Alms Tax (Zakat) Law Intricacies: An Institutional and Governance‐Based Analysis

Abstract

ABSTRACT The complexity of alms tax laws (zakat) in many Muslim countries has created challenges for effective implementation and compliance. This study empirically investigates the determinants of alms tax law intricacies, focusing on institutional credibility and administrative efficiency, with corporate governance as a moderating factor. Grounded in agency theory and institutional theory, the study posits that misalignment between regulators and administrators, coupled with weak institutional structures, increases regulatory complexity. The findings indicated that higher institutional credibility and efficient administrative processes significantly reduce alms tax law intricacies. Moreover, corporate governance strengthens these relationships by enhancing oversight, accountability, and alignment between principals and agents. The results offer practical insights for policymakers and zakat institutions, suggesting that reinforcing institutional trust, streamlining administrative procedures, and implementing robust governance mechanisms can simplify alms tax regulations and improve compliance outcomes in the Islamic context.

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