Homework answers / question archive / Pick a White Collar Crime - (Could be Government, Corporation or Individual) 1)Describe the crime, who the individuals were that were involved in the crime, how it was eventually caught and/or what led it to be caught 2) What were the red flags the accountants/investigators/regulators missed

Pick a White Collar Crime - (Could be Government, Corporation or Individual) 1)Describe the crime, who the individuals were that were involved in the crime, how it was eventually caught and/or what led it to be caught 2) What were the red flags the accountants/investigators/regulators missed

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Pick a White Collar Crime - (Could be Government, Corporation or Individual)

1)Describe the crime, who the individuals were that were involved in the crime, how it was eventually caught and/or what led it to be caught

2) What were the red flags the accountants/investigators/regulators missed.

3)What was the impact to society as a result of the crime. Who suffered and what was their recourse

4)In your opinion, describe what regulations could have been changed, what could have been done to prevent this crime and what could be done to prevent this crime in the future.

TAX and Zakat in Saudi Arabia Introduction: Obtaining wealth and financial investments in life is something that all people on earth share. People work daily, invest their money and buy real estate to financially secure their future and their family’s future. But having good wealth, which is a good thing, results in obligations to society as well as the country in which you live. One of those obligation is “Islamic Tax” or what is known among Muslims as Zakat. It is a specific percentage of a person's wealth paid to needy and poor people. the other obligation is Tax. It is considered as a source of income for most countries, recently Saudi Arabia has begun to apply it. This research will discuss Zakat and Tax in Saudi Arabia. Tax is an important tool for the country and has many positive financial, economic and social impacts. Financially, Tax is an important source of income for the country, as it works to increase public treasury revenues. Economically, it is a tool owned by the country to influence the economy in order to achieve economic stability and high growth rates. Socially, it helps in social stability and redistribution of income among the different classes of society. Zakat also is important for the country, and It takes its importance from it being a law from the God Almighty. Tax and Zakat are both have the same concept which is deducting different amount from a person's wealth for different reasons, but zakat is fairer as it is taken only from [Last Name] 2 the rich people and given to the poor and in need, while the tax is taken from all individuals regardless of your financial condition. Saudi Arabia Laws: Saudi Arabia is a middle eastern country with over 34 million of population. KSA is a G20 member and has a strong and stable economy as it is the largest oil exporter, at an average of 7 million barrels per day. Saudi Arabia has a monarchy system and the holy book of Quran and Sunnah of Prophet Muhammad are the country's constitution. (https://laws.boe.gov.sa/BoeLaws/Laws/LawDetails/16b97fcb-4833-4f66-8531-a9a700f161b6/2) Thus, all the laws and regulations in KSA comes from Islamic perspective or in other word “Islamic Shari'ah”. In Islam, Shari'ah has regulated the amount that a Muslim must pay from his own money, and accordingly the person is rewarded or punished for paying it or evading it under the name of Zakat. Shari`ah also said that Tax in Islam is forbidden, but it also gives the country’s king or president an exception to apply the tax on their citizens to build general utilities such as hospitals, schools, roads and bridges. The General Authority of Zakat and Tax were established in 1936 and their responsibilities are Collecting Zakat and taxes in accordance with law & regulations, providing high-quality services to support taxpayers in fulfilling their duties, liaising with taxpayers and taking the necessary measures to ensure the collection of dues. (GAZT). The Definition of Zakat: Islam is a complete approach to the rules of conduct if life and the five pillars of Islam as discussed by Prophet Mohammad (Peace Be Upon Him) are: testification that there is no God but Allah and Mohammad is his messenger, performing the Prayer, giving the Zakat, fasting Ramadan, and performing the Hajj- Pilgrimage. [Last Name] 3 ‘Zakat’ in Arabic derives from the verb zakah which mean cleansing, and increase. This denotative meaning was mentioned in Quran. Verse 103 chapter 9 says “(O Prophet)! " Take alms out of their riches and thereby cleanse them and bring about their growth (in righteousness), and pray for them. Indeed, your prayer is a source of tranquility for them." Allah is All-Hearing, All-Knowing.” Zakat was determined by the majority of Muslim jurists as a duty that was tasked by God for economic and social efficiency. https://core.ac.uk/download/pdf/42131317.pdf Effectiveness of Zakat: Poverty has been an issue of intense scrutiny Since the dawn of humanity and currently it hits Islamic world strongly with stats indicating that Muslims make up only 23% of the world's population but they have a 50% in global poverty. https://core.ac.uk/download/pdf/229674419.pdf The experience of early Islamic history demonstrated that when zakat was collected and distributed properly to deserving recipients, it led to poverty alleviation in that community. Caliph Omar bin AlKhatab blames the governor in Yemen, Moaz bin Jabal after Moaz sent him a third of Yemen's zakat: “I did not send you as a collector, but to take from the rich and give it to the poor.” Moaz answered him: “I wouldn't send you anything if I found someone to take it from me.” One year later, Moaz sent half of Yamen’s Zakat to Caliph Omar bin AlKhatab and on the Third year he sent all the zakat of Yemen and said that he didn’t find any in need person to accept Zakat. Another story happened during the time of Caliph Umar bin Abdul Aziz, it was told by the famous transmitter of Hadith, Imam AlBayhaqi recounted that Omar bin Abdul Aziz made the people rich to the point that they did not find any poor person who would accept zakat. The story was confirmed by Umar’s Messenger to Africa (Tunisia), who collected zakat and found no one [Last Name] 4 to accept it. He said: I bought slaves from the zakat fund and set them free. https://islamicmarkets.com/education/effectiveness-of-zakah. So, it is also possible to eradicate poverty at this time by activating the role of zakat collection institutions in Muslims countries and collect Zakat from all its sources that Islam has legalized and spending it on those who are in need. The Requirements of Zakat’s Payer: At the end of a year, every Muslim ask himself, Should I pay Zakat? In fact, there are some general elements for all Zakat payers and there is some other extra element that apply on some types of zakat. There are eighth general elements if a person has met all these elements he must pay Zakat. First: Muslim. Since Zakat is religious obligation upon Muslims. Second: Free person. Slaves does not have to pay Zakat. Third: Sane. Whoever is obligated to pay zakat is required to be of sound mind. Fourth: Adult: children do not have to pay zakat even if they are wealthy. Fifth: In complete control of their wealth. The payer must have his money and be in his possession. Sixth: In possession of money above the quorum- Nisab-. A person must possess wealth in excess of a specified amount required to satisfy the basic needs of himself and his dependents. Seventh: Free of debt. It is permissible for the zakat payer to deduct his debts from his money, and if the remainder remains above the threshold, zakat is due, otherwise it is not. Eighth: In possession of money for a full Hijri year- Islamic calendar-. [Last Name] 5 https://www.islamic-relief.org/zakat/recipients-ofzakat/#:~:text=To%20be%20eligible%20to%20receive,grandparents%20cannot%20receive%20 your%20zakat. These are the essential elements that all zakat payer must have to pay their zakat, if any one element is missed the zakat is not required to the payer. Zakat Recipients: God almighty in the Quran specified the categories that are entitled to Zakat. Surah At-Tawbah [9:60] The alms are meant only for the poor and the needy and those who are in charge thereof, those whose hearts are to be reconciled, and to free those in bondage, and to help those burdened with debt, and for expenditure in the Way of Allah and for the wayfarer. This is an obligation from Allah. Allah is All-Knowing, All-Wise. So, the Zakat can only be delivered to: 1- The poor (al-fuqarâ’), meaning low-income or indigent. 2- The needy (al-masâkîn), meaning someone who is in difficulty. 3- Zakat administrators. 4- Those whose hearts are to be reconciled, meaning new Muslims and friends of the Muslim community. 5- Those in bondage (slaves and captives). 6- The debt-ridden. 7- In the cause of God. 8- The wayfarer, meaning those who are stranded or traveling with few resources. [Last Name] 6 While zakat is not the only form of charity in Islam, it is so important that it has become the third pillar. Through Zakat, the prosperous can raise the poor, help the restless and console those in distress. The Zakat Law provides for the poor's right to support and assistance, and those who are captured as slaves or as debtors are released. Zakat has the power to change the world. But it must be paid off first by Zakat payer. https://www.zakat.org/the-eight-kinds-ofpeople-who-receive-zakat, Types of Zakat: There are two main types of zakat in Islam: Zakat Alfitr and financial zakat. 1- Zakat Alfitr: It is also called zakat of breaking the fast of Ramadan. Zakat Alfitr is special charity obligatory for all Muslims at the end of Ramadan. it is a mandatory charity for every Muslim at the end of the month of Ramadan, regardless of age or gender. Zakat Alfitr differs from other alms in that it is imposed on the individual Muslim and not on measures of wealth or earning. https://www.zakat.org/what-is-zakat-al-fitr-the-special-ramadan-zakat Fasting Ramadan is the fourth pillar of Islam. Fasting is mandatory for all adult and able Muslim, which means that eating, drinking, smoking, and having sex is prohibited from time of sunrise to sunset when all fasters start to eat and break their fast. Zakat Alfitr was established for two main reasons, first, it is a purification for the fasting person from idle and obscene speech, second it is a food for the needy. Zakat Alfitr is due before the prayer of Eid Alfitr. Eid day is the first day after the month of Ramadan and it is the day when all Muslims celebrated and thanking God for giving them the strength to fast all the days of Ramadan. Zakat Alfitr [Last Name] 7 must be given to the needy person and It could be a dates, rice, Flour, or any commonly kind of food. It also can be paid to charities “about $10” and they deliver it to needy and poor. 2- Financial Zakat: This type deals with financial matters in all their details and forms, whether cash, metals such gold and silver, or what grows from ground such as fruits and corn. Each type of them has a different percentage or amount of Zakat which will be explained in detail later. In this part the General Authority of Zakat and Tax is responsible to calculate and collect the Zakat from the zakat payer. Individual have the choice to pay their zakat directly to the recipients or they can pay it through GAZT. Moreover, GAZT has the right to impose penalties and fines on companies and businesses if they fail or evaded to pay the annual Zakat due. One of these penalties is suspend all the government services until the Zakat is paid. These penalties did not apply on individuals and that is the reason why they have the choice to pay their zakat directly to recipients or ask GAZT for help. Financial zakat can be divided into different types: Money’s Zakat: Money’s Zakat is due if it is saved over a period of one lunar year, there is no zakat for any saved money less than one lunar year. Most zakat payer set the month of Ramadan as a first month of lunar year. So, in the next Ramadan they collect the wealth they have and dedicate 2.5% of it and pays it as Zakat. The quorum- Nisab- for money’s zakat was set by Prophet Mohammed and it our current measure of 85 grams of pure gold (approx. 3 U.S. ounces). https://www.zakat.org/nisab-and-zakat-calculation-in-a-nutshell [Last Name] 8 To convert the Nisab value from gold to the currencies currently in use for each country, we use the following equation: Gold price per gram US$ x 85 grams = Nisab. Based on the gold price, the Nisab in this year 2021 is about ($4,181.15). So, any Muslim has this amount at the end of the lunar year he must pay a portion of 2.5%. If not, he is not qualified to pay zakat. Zakat in Gold and Silver: Nowadays, people are using the current different currencies (Dollar, Riyal, Pound, Yen) in buying and selling products, people in previous eras used to use gold and silver for buying and selling products. Gold and silver are valuable metal. Until now, many countries estimate the price of their local currency at the price of gold. Zakat on gold and silver has another additional condition in addition to the eight conditions for zakat payer, which is the purpose of having gold and silver is for future investment. The personal use of gold and silver such as daily use of neckless, earrings, rings, and bracelet has no zakat even if the eight conditions are applied. The Nisab of gold is as mentioned before is 85grams. Any amount less than 85grams has no Zakat. And the Nisab for silver is 613grams. Multiply this amount by today price of a gram of gold or silver, and paid 2.5% as Zakat from the total value. Zakat on Agricultural Products: Zakat on agricultural products has conditions necessitating that must be applied to be qualified to pay zakat. Agriculture products must be stored, measurable, and reach the amount of Nisab which is 612kg https://www.ihcproject.com/agricultural-zakah . An examples of products that can be stored and measured is dates, wheat, and raisins. Agricultural products have different [Last Name] 9 percentage of zakat based on how It was irrigated. If it was irrigated naturally without any effort for instance it was irrigates by rains and streams, then the Zakat would 10% from the net corp. The zakat would decrease to half 5% if the products was irrigated with some personal effort such as using wells to irrigated. This type of zakat does not require to complete one lunar year to paid, it must be paid once it harvest. Big farm companies in Saudi Arabia such as Almraei, Nadec, and Nada must register with GAZT and pay their Zakat once it due. Zakat on Business: Islam has encouraged everyone who has capital and wealth to start trading and investing. So, this wealth won’t be consumed by zakat while it is stagnant. Start small business or buy a real state and rent it to earn a profit. Because in both ways if what you own passes the Nisab you have to pay zakat on what you have. For example, David own $100,000. After one lunar year he must pay 2.5% of that wealth as Zakat about ($2,500) and his total wealth have decreased to $97,500. The other scenario, if David bought a house and rented that house for $30,000 a year, his zakat will be $3,250 but his wealth increased to $126,750. The second scenario is profitable for both David and the recipient of zakat. In this part, Zakat is 2.5% of what you own plus the earning profits that made during the lunar year. In Saudi Arabia all small business and big corporation must register with GAZT and pay their zakat every year. Zakat on Livestock: Cattle has several obligatory conditions that must be fulfilled in order to be due for zakat. First, a full lunar year has passed when the animals are with the owner. Second, it must be grazed livestock, which mean it feeds by eating vegetation of the ground and permissible grass without any effort from the owner. Third, it must be preserved for some of the benefits, whether from its [Last Name] 10 milk or from its offspring but not for working like tilling the land or lifting loads. last, cattle must reach the Nisab. Each type of livestock has different Nisab and different Zakat. It will be explained in the next table: Cattle number Zakat obligation Camel 1-4 No Zakat 5-9 1 goats 2 years old, or 1 sheep 1year old 10-14 2 goats 2 years old, or 2 sheeps 1year old 15-19 3 goats 2 years old, or 3 sheeps 1year old 20-24 4 goats 2 years old or 4 sheeps 1year old 25-35 1 female camel 1year old 36-45 1 female camel 2 years old 46-60 1 female camel 3 years old 61-75 1 female camel 4 years old 76-90 2 female camel 2 years old 91-120 2 female camel 3 years old 120 and over 3 female camel 2 years old 1-29 No Zakat 30-39 1 Cow I year old 40 and over 1 Cow 2 years old Cow [Last Name] 11 Goat 1-39 No Zakat 40-120 1 goats 2 years old, or 1 sheep 1year old 120-200 2 goats 2 years old, or 2 sheeps 1year old 201-399 3 goats 2 years old, or 3 sheeps 1year old 400 and over 4 goats 2 years old, or 4 sheep old 1year old Tax in Saudi Arabia: References: 1- International Tax Saudi Arabia highlight 2020 https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-taxsaudiarabiahighlights-2020.pdf . 2- PWC. https://taxsummaries.pwc.com/saudi-arabia/corporate/taxes-on-corporate-income.