Bahrain Parliament gears up to debate Zakat tax on commercial companies

TDT | Manama                                                     

The Daily Tribune – www.newsofbahrain.com

The Bahrain Parliament is set to deliberate a proposed law focusing on the imposition of a tax and regulation of Zakat Al Maal (wealth tax) on commercial companies, overriding concerns raised by advisors.

Despite the absence of feedback from government and private entities, the Parliamentary Committee on Financial and Economic Affairs has recommended the approval of the proposed law, with no expressions of opposition or objections thus far.

The law outlines the specified amount of Zakat to be imposed on companies, equivalent to a quarter of the tenth of Zakatable net assets—25% for financial statements prepared based on the Hijri year or 2.577% for financial statements prepared based on the Gregorian year.

Proposed by MPs Mohammed Al Aliwi, Mohammed Al Rifai, Mohammed Al Ahmed, Mohammed Al Husseini, and Ahmed Qarata, the legislation aims to establish a framework obligating and regulating the payment of Zakat Al Maal to commercial companies.

The proponents argue that it addresses a legislative gap, considering Zakat as one of the five pillars of Islam, a divine obligation, a financial worship, and a solidarity ritual rooted in Islamic law.

However, an advisor to the Committee raised concerns about the law, particularly the concept of obligating all types of companies to pay Zakat without considering individual partners in those entities.

He added that it raises several questions about the soundness of its legal basis, given that Zakat is a pillar of Islam imposed on every Muslim who meets the conditions of Zakat. In this context, a Muslim refers to a natural person who adheres to the religion of Islam.

" The requirement stated in Article 4 of the proposal, which obligates the legitimacy of the wealth subject to Zakat, raises practical challenges, particularly concerning how to verify its validity,” the advisor said.

The advisor questioned the legal basis and practical challenges, emphasising the need for feedback from relevant government entities for legal opinions as per the Parliament’s internal regulations (Article 28).