PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

INTRODUCTION

Treasury is a financial institution that works to manage the property or the public to

keep valuables such as gold, silver, precious stones and the like. Treasury began during the

Prophet's era and continued to Rashidun and beyond and streamlined. implementation during the

period of Rightly Guided Caliphs.

Source Baitulmal derived from 3 main sources

Real Community - Resources derived from the rich and distributed to those entitled to

receive it.

Real National - Resource obtained from the spoils of war, tax Kharaj, tribute out and

property without heirs.

Property General - comprises the results of business, agriculture and others.

The purpose of the Baitulmal is to enhance the development of national economy, provide basic

needs and poverty eradication. Baitulmal property division determined in accordance with the

requirements in a fair and equitable economy based on Islamic principles.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

TREASURY

Treasury from the Old French word “tresorie”. A place where treasure is stored safely,

a place where state or royal money and valuables are stored and a collection or artistic or literary

works.

Treasury is any place where the currency or item of high monetary value like rubies

and diamonds etc. are kept. The term was first used in Classical times to describe the votive

building erected to house gifts to the gods, such as the Siphnian Treasury in Delphi or many

similar building erected in Olympia, Greece by competing city-states to impress others during

the ancient Olympic Games.

In Ancient Greece treasuries were almost always physically incorporated within

religious buildings such as temples, thus making state funds sacrosanct and adding moral

constraints to the penal ones to those who would have access to these funds.

The head of a Treasury is typically known as a Treasurer This position may not

necessarily have the final control over the actions of the Treasury particularly if they are not an

elected representative

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

BAITULMAL

Bayt al-mal (baitulmal) is derived from the Arabic word ( المال bayt al-mal which ,(بيت

means "house property". In Islamic history, Bayt al-mal is a financial institution responsible for

administering the tax. Bayt al-mal functions as treasury caliphs and sultans of managing personal

finances and government spending. It also manages the distribution of public charity for the

people. Modern Islamic economists consider the institutional framework appropriate to the

Baitulmal as the Muslim community now.

The concepts of welfare and pension were introduced in early Islamic law as forms of

Zakat (charity), one of the Five Pillars of Islam, during the time of the Rashidun caliph Umar in

the 7th century. This practiced continued well into the era of the Abbasid Caliphate, as seen

under Al-Ma'mun's rule in the 8th century, for example. The taxes (including Zakat and Jizya)

collected in the treasury of an Islamic government were used to provide income for the needy,

including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist

Al-Ghazali (Algazel, 1058–1111), the government was also expected to stockpile food supplies

in every region in case a disaster or famine occurred. The Caliphate is thus considered the

world's first major welfare state.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

BAITULMAL IN MALAYSIA

Baitulmal is the treasury and financial institutions holding property in the Islamic

countries. Wealth accumulated in the treasury is the property owned by all the people who live

and lived under the Islamic government. Treasury in accordance with the views al-Mawardi is

the record collection and distribution of wealth. More precisely treasury as treasury country is

receiving from various sources of financial and property accumulated by Islamic countries such

as charity(zakat), wakaf property, tax and others.

Treasury contains a concept and a very broad understanding of property based on the

full faith and piety to believe that only beseech God the Creator. Administrator and

Superintendent of the universe, while the Caliph was a trustee to manage property that has

accumulated in the treasury. In fact, the scope of treasury accounting for a larger role compared

with the treasury national concepts today that not only serves as national treasures through

institutional policies and its importance to the government, even acting as a central bank that

serves the nation's financial system. If viewed from context treasury at the beginning of Islam, a

fact for a country's treasury.

But for Malaysia, administration and coordination of treasury and restricting the scope

of its functions by creating two fractions in the administration, the national treasury through the

Ministry of Finance and treasury through the state government. In terms of administration,

treasury now more systematically with the existence of various provisions that gave jurisdiction

to the Islamic Religious Council to manage the scope of management and treasury functions are

made in accordance with reasonable time requirements and local requirements.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Income and expenditure shall be in accordance with treasury regulation of Allah in the

Qur'an and Sunnah of prophet as well as conditions such as the recommended law istinbat Ijma,

'Qiyas and other resources coincide with the spirit of Islamic legislation, such as al-maslahah

mursalah, istislah, istishab and Istihsan.

Wealth owned by Serra Islamiyah

Zakah

Kharaj.

Jizyiah

Ghanimah and Al-fay

Usyur.

Tribute out.

Various public property.

Property in the form of state-owned land, buildings, public facilities and income.

Property is not the legitimate authorities and officers of the country, property work with

contradictory legislation and the property I obtained from other fraudulent actions.

Khumus discovery property and mineral.

Real advantage of the remaining heirs and distribution of property which has no

successor.

Real people apostates.

Taxes.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

SOURCES TREASURY(BAITULMAL)

ZAKAT

Zakat in Arabic (زكاة) sometimes "Zakāh/Zekat" or "alms giving", one of the Five

Pillars of Islam, is the giving of a small percentage of one's possessions (surplus wealth) to

charity, generally to the poor and needy. It is often compared to the system of tithing and alms,

but it serves principally as the welfare contribution to poor and deprived Muslims, although

others may have a rightful share. It is the duty of an Islamic community not just to collect zakat

but to distribute it fairly as well.

In terms of language charity means clean, pure, fertile and growing.

From Sura’ Al-Taubah (09), verse 103:

)“ ” لهم سكن صالتك إن عليهم وصل بها وتزكيهم تطهرهم صدقة أموالهم من سميع) 103خذ والله

عليم

“Take (some) from their wealth alms (zakat), that so thou purify them (from sins) and purified

them (from moral evil) and pray for them, surely prayers (Muhammad) is to be security for them

( remember) Allah is Hearing, Knowing”

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Conditions For Zakah

Several conditions must be fulfilled before zakah can be paid. These conditions are necessary as

zakah can only be applied on those who are of legal age and who own enough assets. These

conditions are categorized into two broad categories, namely performer and asset.

Zakah Performer Muslim - Every Muslim who is of a certain age and owns enough assets is

required to pay zakah.

Zakah Asset - Full Ownership A Muslim will only be required to pay zakah if he or she has full

and legal ownership of an asset.

Zakah is payable only on those assets that are acquired for the purpose of creating or generating

wealth. Some examples of this type of assets are livestock or crops that are traded or sold,

inventory of goods used for trading, and investments such as gold or securities that have

potential for appreciation in value. However, zakah is not payable in the case of fixed assets such

as buildings, if they are not subjected to "capital circulation".

Assets That Exceed A Minimum Value

Zakah need only be paid on those assets that exceed a minimum value. This minimum value is

calculated based on the market price of 85 grams of gold or 595 grams of pure silver. This

minimum value is termed Nisab. The Islamic Fiqh and Research Councils, as well as Jumhur

(majority) of Ulama' recommend that gold be used as the basis for the calculation of nisab.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Completion of Haul

Haul is defined as the completion period for a zakah asset. The length of time for haul is one

Islamic or Hijri year (1 year Hijri = 354.5 days, 1 year Solar = 365.25 days). Zakah is only

payable on assets that have been held for at least this period.

Types of Zakah

Zakah Fitr is a one off payment that is made once in every Muslim Hijri calendar year at any

time between the first day of the month of Ramadhan and the first day of Shawal. All Muslims

are obliged to pay this, regardless of their age, status or wealth. The amount of zakah payable is

approximately 3kg of staple food in the relevant country or an amount of money that is

equivalent to the price of the food.

Zakah al-Mal is an annual payment based on the amount of wealth owned by a Muslim

individual or organization. This payment is obligatory upon any Muslim individual or

organization that has completed the requirement of Nisab (minimum taxable amount) and Haul

(one Muslim Hijri calendar year). The payment is 2.5% out of the total wealth deemed for zakah.

Zakah Al-Mal Can Be Subdivided Into Zakah On:

Business Rental Income

Personal Income Savings

Gold and Silver Shares

Livestock Crop

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

KHARAJ

Kharaj means land revenue tax imposed on non-Muslims. In Sharia law, Kharaj is tax

on agricultural land. Kharaj not mentioned in the Quran or Hadith, but more to Ijma' agreement

or Islamic scholars and some of the traditions of Islam or URF.

In Islamic history, Kharaj form of duty imposed on land that was confiscated from the

Byzantine Empire and Sassanid, whether through war or peace. If the peace agreement between

Muslims and residents has been agreed that says the land is owned by Serra Islamiyah (country),

and they agree to pay Kharaj, they must be fulfilled. Kharaj by language means al-kara '(rent)

and al-ghullah (results). Each soil taken from the kuffar by force, after they declared war on, so

land that categorized as land kharajiyah. Although they embraced Islam after the conquest, but

the land is still land kharajiyah status.

While the number of Kharaj collected from the compulsory land shall be calculated

based on the land. At the time of 'Umar set Kharaj, examine the contents of his land, and not act

against the wrong owner and plantation. In some situations he has been collecting for every 1

Kharaj jarib to 1 qafiz and 1 dirham. In the event that he and other land Kharaj collect the

amount is different. Syria is in the area he collect total Kharaj different.

Therefore, it is known that he examine the content of each soil based on the rate of

land. An Imam (Caliph) can be calculated by observing Kharaj matters which should be based

on three aspects of this:

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

1. based on land area, or

2. pastures, or

3. will be calculated based on crop yield can be at that time.

If the land is so been fertilized pastures can increase yield, or the land is attacked factors

that can make the results less watering then such matters must be studied first.: If the yield

increase is the result of the efforts of farmers, for example they have been digging wells, or they

make water, so they will not be added Kharaj even slightly.

JIZYAH

Jizyah or jizya (جز*ي) is the extra tax imposed on non-Muslims (Dhimmis) who live

under Muslim rule according to the Qur'an and

The name for the head-tax under Islamic rule extorted to the dhimmies. This must be

handed over in obsequious way (including impacts on the necks). Welfare benefits and cash

allowances to Mohammedans are often regarded as the jizhya which has to be given to them. So

are the billions given by America to the Palestinians, Egypt, Pakistan, etc. which basically only

feed their hatred towards the West.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Fight those who believe not in Allah nor the Last Day, nor hold forbidden that which hath

been forbidden by Allah and His Messenger, nor acknowledge the religion of Truth, (even if they

are) of the People of the Book, until they pay the Jizyah with willing submission, and feel

themselves subdued. (Qur,an 9:29)

Once a land is conquered by Islamic armies the ruler can impose a taxation on those non-

Muslims who will not convert to Islam.

Jizyah is paid as a sign of submission and gives Dhimmis some legal protection in return.

Under dhimmitude (the status that Islamic law, the Sharia, mandates for non-Muslims) Dhimmis

usually are not allowed to carry arms to protect themselves, serve in the army or government,

display symbols of their faith, build or repair places of worship etc. If the conquered do not wish

to pay or convert, their fate may very well be slavery (under which, rape is permitted) or (as

evidenced in the quotes above) death.

The amount of the Jizyah tax and the way it was collected varied from time to time and

from place to place, but when imposed, the forced payment of Jizyah greatly stimulated the

conversion of non-Muslims into Islam. In some cases the taxation of the non-Muslims was so

profitable that the Islamic rulers prohibited their subjects from converting to Islam, lest they

should lose their income.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

GHANIMAH AND AL-FAY.

1. Ghanimah the spoils.

2. Al-fay is without spoils of war, legacy of the dead with no heirs and treasure.

3. One-fifth of the property ghanimah and al-fay expenditure allocated to the center in Medina.

The remainder of the property is divided into forces involved in the war J

USYUR.

i. Usyur business tax is imposed on Muslims and non-Muslim businessmen.

ii. To reject Harbi, which reject the peace treaty with no Islamic country imposed usyur

by 10%.

iii. For Zimmi reject the government under the Islamic rule imposed by only 5%.

iv. Usyur tax imposed when enough nisabnya ie as many as 200 dirhams.

TAXES

Tax is a cost paid by individuals or companies to the government. How to use the collection of

taxes and how tax money is material in the hot talk of politics and economy. Political science /

economics of public finance is the tax debate.

Type of tax Among the types of taxes:

Income tax

Tax sales

Land tax

Tax door

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Property Tax In Islam

Acquisition of property (of Muslims), this is referred to as dharibah (a collection) is allowed by

syara 'to be collected by Serra Islamiyah (country) and the responsibility of countries to spend

with the right.

It should be emphasized that dharibah not 'tax' as often wrong interpreted or the arguments made

by those who are ignorant to allow tax. Dharibah is a form of 'special collection' collected from

the rich Muslims / feasible only, that is only on the condition experience Bayt al-mal or deficit

are not sufficient to perform any obligation of the country. Can’t collect if dharibah Baitul mal

countries still inadequate. It is only collected in the state of the country is so desperate if not

collected, then a duty will be neglected. Dharibah can only be collected in the following

circumstances only,

1) To meet basic needs (food / clothing / home) those poor and needy

2) For financing the administrative machinery of the country to watch as people continue to

work as staff salaries and administrative infrastructure

3) For providing public facilities such as roads, hospitals, mosques, schools and similar

4) For recovery situation after people suffer from natural disasters like floods, hurricanes,

earthquakes, landslides and similar

5) For Jihad Fi Sabilillah.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Dharibah not like the current tax (in the economic system of capitalism) because

1) It is resouces and taken inspiration from the Prophet's Hadith and also Ijma Friend

2) It is not a source of fixed income countries because it is collected only when the Baitul Mal

had a deficit and facing a critical situation and it is not collected only by prolonged

3) It is only collected from the rich Muslims / eligible in accordance with the rates ma'aruf until

sufficient rate required only

4) It is used to provide services to the people / nation, not for personal interest or government

Kroner

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

BAITULMAL ROLE IN ISLAMIC COUNTRIES

1) Help the economic development of Islam.

i. Helping the poor and less fortunate.

ii. Can reduce the gap between the rich and the poor.

iii. Forms of assistance such as food, shelter and so forth.

2) Major source of strengthening the armed forces.

i. Important to ensure the threat from Islamic countries who have an enemy military

force.

ii. During the reign of Caliph Uthman, treasury resources are used to strengthen the

forces of Islam who are facing threats from the Byzantine army.

3) Distribute financial resources for the central government expenditure.

i. Involve administrative costs and give allowances to the armed forces.

ii. During the reign of Umar, Baitulmal has issued allowances to armed forces as a

substitute to a prohibition of land in the newly conquered land.

iii. This can help inhabiting the country from causing conflict to have the land.

4) Coordinate collection and distribution of property based on Islamic sharia.

i. Baitulmal property cannot be used at will.

ii. Distribution must be fair and equitable.

iii. During the reign of Ali, he never used the property Baitulmal when facing opposition

from Muawiyah even get pressure from their friends.

5) Keeping the property.

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

ISLAMIC COUNTRIES

Political aspects of Islam, Sharia, Caliphate, Religious police, and Islamism

Although the separation of church and state was first theorized by Averroes, most

Muslim-majority countries recognize Islam as the state religion, but most of them do not place

Sharia Law as the constitution itself

Afghanistan (Islamic state) Mauritania (Islamic state)

Algeria Morocco

Bahrain Oman

Bangladesh (Islamic state) Pakistan (Islamic state)

Brunei Qatar

Comoros Sahrawi Arab Democratic Republic

Egypt Saudi Arabia (Islamic kingdom)

Indonesia Somalia

Iran (Islamic state) Tunisia

Iraq United Arab Emirates

Jordan Yemen (Islamic state)

Kuwait Maldives

Libya Morocco

Malaysia (Islamic state)

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

Sunni Islam

Algeria Pakistan

Bangladesh Saudi Arabia (as state-sanctioned religion)

Comoros Somalia

Malaysia Jordan

Maldives Indonesia

Shi'ah Islam

Iran (as state-sanctioned religion)

PHILOSOPHY AND CONTRACT IN ISLAMIC FINANCE AND BANKING

CONCLUSION

Implementation Baitulmal during Rashidun is based on Islamic and distortion does not occur.

Bayt al-mal economy can increase the Muslim community.

We would have realized the key aspects of the economic system I highlighted are much

more than the current Islamic Banking or Islamic Finance and it should be clear that this system

cannot be implemented without a true Islamic state which rules by the Shariah and unlike the

Muslim world today is a truly independent state and not an agent of the west.

Instead of turning to billions of dollars of bailouts where the US and UK are spending tax payers

money in order to save their collapsing financial system, people should realized that Islam offers

the world a practical alternative. The next speaker will elaborate on the importance of taking the

Islamic system as a whole and not separating the economic system of Islam from the other

systems such as ruling or punishment.

Even many non-Muslim thinkers have recognized the progress and development that was

achieved under Islamic rule in history in all fields of science and technology.