li thawab which is the second contract similar to SIB. This is because of hajah and the element of gratuity respectively.
- PublicationCorporate waqf via initial public offering (IPO): a viable instrument for the sustainability of Malaysia's higher learning institutionsNoor Suhaida Kasri; Sa'id Adekunle Mikail; Mohamed Ibrahim Negasi; Mahadi Ahmad; Sa'id Adekunle Mikail; Noor Suhaida Kasri (International Shari'ah Research Academy for Islamic Finance (ISRA), 2020)
The need for sustainable funding of institutions of higher learning led the Government of Malaysia to formulate its Universities Transformation Programme 2015-2025. This transformation agenda came out as the Purple Book which highlighted the need to address the funding gap that may occur in the education sector in the event of unexpected budget cuts. It called for the enhancement of income generation, endowments and waqf to achieve self-sustainability for higher learning institutions (Ministry of Higher Education Malaysia, 2016). Based on the above premise, this research explores the viability of corporate waqf via initial public offering (IPO) as an instrument to raise funds and sustain Malaysia's higher learning institutions. Corporate waqf, as defined by the Securities Commission Malaysia, refers to: A type of corporate [financial] instrument where liquid-asset-like shares or securities [are] endowed as waqf assets and [sic] thus enabling the waqf institutions to benefit from the dividend that can finance any welfare project or initiative (Securities Commission Malaysia 2014, p. 17).
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