The Influence of Perception towards Legal and Ethical Obligation on Compliance Behavior of Income Zakat in Kedah

Abstract

Zakat is not only a religious obligation that must be complied with by all eligible Muslims but also plays a very important role in the Islamic fiscal system. However, the issue which arises is that zakat compliance including income zakat is still low which hinders the effectiveness of zakat in playing a more significant role in the state of Kedah, Malaysia. Therefore, this study attempts to examine the influence of perception towards legal and ethical obligations on compliance behavior of income zakat to gain more understanding of the determinants of income zakat. This study reveals that perception towards ethical obligations has significant relationships on the intention to comply with zakat payment. However, there is no significant relationship between perception towards legal obligation and intention to comply with zakat payment. This study is able to provide empirical evidence that is in line with findings of previous studies as well as new findings that expand the boundary of knowledge in the area of compliance behavior of zakat. The important contribution of this study is that the factors identified as significant determinants of compliance behavior of income zakat such as perception towards legal and ethical obligations could be useful as a guide for relevant authorities and policymakers to formulate suitable strategies to increase zakat collection in the future.