Zakat Vs. Tax

The main difference between tax and zakat is that the latter is mainly imposed on accumulated savings (wealth) and not on the daily or monthly income of the individual. 

As illustrated in the figure below, zakat is paid on the accumulation of wealth and the reason is that Islamic system does not want the individuals to be obliged for tax payments and not buying the essential living needs. But it wait tell the individual accumulates savings and then charge the individual 2.5% on savings which will be then a small amount of the total savings taken to zakat beneficiaries.

The other difference between zakat and tax, that the earlier has its own eight defined beneficiaries which is clear in the Quran as stated by Behdad and Nomani (2009).In contrast, tax money usage varies from country to another and changes over time. For zakat beneficiaries categories please refer to the following link

 Surprisingly, the government is not one of the beneficiaries. So how the government will generate income?

Al-Atawi (2010) claims that the state does not need tax money because it will use it self-generated income by employing it money in different projects e.g. infrastructure which others such as the private sector are not interested to do it. Hence, profit generating projects such as sea ports and airports will be the government main focus. And he adds that why to charge taxes in something the government did not contributed in its creation!

Zakat is also applied on corporate as well as individuals. In addition, it is imposed on other form of income with different charge rates. For further zakat categories (Payers) please refer to the following link