On Tuesday, the Federal National Council (FNC) in the United Arab Emirates passed a new draft federal law governing the collection, distribution, and management of zakat.

This legislation introduces stringent penalties for violations, including fines up to Dh1 million and potential imprisonment, as part of a broader effort to enhance transparency, accountability, and governance surrounding zakat funds in the UAE.

Dr. Omar Habtoor Al Darei, Chairman of the General Authority for Islamic Affairs, Endowments, and Zakat, characterized the law as a significant advancement towards establishing a well-structured regulatory framework for zakat activities across the nation.

He emphasized that the legislation will improve governance, ensure that zakat reaches eligible recipients in an efficient manner, and promote greater community involvement, thereby reinforcing public confidence in zakat institutions and fostering social solidarity in the UAE.

The new legislation encompasses all processes related to zakat, including receiving, collecting, distributing, and disbursing funds, alongside the investment of any surplus in accordance with Sharia principles and national regulations.

It applies broadly to all individuals and entities engaged in zakat activities throughout the UAE, including operations in financial and non-financial free zones.

However, the Cabinet retains the authority to exempt specific organizations from certain provisions of the law, provided they fulfill registration and reporting obligations.

The law stipulates harsh penalties for offenses related to zakat, categorizing crimes against zakat as offenses against public funds.

Individuals found illegally collecting, receiving, or distributing zakat may face imprisonment, substantial fines, or both, and will be required to refund any improperly acquired funds.

Authorised entities could incur fines ranging from Dh100,000 to Dh1 million for offenses such as distributing zakat abroad without permission, investing surplus without a license, or disclosing data unlawfully.

Additionally, anyone found obtaining zakat through fraudulent documentation may face imprisonment for up to one year or fines up to Dh200,000.

Organizations currently engaged in zakat activities must regularise their legal status within one year following the enactment of the law, with the possibility of a deadline extension upon the Authority Chairman's recommendation.

A notable aspect of the legislation is the establishment of a unified digital platform, the 'National Zakat Platform', designed to document all authorised entities, eligible beneficiaries, allocations, and the management of collected and distributed zakat.

The legislation prohibits the distribution of zakat outside the UAE, barring special circumstances such as natural disasters or significant humanitarian crises.

In such cases, designated entities must submit requests via the National Zakat Platform and coordinate with relevant authorities to ensure adherence to applicable regulations.

The law also permits authorised entities to invest surplus zakat funds with the necessary approvals and under specific conditions.

Such investments must comply with Sharia guidelines, avoid risk, and maintain the sanctity of zakat, with any profits strictly allocated to zakat purposes.

Entities are also prohibited from taking any share of the investment returns for themselves.

During discussions, FNC members debated Article 4, which details who is authorised to collect or receive zakat.

The original draft restricted collection to individuals who meet certain criteria.

Proposed amendments aiming to ease restrictions were debated, with some members expressing concerns that the amendments could hinder traditional practices of zakat distribution among family and friends.

However, after deliberation, the Council opted to maintain a more flexible stance on zakat giving, rejecting the amendments suggested by the committee.