The Arab Chamber of Commerce & Industry

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FAQs

Purpose

What is MBF? What is it for?

MBF constitutes the Mosque Building and Muslim Welfare Fund. The Mosque Building Fund (MBF) is used to build new Mosques. The Muslim Welfare Fund is used to develop education and social programs to help uplift the Hong Kong Muslim community.

Who need to contribute to MBF?

All Muslims are to contribute to the MBF. This includes Muslim permanent residents and foreign.

Enrichment for the community

How will the MBF do it?

The building of new Mosques had been planned in phases; the MBF will finance the building of a new-generation of Mosques in new housing estates. Three new Mosques will be built mainly in Hong Kong’s New Territories.

Through the MBF, UMAH will be able to develop elderly care facilities, educational programs to help Hong Kong/Muslim students excel. These programs need to be subsidized to make them affordable to the community.

Other Hong Kong/Muslim initiatives such as vocational training of Muslim professionals, halfway houses, and family service and student care centers, are also able to conduct programs and services for the Hong Kong/Muslim community by utilizing portion of the MBF.

Funds will be distributed according to the categories of need outlined in the Quran. These include:

those who are poor
those who are needy or destitute
those employed to administer Zakat
those whose hearts are being reconciled
those held captive
those in debt
those who are stranded

In the cause of God (Fi Sabil Allah)

The last category, Fi Sabil Allah, is broad to allow Zakat funds to be used for the general welfare of the community. Under this category, considering the fact that our Islamic and community centers promote Islam and in many ways act as dawah centers, a portion of one's Zakat may be paid to these centers. Zakat funds may also be used for education of the people and for promotion of Islam and the Ummah.

Rationale

Why is the need for an MBF contribution?

MBF will be embarking on new programs this year and funds will enable it to help more beneficiaries, particularly those from disadvantaged backgrounds. For example, UMAH would like to ensure students who are on the verge of dropping out of schools to stay put, while at the same time, continue to encourage drop-outs to re-enter the school system and equip them with skills needed for gainful employment.

What is the status of MBF?

MBF is a newly established Shariah compliant Islamic Investment Fund that provides a system to collect funds for building Mosques and community centers through proportional deductions from a sensible sum of “Zakat”.

How much does it need to build a Mosque?

A new Mosque will cost at least about US$8 million, excluding the land cost.

Why do we need to spend money to build Mosques?

Do we really need to have new Mosques? There is a growing need for over 280,000 ethnic minority Muslims in Hong Kong to ensure that new housing estates will have a Mosque. This will facilitate life for the Muslim community living in those areas.

When should deductions or contribution take place?

Anytime or as fiscally practical. Many prefer to pay during the holy month of Ramadan or Rajab while others prefer Muharram, the first month of the Hijri year. The legal provision that a complete lunar year should elapse starting from when the Nisab was exceeded, means that a Zakat year may run at different times for different investors. If an investor chooses the fiscal or calendar year end, to coincide with payment of other obligations like federal and state income taxes, one must keep in mind that the difference between the Gregorian and lunar years is 11 days, the lunar year being shorter. Zakat is calculated on the basis of lunar year and not on Gregorian calendar year.

What would the rates be like?

There are different rates of Zakat that apply to different types of assets. According to Malik, Zakat is due on three types of assets only: "the produce of plowed land, gold and silver, and livestock." Contemporary Islamic jurists have extrapolated, through analogy, Zakat rates for nearly all types of assets. Zakat on Stock Investments - Stock investments are often categorized as gold and silver, i.e. financial holdings. According to Sheikh Yusuf Qaradawi, it is more appropriate to categorize stock investments as "the produce of plowed land." Both are "productive capital" and both are assets which yield gains. Qaradawi notes that Zakat is due on the gains of such "productive capital" not the "productive capital" itself. As for the rate of Zakat applicable to stock investments, the following Hadith offers us guidance: The Prophet (s.a.a.w.s.) said: "On a land irrigated by rain water or by natural water channels or if the land is wet due to a nearby water channel Ushr (i.e. one-tenth, 10%) is compulsory (as Zakat); and on the land irrigated by the well, half of Ushr (i.e. one twentieth, 5%) is compulsory (as Zakat on the yield of the land)." Although the hHdith makes reference to a Zakat rate of half of Ushr (5%), according to Qaradawi, this rate is not appropriate for investments like stocks as it is possible with stocks to clearly calculate net gains. Zakat on Long-term Investments - Muslims are encouraged by their faith to invest for the long-term. Though investors may see gains in their portfolio value, the gain may not be realized for years. Islamic jurists have agreed that to distribute Zakat sooner rather than later it is allowable to consider the difference in the market value of your portfolio from the beginning to the end of each Gregorian calendar year and pay 10.3% (10% for lunar calendar) of the gain, if any, as Zakat. This method of estimating your Zakat is based on two assumptions: You have/will reach Nisab within the calendar year You have held your investments or your resources for investment (cash, for instance) for at least one lunar year before your Zakat is calculated for the calendar year How We Estimate Zakat - Our Zakat estimation nets the cash flows in and out of the account. As the figure below illustrates, the beginning-of-year value is subtracted from the year-end value, adjusted for new investments and disbursements. Reinvested dividends are excluded from the calculation since they are both disbursements and investments. The employee has to only submit his request in writing to MBF, after which a form will be issued to him. The employee shall, with the form, notify his employer who will then start to make the contribution directly. Employers who fail to pay their employees’ contributions to the MBF shall be guilty of an offence, and shall be liable upon conviction to a fine and conviction.

Employer

As an employer, we want to know the guidelines for our Muslim employees’ contributions to MBF. Can you assist us?

Every employer of a Muslim employee shall pay to the MBF monthly in respect of each Muslim employee contributions. The employee may increase or decrease his contribution to the MBF by informing his employer in writing or on prescribed obtainable forms.

Currently, if a Muslim who contributes to other charities can I respectively contribute to MBF?

Yes, he/she can to contribute to both. He may opt out any if he/she wishes to.

Can a non-Muslim contribute to the MBF?

Yes, voluntary contributions may always be done.

What if my employees are currently contributing more than the limit amount prescribed?

To distinguish between the "poor" and the "Zakat-payer," a limit was set and was called Nisab. According to Abu Saud, the basic definition of Nisab is "that amount which is sufficient to sustain the minimum average family for one year." Such limit of "sufficiency" parallels the definition of "poverty" in Hong Kong. Nisab may be thought of as an amount equal to the essential needs of a person or family for one year. Essential needs are defined as things which one could not live without: food, clothing, dwelling, vehicles and the tools of one's trade or profession, medication, and education. Above the limit of Nisab - If your net worth surpasses the level of Nisab, the excess is subject to Zakat. Zakat is the right of the poor in the wealth of the rich, a right decided by the true Owner and Giver of wealth, Allah, and imposed on those who have been given control of that wealth by Him, the Almighty. Zakat is incumbent upon all Muslims and is paid according to the lunar calendar. No Zakat is due on wealth before one year from the date of acquisition. The most well known hadith is that, on the authority of Aishah, the Prophet said: “No Zakat is due on wealth till one (full) year passes”.

Is there a penalty charge on late payment?

Most jurists agree that Zakat can be paid in advance, during the month of Ramadan, or when there is a special need because of a calamity, sickness or fi sabili llahi. An estimated monthly payment of Zakat is encouraged. This not only helps to spread over the payments but fulfills the purpose of Zakat sooner than later. The final calculation and reconciliation of payments, however, can be done at the end of each lunar year.

As at year-end, will there be an MBF taxation relief?

Employers will be informed of any relief by the Inland Revenue Authority.

Employee

How do I increase my contribution to the MBF? How do I do it?

The amount of Zakat you actually contribute remains your decision. You may redeem shares from an account that you specify, or transfer shares into a charity's account, or use any other financial resource available to you. Donating appreciated securities to a charity may have income tax advantages. You may send a written notice to MBF and inform your employer. You can also download the “Salary Deduction Authorization Form” from our website, complete it and submit it to MBF.