A new draft legislation concerning Zakat’s collection, distribution, and management has now been passed in the UAE. It prescribes severe penalties. Fines up to Dh1 million and imprisonment for unauthorized activities. The Federal National Council, or FNC, approved it on Tuesday. The new Zalak law aims at promoting the principles of transparency, accountability, and governance with respect to Zakat funds.
Dr. Omar Habtoor Al Darei, Chairman of the General Authority for Islamic Affairs, Endowments, and Zakat, emphasized that this law establishes a comprehensive system of “assuring that Zakat reaches its deserved beneficiaries, thus reinforcing public confidence in Zakat institutions and promoting the spirit of solidarity among the UAE people.”
Key Provisions of the Law
The law covers every person and entity involved in performing Zakat activities during the Holy month of Ramadan, including those operating in free trade zones. However, the Cabinet might provide exemptions if the organizations so exempted fulfill registration and reporting requirements. It will govern everything, starting with the collection and distribution of Zakat and ending with an investment of surplus funds in accordance with Sharia rulings and national regulations.
The law provides that collection and or distribution of unauthorized Zakat will constitute a crime against public fund. Anyone convicted of the offense may be imprisoned and fined. Approved entities may also be punished by a financial penalty of between Dh100,000 to Dh1 million for unauthorized distribution outside the country, flawed investment, or unauthorized deductions from Zakat funds.
Moreover, those who, through deceitful documents, obtain Zakat are liable to a penalty that would be one year of imprisonment or a fine not exceeding Dh200,000. All entities currently conducting Zakat activities shall regularize their affairs within one year of the law becoming operational.
New ‘National Zakat Platform’
This legislation’s singular measure is the establishment of the National Zakat Platform, a unified digital system that would track all authorized Zakat entities, eligible beneficiaries, fund allocations, and transactions. Its primary impact will be increased transparency and improvement in efficiency in Zakat management.
Zakat distribution outside the country is prohibited unless in the case of natural disasters or humanitarian crises, however, such distributions must be approved and coordinated with responsible UAE authorities.
Debate over Zakat Collection
Much debate occurred among FNC members against Article 4 of the law, which concerns the Zakat collector and Zakat receiver. While some argued that the limitations could be an impediment in helping the needy, the council, regarding the statements made by the government, thus allowing greater flexibility to traditional Zakat handling, while being in accordance with the necessary regulations, subsequently reaffirmed this condition.
The UAE wanted to ensure that, under the new Zakat law, the funds will reach their exact destinies without being misused, while at the same time bringing modern financial oversight in tandem with the religious, social principles of Zakat.
