UAE Approves New Zakat Law

The UAE has passed a new federal draft law aimed at regulating the collection, distribution, and management of zakat across the country. The legislation introduces stringent penalties for non-compliance, including fines up to Dh1 million and imprisonment, as part of efforts to enhance transparency, accountability, and governance over zakat funds.

Overview of the Zakat Law

The new zakat law marks a significant step towards establishing a comprehensive system for managing zakat activities, ensuring that funds are distributed efficiently and to the rightful recipients. The legislation is designed to improve governance, foster public confidence in zakat institutions, and encourage greater participation from the community.

The law governs all aspects of zakat processes, including the collection, disbursement, and investment of zakat funds, in line with Sharia rulings and national regulations. It applies to all individuals and organizations engaged in zakat activities across the UAE, including those in financial and non-financial free zones. However, the Cabinet may exempt certain organizations, provided they meet registration and reporting requirements.

Penalties for Violations

One of the key features of the new law is the imposition of severe penalties for violations related to zakat funds. These penalties include:

• Imprisonment and fines of up to Dh1 million for individuals or entities involved in the illegal collection, receipt, or distribution of zakat.

• Return of unlawfully collected funds.

• Fines ranging from Dh100,000 to Dh1 million for entities that distribute zakat abroad without the required permit or in violation of regulations, misuse surplus funds, or improperly deduct zakat funds.

• Fines and imprisonment for anyone who obtains zakat funds through false or forged documents, with penalties of up to one year in prison and fines of up to Dh200,000.

These strict measures emphasize the UAE's commitment to maintaining integrity in zakat distribution and ensuring that funds reach the intended recipients.

Establishment of the National Zakat Platform

A significant aspect of the new law is the creation of the National Zakat Platform. This unified digital platform will serve as a centralized system for recording all authorized entities, eligible beneficiaries, and zakat transactions. It aims to ensure transparency and efficient management of zakat funds, promoting greater accountability and reducing the risk of misuse.

The law also imposes regulations on the investment of surplus zakat funds. Entities are allowed to invest surplus funds only with approval from the competent authority, ensuring that investments comply with Sharia principles, avoid risk, and preserve the religious integrity of zakat. Any profits from these investments must be fully allocated to zakat purposes, and all transactions must be documented on the National Zakat Platform.

Restrictions on Zakat Collection and Distribution

The law specifies that only authorized entities can collect or distribute zakat. Individuals, whether regular or legal, are prohibited from collecting or distributing zakat without a license. However, the law includes provisions for individuals linked to eligible zakat recipients, allowing them to receive zakat on their behalf, as long as the collection and distribution adhere to the regulations set by the authority.

This measure aims to ensure that zakat collection and distribution remain under regulated oversight to prevent misuse and ensure funds are properly allocated.

Exemptions for Foreign Distribution and Exceptional Circumstances

The law also outlines strict controls on distributing zakat outside the UAE. Distribution is generally prohibited unless in exceptional cases, such as natural disasters or major humanitarian crises. In these cases, authorized entities must submit a request through the National Zakat Platform and coordinate with UAE authorities to ensure compliance with applicable regulations.

Conclusion

The new zakat law represents a crucial step in enhancing the management of zakat funds in the UAE. With the creation of a centralized platform and strict penalties for violations, the law aims to ensure that zakat funds are used effectively and transparently, promoting social solidarity and protecting the integrity of zakat distribution. Through these measures, the UAE government seeks to strengthen governance over zakat activities and build public trust in zakat institutions across the country.

 

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