Keywords

1 Introduction

Zakat is required of Muslims who meet the criteria for obligatory zakat. If a Muslim does not meet the criteria for paying zakat, they are not required to do so. In Quran, the word for paying zakat is , where the word is a passive command verb. It carries the meanings to derive, turn up, bring, come about, originate, develop, take place and occur. On the other hand, it may not belong to Muslim, zakat should be given to needy. Zakat is the right of other people.

The same treatment standards apply to corporate zakat. If the company fits the conditions for zakat payment, it must pay zakat. Corporate zakat is essentially zakat levied on the assets of individuals who invest in the firm and the company's earnings. The subject of zakat is the owner of the company who is required to pay zakat. Only in Saudi Arabia and Kuwait is zakat seen as obligatory for local businesses, therefore zakat payment is required. On the other hand, zakat is not mandatory in Malaysia and other Muslim countries.

The outbreak of the Covid-19 pandemic between 2020 and 2021 had a detrimental influence on the world economy, including Muslim nations. Aside from the health and communication industries, where personnel are most needed during the pandemic, other economic sectors are experiencing a slowdown, including retail, transportation, consumer, tourist, hotel, and energy. People cannot leave their homes and engage in activities, especially during lockdown periods. Decreased demand for goods and services disrupts the production process and reduces the company's earnings.

There was no studies found that explored the influence of Covid-19 on corporate zakat. Some publications focused solely on the influence of Covid-19 on an individual basis. Therefore, the objective of this paper is to analyze the impact of Covid-19 on corporate zakat payment. The paper's structure is as follows: introduction, literature review, research technique, and analysis. It ends with conclusion and recommendation.

2 Literature Review

There were no studies found on the influence of Covid-19 on corporate zakat. As a result, this study will use individual zakat payments for comparison purposes, because corporate zakat is based on an individual basis and is charged to the company's owner.

Some attempts and techniques were made to collect zakat during Covid-19 [1]. Furthermore, despite the fact that some tactics have been implemented, Covid-19 has an impact on zakat collection [2, 3]. As a result, zakat institutions should be vigorous in encouraging Muslims to pay zakat.

Covid-19 had no effect on the quantity of zakat paid by Muslims; rather, the amount grew [4]. In addition, It is discovered that awareness of zakat keeps Muslims paying zakat despite the Covid-19 pandemic [5, 6]. Therefore, the government should facilitate zakat payment for Muslims. Similarly, it is discovered that direct and indirect tactics boosted zakat collection [7]. Direct techniques include zakat collection and zakat counter services, whilst indirect strategies include Internet-based digital fundraising, crowd funding, and program marketing via Facebook and Instagram [8]. It is discovered a similar result when zakat collection rose in 2020 by employing techniques such as the food program, school collaboration, and Friday program [9]. The digitalization of zakat, government laws, and awareness of zakat payments are other determining factors [10]. In order to collect zakat funds, a zakat institution must have an effective program and strategy, particularly during economic downturns and crises.

Some initiatives in Malaysia could reduce the impact of Covid-19 [11]. Covid-19 may have a greater influence in other countries that have many lockdowns and closed economic activity than in countries that have not implemented such regulations.

3 Research Method

This study applies a qualitative research methodology to analyze the company's financial data. Only countries where zakat is discretionary would be included in the analysis. Hence, Saudi Arabia and Kuwait, where zakat is obligatory are removed from the analysis whereas Malaysia, Qatar, Sudan, Bahrain, and Egypt that do not mandate businesses to collect zakat are included in the sampling frame. The final sample consists of 38 companies. One company is excluded owing to a lack of information.

Data description

Total

Total Companies paid zakat

346

Compulsory payment

(307)

Voluntarily payment

39

Incomplete data

(1)

Final data

38

The analysis covers the descriptive analysis, total zakat payment (both obligatory and optional), and total corporate voluntary zakat. The study then specifies which companies paid zakat and which did not.

4 Analysis

The analysis begins with descriptive statistics, with 2021 having the highest average zakat payment, followed by 2018. 2020 had the highest median, followed by 2019. The largest standard deviation occurred in 2018, followed by 2021. This phenomenon revealed that the most diverse data was collected in 2018. It was also demonstrated by the highest kurtosis and skewness, as well as the range (see Table 1.).

Table 1. Descriptive statistics
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Total zakat payment, which includes compulsory payment from countries like Saudi Arabia and Kuwait, fell in 2019, then grew until 2021. (see Fig. 1). Hence, prior to the occurrence of Covid-19, overall zakat payment was already reduced in 2019. Covid-19 occurred in 2020, resulting in numerous lockdowns and economic downturns. However, total zakat payments increased in 2020 and 2021 in comparison to 2019.

Fig. 1.
figure 1

Total zakat payment (in USD)

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A similar pattern emerged in voluntary zakat payments, which excluded enterprises from Saudi Arabia and Kuwait (see Fig. 2). The overall voluntary zakat payment is less than the total zakat payment which includes Saudi Arabia and Kuwait. When compared to 2018, total zakat payment fell in 2019. This shows that before Covid-19 in 2020, most companies had smaller zakat payment in 2018 and 2020.

Fig. 2.
figure 2

Voluntarily zakat payment (in USD)

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In 2020, there are two companies who paid zakat at the first time, which are Bursa Malaysia Bhd and Boustead Plantations. This demonstrated that the Covid-19 outbreak had no effect on corporations' refusal to pay corporate zakat. Four enterprises, Fima Corporation Bhd, Dagang NeXchange, AWC Bhd, and Kumpulan Fima Bhd, paid zakat for the first time in 2021. UEM Sunrise Bhd and Symphony Life Bhd were the only two companies that did not pay zakat in 2021. However, total zakat payments did not fall during the Covid-19 pandemic. This is consistent with individual zakat payment, as corporate zakat is essentially also predicated on the company's owner paying zakat [4, 5] (Table 2).

Table 2. Zakat payment
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5 Conclusion

The effect of Covid-19 on corporate zakat payment is not evidence. However, in 2021, two corporations failed to pay corporate zakat. This requires additional investigation and research. The limitation of this study was that it only looked at the overall amount and number of companies that paid zakat. Further research needed to explore how and why the amount of corporate zakat payment increase or decrease. While recommendation of this research is government and zakat institutions must increase the variety of strategies to raise zakat funds.