Understanding zakat reporting practices in Malaysia: a case study of Shariah-compliant companies

This paper aims to investigate the zakat disclosure practices in Shariah- compliant companies in Malaysia. The zakat information is important for stakeholders of Shariah-compliant companies to know whether the company is paying zakat on their behalf or otherwise. Disclosing such information is also necessary to eliminate the uncertainties within the Shariah principles and avoid doubt among the stakeholders. This information is crucial, particularly for investors who may have different accounts with different Shariah-compliant companies, as they must know who is the party that pays the zakat. The objective of this study is achieved through analysing fifteen Shariah-compliant annual reports for the year 2023. The study used a content analysis covering the material aspects, including presentation, method use, obligations for payment of zakat, and components of zakat information. The results indicate that zakat disclosure practices remain low among the Shariah-compliant companies in Malaysia. The sample companies show a limited amount of information about zakat, such as the method used, the amount of zakat, and the components of zakat information. Furthermore, the zakat disclosure of the sample selection, whether following MASB Tri-1 or otherwise, does not meet the standard as recommended by the technical release.