A thesis submitted in fulfilment of the requirements for the degree of Business Administration (Islamic Banking and Finance)

Tekspenuh

(1)MUHAMMAD AIMAN BIN AZIZ RINNIE RIZWANA BINTI MOHD RIDZUAN LIM ROSSILAWATIE BINTI CHE HAMAT AMIRAH AQILAH BINTI MOHD AKHIR. DEGREE OF BUSINESS ADMINISTRATION (ISLAMIC BANKING AND FINANCE) WITH HONOURS 2022. FYP FKP. INCOME ZAKAT COMPLIANCE BEHAVIOUR AMONG MUSLIM MEMBERS IN SELANGOR.

(2) FYP FKP INCOME ZAKAT COMPLIANCE BEHAVIOUR AMONG MUSLIM MEMBERS IN SELANGOR. by. MUHAMMAD AIMAN BIN AZIZ RINNIE RIZWANA BINTI MOHD RIDZUAN LIM ROSSILAWATIE BINTI CHE HAMAT AMIRAH AQILAH BINTI MOHD AKHIR. A thesis submitted in fulfilment of the requirements for the degree of Business Administration (Islamic Banking and Finance). Faculty of Entrepreneurship and Business UNIVERSITI MALAYSIA KELANTAN 2022 APPENDIX 3: THESIS DECLARATION.

(3) I hereby certify that the work embodied in this thesis is the result of the original research and has not been submitted for a higher degree to any other University or Institution.. /. OPEN ACCESS I agree that my thesis is to be made immediately available as hardcopy or on-line open access (full text).. /. EMBARGOES I agree that my thesis is to be made available as hardcopy or online (full text) for a period approved by the Post Graduate Committee. Dated from ______________ until _______________.. /. CONFIDENTIAL (Contain confidential information under the Official Secret Act 1972)*. /. RESTRICTED (Contains restricted information as specified by the organization where research was done)*. FYP FKP. THESIS DECLARATION. I acknowledge that Universiti Malaysia Kelantan reserves the right as follows: 1. The thesis is the property of Universiti Malaysia Kelantan. 2. The library of Universiti Malaysia Kelantan has the right to make copies for the purpose of research only. 3. The library has the right to make copies of the thesis for academic exchange.. SIGNATURE NAME: MUHAMMAD AIMAN BIN AZIZ. ____________________ SIGNATURE OF SUPERVISOR NAME:. SIGNATURE NAME: RINNIE RIZWANA BINTI MOHD RIDZUAN LIM. SIGNATURE NAME: ROSSILAWATIE BINTI CHE HAMAT. SIGNATURE NAME: AMIRAH AQILAH BINTI MOHD AKHIR Date: 20/1/2022. SITI FARIHA BINTI MUHAMAD Pensyarah Fakulti Keusahawanan dan Perniagaan Universiti Malaysia Kelantanxt 31/1/2022.

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(5) First and foremost, praise and appreciation to God, the Almighty, for His shower of blessing in completing this study. We would really like to describe our deep and sincere appreciation for giving us the opportunity to do this research and providing invaluable guidance during this study to our beloved supervisor, Dr Siti Fariha. We have been greatly motivated to complete this analysis by her pro-activity, passion, honesty and inspiration. She taught us the methods to carry out this research study as simply as possible and to present it briefly. Working and learning her leadership was a great pleasure and honour. We were very grateful to her for the knowledge she had given to us. We want to thank her too, for her kindness, her understanding, her time and her wonderful warm personality. We also appreciate her family very much for their understanding and patience during the discussion we had with her during this study. We were immensely grateful to our parents for their support, their prayers, their care and their sacrifice for our future education and training. In order to complete this report, we were also incredibly grateful to our informants for their cooperation. Finally, thanks go out to all the people who have helped us directly and indirectly to complete this study. TABLE OF CONTENT V. FYP FKP. ACKNOWLEDGEMENT.

(6) APPENDIX 2: TITLE PAGE .............................................. Error! Bookmark not defined. THESIS DECLARATION ..................................................................................................... 3 RUBRIC .................................................................................. Error! Bookmark not defined. CHAPTER 1 ........................................................................................................................... VI 1.1 Background of The Study ................................................................................................ 2 1.2 Problem Statement ...........................................................................................................3 1.3 Research Questions ..........................................................................................................5 1.4 Research Objectives .........................................................................................................6 1.5 Scope of The Study ..........................................................................................................6 1.7 Definition of Term ...........................................................................................................9 1.7.1 The Zakat Compliance Behaviour .............................................................................9 1.7.2 Understanding Zakat .................................................................................................9 1.7.3 Zakat Enforcement ....................................................................................................9 1.7.4 Trust Towards Zakat Institution ................................................................................9 1.7.5 Perception towards Tax System ..............................................................................10 .....................................................................................10 1.7.7 Convenience of mechanism.....................................................................................10 1.8 Organization of The Proposal ........................................................................................ 10 CHAPTER 2 ............................................................................................................................ 11 2.1 Introduction ....................................................................................................................12 2.2 Underpinning Theory .....................................................................................................12 2.3 Previous Studies .............................................................................................................13 2.3.1 The Zakat Compliance ............................................................................................ 13 2.3.2 Zakat Enforcement ..................................................................................................14 VI. FYP FKP. INCOME ZAKAT COMPLIANCE BEHAVIOUR AMONG MUSLIM MEMBERS IN SELANGOR .............................................................................................................................. 1.

(7) 2.3.4 Trust in The Zakat Institution ..................................................................................16 2.3.5 Convenience of Zakah Mechanism .........................................................................17 2.3.6 Perception Towards Tax System .............................................................................18 .....................................................................................19 2.4 Hypothesis Statement.....................................................................................................19 2.5 Conceptual Framework ..................................................................................................20 2.6 Summary ........................................................................................................................ 21 CHAPTER 3 ............................................................................................................................ 21 3.1 Introduction ....................................................................................................................22 3.2 Research Design .............................................................................................................22 3.3 Data Collection Methods ............................................................................................... 22 3.4 Study Population ............................................................................................................23 3.5 Sample Size ....................................................................................................................23 3.6 Sampling Techniques .....................................................................................................25 3.7 Research Instrument Development ................................................................................26 3.8 Measurement of The Variables ......................................................................................28 3.9 Procedure for Data Analysis .......................................................................................... 29 3.9.1 Descriptive Analysis................................................................................................ 29 3.9.2 Reliability Test ........................................................................................................30 3.9.3 Pearson Correlation Coefficient ..............................................................................31 3.9.4 Multiple Linear Regression Analysis ......................................................................32 3.10 Summary ......................................................................................................................32 CHAPTER 4 ............................................................................................................................ 34 4.1 Introduction ....................................................................................................................34 4.2 Preliminary Analysis ......................................................................................................34 4.3 Demographic Profile of Respondents ............................................................................37 4.3.1 Number of Respondent Based on Gender ............................................................... 37 4.3.2 Number of Respondent Based on Age ....................................................................38 4.3.3 Number of Respondent Based on Academic Background ......................................40 VII. FYP FKP. 2.3.3 Understanding Zakat ............................................................................................... 15.

(8) 4.3.5 Number of Respondent Based on Occupation ........................................................ 42 4.3.6 Number of Respondent Based on Working Experience ..........................................44 4.3.7 Number of Respondent Based on Employment Status ...........................................45 4.3.9 Number of Respondent Based on Number of Dependents......................................48 4.4 Descriptive Analysis ......................................................................................................49 4.5 Validity and Reliability Test .......................................................................................... 55 4.6 Test of Normality ...........................................................................................................56 4.7 Hypotheses Testing ........................................................................................................61 4.7.1 Hypothesis 1 ............................................................................................................61 4.7.2 Hypothesis 2 ............................................................................................................62 4.7.3 Hypothesis 3 ............................................................................................................63 4.7.4 Hypothesis 4 ............................................................................................................63 4.7.5 Hypothesis 5 ............................................................................................................64 4.7.6 Hypothesis 6 ............................................................................................................65 4.8 Regression ......................................................................................................................66 4.9 Summary ........................................................................................................................ 67 CHAPTER 5 ............................................................................................................................ 67 5.0 Introduction ....................................................................................................................67 5.1 Key Findings ..................................................................................................................67 5.3 Discussion ......................................................................................................................68 5.4 Implications of the Study ............................................................................................... 72 5.5 Limitations of the Study.................................................................................................73 5.5.1 Limited time ............................................................................................................73 5.5.2 Data collection method ............................................................................................ 73 5.5.3 The scope of the study ............................................................................................. 74 5.5.4 The respondents .......................................................................................................74 5.6 Recommendations / Suggestions for the future research ...............................................74 5.7 Conclusion .....................................................................................................................76 VIII. FYP FKP. 4.3.4 Number of Respondent Based on Marital Status ....................................................41.

(9) APPENDIX A: DRAFT OF QUESTIONNAIRE ...................................................................80 APPENDIX B GANTT CHART .......................................................................................... 88 LIST OF TABLES LIST OF TABLES Table 3.1 (Krejcie & Morgan, 1970). PAGE 25. Table 3.2 Shows Measurement Items Adapted and Adopted for the Study. 26. Table 3.3 The Distribution of Items in The Questionnaire Study. 27. Table 3.4: Level of Likert Scale ("5-Point Likert Scale," 2010). 29 31. Table 3.6: Rules of Thumb about Correlation Coefficient Size. 32. Table 4.2: The Results of Pilot Test for All Variable by Reliability Test. 35. Table 4.2.1: No of respondents based on gender. 36. Table 4.3.1: Gender of Respondent. 37. Table 4.3.2: Age of Respondent. 38. Table 4.3.3: Academic Background of Respondent. 40. Table 4.3.4: Marital Status of Respondent. 41-42. Table 4.3.5: Occupation of Respondent. 43. Table 4.3.6: Working Experience of Respondent. 44. Table 4.3.7: Employment Status of Respondent. 45-46. Table 4.3.8: Estimated Monthly Household Income of Respondent. 47. Table 4.3.9: Number of Respondents of Dependents. 48. Table 4.4.1: Level of Mean. 50. Table 4.4.2 Summary of the mean according to the variables (N=384). 51. Table 4.4.3: Summary of the means of items according to the variables (N=384) Table 4.5: Reliability Test of Variables. 51- 53 55. Table 4.6.1: Test of Normality. 56-57. Table 4.7.1: Rules of Thumb about Correlation Coefficient Size. 61. Table 4.7.2: Pearson Correlation for Convenience of Zakat Mechanism. 62. IX. FYP FKP. REFERENCES ........................................................................................................................ 76.

(10) 62. Table 4.7.4: Pearson Correlation for Zakat Enforcement. 63. Table 4.7.5: Pearson Correlation for Trust in Zakat Institution. 64. Table 4.7.6: Pearson Correlation for Respondents Commitment Table 4.7.7 Pearson Correlation for Perception Towards Tax System Table 4.8 Coefficients. 64 65 66. LIST OF FIGURES LIST OF FIGURE PAGE Figure 2.5: Framework on Factors Contributing towards Zakat Compliance Behaviour. 21. Figure 4.3.1: Percentage of Gender. 38. Figure 4.3.2: Percentage of Age. 39. Figure 4.3.3: Percentage of Academic Background. 41. Figure 4.3.4: Percentage of Marital Status. 42. Figure 4.3.5: Percentage of Occupation. 43. Figure 4.3.6: Percentage of Working Experience. 45. Figure 4.3.7: Percentage of Employment Status. 46. Figure 4.3.8: Percentage of Estimated Monthly Household Income. 47. Figure 4.3.9: Percentage of Number of Dependents. 49. Figure 4.6.1: Normal Q-Q Plot of Convenience of Zakah Mechanism. 57. Figure 4.6.2: Normal Q-Q Plot of Understanding Zakah. 58. Figure 4.6.3: Normal Q-Q Plot of Zakah Enforcement. 58. Figure 4.6.4: Normal Q-Q Plot of Trust in Zakah Institution. 59. Figure 4.6.5: Normal Q-Q Plot of Respondent Commitment. 59. Figure 4.6.6: Normal Q-Q Plot of Perception Towards tax system. 60. Figure 4.6.7: Normal Q-Q Plot of Zakah Compliance Behaviour LIST OF SYMBOLS. 60. %. Percentage. B. Beta. X. FYP FKP. Table 4.7.3: Pearson Correlation for Understanding Zakat.

(11) Hypothesis 1. H2. Hypothesis 2. H3. Hypothesis 3. H4. Hypothesis 4. H5. Hypothesis 5. H6. Hypothesis 6. Sig.. Significant. FYP FKP. H1. Cronbach's alpha N/n. Numbers. <. Less than. >. Greater than. XI.

(12) INTRODUCTION. 1.1 Background of The Study Chapter one presents an introduction of this research and comprises eight main sections in this chapter. Section 1.1 begins with the background of the study. Next, Section 1.2 defines the problem statement. Section 1.3 discusses research objectives and Section 1.4 discusses research questions that have been chosen. This research also followed by a separate section which is Section 1.5 elaborates the scope of the study and Section 1.6 discusses the significance of the study. while Section 1.7 defines the definition of the term in research. The final section of this research is Section 1.8 elaborates the organization of the proposal. This chapter will discuss the whole thing about the research by the section. A Muslim's zakat duty is the same as his or her obligation to worship in order to become a perfect Muslim. It has a very high status in Islam, and its meanings are often associated with prayers in the Quran. Zakat is a tax that must be levied on certain forms of the property after certain terms and time limits have been met. Its obligation serves a variety of constructive socioeconomic goals, not just for the zakat beneficiary but also for the zakat payer and community at large. Zakat, in general, will improve the social welfare system, and it is an important first step toward a perfect Islamic economic system. Therefore, in this study we focus more on income zakat. Income zakat is zakat imposed on all types of sources of income, wages earned from services, jobs or activities that generate income for a Muslim. According to Prof. Dr. Yusuf al-Qaradawi (2003), zakat on salary and income is termed as zakat Mal al-Mustafad, which is zakat derived from professional salary and income. It is a reward for his service with an employer or an individual or institution. Any . 2. FYP FKP. CHAPTER 1.

(13) Selangor is decreasing. Based on the Selangor Zakat Board (2018 & 2019) data released for zakat collection as a whole of 20.4 percent from RM209 million in 2018 to RM316 million in 2019. When compared to other forms of zakat collection, income zakat contributed to the decrease. A high set of zakat will strive to increase the social security of Muslims. Since the obligation to pay zakat is still debated by scholars from a fiqh perspective, there are various perceptions, opinions, and reactions within the group regarding its payment.. 1.2 Problem Statement. Malaysia is a Muslim country and has 14 states which includes Sabah and Sarawak. Zakat administration is the jurisdiction of each state in Malaysia and not the federal government (Nur Barizah, 2007a; Nur Barizah & Abdul Rahim, 2007b). The legislation on Zakat shall therefore be governed by every state except in the Kedah, Sabah and Sarawak States in which the law on Zakat exists (Mohd. Daud, 1998). At national level on 22 June 1997, the National Fatwa Council agreed that Zakat is obligatory for individuals entitled to pay for earned income. Although several states in Peninsular have issued fatwas at the governmental level, which enforce zakat on earned income (Kamil, 2005). Selangor, Wilayah Persekutuan and Melaka would be included. For Perak, in 2004 (Hairunnizam et al, 2005), they issued a contradictory fatwa in which they decided that zakat on income should not be payable obligatory. Other states such as Kedah, Perlis and Terengganu have yet to come to grips with zakat earnings. The Selangor state can be seen as the most advanced state in its implementation, as it requires the Selangor state government to pay zakat for Lembaga Zakat Selangor (LZS) by wage deductions for all Muslim employees of the Federal Government, the statutory 3. FYP FKP. The collection of zakat in Selangor is increasing year by year but income zakat in.

(14) state. This fatwa on Muslim people's compulsion to pay Zakat was laid down in a law of the Islamic Legal Administration Enactments on 16 January 2001. Compliance behaviour is greatly influenced by external and internal factors of an individual. Each of these factors affects a person's views and adherence in carrying out religious obligations. In Malaysia, the collection of income zakat is the highest contribution to the total amount of zakat throughout Malaysia. This is because Muslim individuals pay income zakat in excess of the nisab rate of income zakat that should be paid, which is 2.5 percent. Compliance behaviour in income zakat in Selangor is very encouraging. This is due to changes in the attitude and awareness of individuals in carrying out their responsibilities (Hanep Ahmad & Hairunnizam Wahid, 2005). In Malaysia, the collection of zakat has increased drastically from year to year due to the awareness of Muslims to pay zakat. Income zakat collection increased by 40% -60% per year (Laporan Pusat Pungutan Zakat Wilayah Persekutuan, 2003). While the collection of zakat in Selangor increased from year to year but income zakat in Selangor decreased from RM 479 873 502 million in 2018 to RM 218 534 470 million in 2019 (Selangor Zakat Board, 2018 & 2019). Furthermore, most Muslims do not pay income zakat because they are confused and do not understand the obligation to pay income zakat. This is because there are some states that are obligatory in the payment of income zakat and there are also some states that are not obligatory in paying income zakat (Kamil, 2005). Based on the Selangor Zakat Board, (2018 & 2019), there is a decrease in the payment of zakat by salary deduction. As a result, there is a decrease in the payment of income zakat and more Muslims do not pay income zakat. Apart from that, Muslims also consider that income zakat does not benefit the development of the country but only for Muslims (Muhammad, 2016). Therefore, they are more. 4. FYP FKP. authorities, the state governments, the agencies and subsidiary companies serving Selangor.

(15) previous studies, the majority of working Muslims still choose scheduled salary deduction for tax payment income instead of income zakat (Hairunnizam et. al, 2007). Overall, it is clear that the behaviour of obedience among Muslims towards income zakat is interrelated. Therefore, this study was conducted to investigate the behavioural factors of zakat compliance among Muslim members in Selangor and researchers can relate income zakat compliance with this practice among the people in Malaysia, especially in the state of Selangor 1.3 Research Questions. The research questions for this research are: RQ1:Does trust towards zakat institution affecting the zakat compliance behaviour among Muslim members in Selangor? RQ2: Does zakat enforcement affect the zakat compliance behaviour among Muslim members in Selangor? RQ3: Does understanding about zakat affect the zakat compliance behaviour among Muslim members in Selangor?. members in Selangor? RQ5: Does perception towards tax affect zakat compliance behaviour among Muslim members in Selangor? RQ6: Does convenience of zakah mechanism affect zakat compliance behaviour among Muslim members in Selangor?. 5. FYP FKP. focused on the payment of income tax as compared to the payment of income zakat. Based on.

(16) The research objectives of this research are: RO1: To determine factor zakat compliance behaviour among Muslim members in Selangor. RO2: To examine the relationship between factor influencing zakat compliance behaviour among Muslim members in Selangor.. 1.5 Scope of The Study. This study focused on the factors contributing to income zakat compliance behavior among Muslim members in Selangor. Besides, this study is concerned to both employees from both private and government sectors around Selangor. The research is based on Selangor because it is the most progressive and advanced state of Malaysia. Since Selangor is the highest zakat contributor in Malaysia, Selangor recorded the highest number of payers and income zakat collection rate (Wahab, 2013). State with the highest distribution of zakat is Selangor (RM174.52 million) between other state is low (Wahid et al., n.d.). As Malaysia's largest economy, Selangor is highly developed and supported by great state government backing and the advanced trading environment as an infrastructure for significant industrial clusters. Selangor is renowned as a beacon of richness and wealth, and it is also noted for its highly qualified and inventive expertise and attractive cosmopolitan quality of living. Nevertheless, according to Nur Farhana (2020) the collection of zakat in Selangor showed a decrease of three percent while the distribution saw an increase of almost 22 percent. Lembaga Zakat Selangor 6. FYP FKP. 1.4 Research Objectives.

(17) property zakat was collected compared to RM137,982,428 in the same period compared to last year. Thus, the compliance behavior of Muslims to pay zakat salaries can not only help the poor and needy, but can also help the economy of the global Muslim community. 1.6 Significance of Study Since zakat is a basic thing that a Muslim should know yet the community does not aware about it, or do not have the opportunity to learn about it systematically, hence this study aims to contribute to the body knowledge on zakat, specifically the zakat compliance behavior among Muslim community. This study will help to extract lessons of the research issues which have the potential to affect the zakat institution, Muslim community, both objectively and subjectively. This study will clarify the factors contributing to income zakat compliance behavior among Muslim members in Selangor. It will provide a clearer thought about the zakat compliance behavior among Muslim community in Selangor and it will make everyone aware of the importance of paying zakat also will give some significant to the government and zakat regulator on how to improve their work quality. This paper may also help enhance the understanding of zakat, particularly in terms of zakat salary, as well as political leaders to encourage and educate the public. Once the public notice the importance and benefits of paying income zakat, they will be more compliant with the recommendation to pay the zakat. To achieve this, Zakat institutions therefore need to enhance campaigns, conference, regular talks and discussions to make the Muslim citizen in Malaysia aware of the importance of zakat pay and knows what is behind zakat goals and philosophy. The aftereffect is, the community will be more vigilant and compliant to pay the income zakat when they gain awareness and knowledge from a recognized body.. 7. FYP FKP. (LZS) through a statement informed, between January to March, a total of RM134,154,747.

(18) It can help many recipients for the poor and needy, especially in their everyday lives. Essentially, most people do not know the importance of income zakat is as important as zakat fitrah. Once the people aware about these issues as well as the regulator take their role to educate and regulating the zakat matters more systematically, it will give a good impact to the recipients. The public perception of charitable organizations should therefore also be enhanced by increasing the effectiveness of zakat administration. In addition, the implication of this study is very beneficial to zakat regulators to improve their job performance in the workplace. This research would foster innovation and creativity at all levels of the organization in order to achieve a result that is good for everyone who is involved. For instance, innovation in technology. Not just the financial but also the nonfinancial, private and public sector, for example; zakat (Islamic social finance), for the purpose of successfully ensuring collection and distribution via the Online platform (Muhamad & Khaliq, 2019). Zakat is now heading towards financial technology as an Islamic social finance tool to speed up the collecting and distribution of zakat monies (Salma Al Azizah & Choirin, 2019). Zakat payers would be able to compute their zakat amount using an online transaction, make payment and track payment via the online platform. online payments (Ahmad et al., 2014). Financial technology would therefore give its users with a flexible, friendly, efficient, translucent and rapid system of services (Salma Al Azizah & Choirin, 2019). It can eventually provide fresh innovation in terms of products and services to the financial industry. Lastly, this research is significant to the government. The Islamic finance field can help the government in generating the growth of the Islamic economy by money cash flow that happens between the zakat institution and the recipients. When all payer are clear with some genuine facts, then they will always be compliant about the payment of income zakat.. 8. FYP FKP. Next, it is significant to society especially to the recipients as it gives benefits to them..

(19) 1.7.1 The Zakat Compliance Behaviour Zakat compliance can be described as payment of zakat in compliance with zakat rules imposed on the Shariah Islamic law by Zakat authorities (Al-Saad, 2013). Zakat has two authorities, the lawyer (Allah, Almighty) and the State, which are enforced by it (on behalf of the lawgiver). He or she still must pay the zakat to the zakat beneficiaries. According to (Farah et al., 2019) the behaviour of zakaah compliance is distinct in terms of tax compliance since zakaah is one of the Islamic obligations to achieve soul cleansing and kindness, according to Islamic concept.. 1.7.2 Understanding Zakat Zakat is the third pillar of Islam coming next to Salat in the hierarchy of the five pillars of. to purify. Purification in the sense that it cleanses the giver of greed while at the same time cleansing the receiver of jealousy. Danial et al, (2017) believed that the degree of comprehension of Zakat payers in this examination has less understanding about Zakat. 1.7.3 Zakat Enforcement Enforcement can be described as the process of enforcing a law or regulation or of bringing about or accepting a certain scenario (Cambridge Dictionary, 2021. So in this research can be defined as zakat compliance enforcement. Mohamad Alayuddin (2008) stated that without enforcement and especially without specialised zakat law it might affect the entire zakat collection. 1.7.4 Trust Towards Zakat Institution Zakat institutions are religious organizations, which are intended to balance the responsibility of payers and recipients of required alms. In comparison with others, certain Zakat 9. FYP FKP. 1.7 Definition of Term.

(20) Zakat Calculator, zakat collection and distribution statistics, news and updates of linked zakat organizations may be available on a Zakat Institute site. 1.7.5 Perception towards Tax System Taxation is the way in which a country's government receives money from its citizens to pay for its costs (Cambridge Dictionary, 2021). For a long period, governments-imposed income tax just to cover the administrative and defensive costs and the delivery of some services by the state and the ruler's personal expenditure for tyrannical rulers. Tax system give to community to pay income tax.. Commitment refers to a pledge or a clear decision or the promise of something (Cambridge Dictionary, 2021). there in paying zakat. 1.7.7 Convenience of mechanism Mechanism refers to a planned approach to do anything or part of a system (Cambridge Dictionary, 2021). In zakah compliance, if we have a convenience of mechanism, its easier to collect zakah because nowadays we have introduced to application and technology to make our lifestyle easier. So, in this study we can know how much amount that zakah can collect if use of mechanism. 1.8 Organization of The Proposal This study is allocated into five chapters. The study will partially base on the area of research followed by the chapters; in the first chapter, it defines Zakat compliance about understanding, knowledge, awareness and perspectives. Also clarify about the overview, background of the. 10. FYP FKP. institutions have given a wider range of payments. Any information on the Zakat Calculator,.

(21) research limitations, and interpretations of study, study organizations and chapter summary. Chapter 2 explains the analysis literature. It addresses the introduction, analysis of Zakat compliance, related studies performed by the previous researcher through the papers, posts, research framework, and lastly the overview of the chapter. Next is Chapter 3. This section is a detailed overview procedure in this study that start with the introduction and proceeds to the research methods, research design, research techniques, population study, sample size, data collection, pilot study, data analysis and conclusion in the summary. Chapter 4 involves description of this topic, findings from the research information, findings from the triangulation process and lastly a review of chapters. It also includes analysis and presentation of the data obtained from the findings. Finally, the last chapter will be mentioning about the endorsements to solve the issue that has arisen from zakat compliance behaviour among Muslims in Selangor. In addition, the recommendation for future research and lastly, the conclusion to conclude the research.. CHAPTER 2 LITERATURE REVIEW 11. FYP FKP. study, declaration of issues, research questions, research objectives, important of survey,.

(22) In this Chapter 2, this study will discuss on the theory and literature relating to this research. The following chapter is divided into several subchapters. The first part is Section 2.2 the underpinning theory this study. Next, Section 2.3 the previous study from past researcher and Section 2.4 elaborates about hypothesis statement. While the second last Section 2.5 discuss about conceptual framework, and lastly, Section 2.6 summary for this study. 2.2 Underpinning Theory Theory of Reasoned Action (TRA) The TRA, which essentially aims to clarify the conduct of human (Fishbein & Azjen 1975) has become a popular hypothesis in the fields of social psychology (e.g., Hanno & Violette 1996; Oliver & Bearden 1985; Shimp & Kavas 1984). This theory focuses mostly on the desire to conduct as a forerunner to real behavior. From this viewpoint, intent is a key component that existing in a person before it acts. In other terms, components that influence one's behavior, such as subjective norms and attitudes, work by determining if one acts on the goal. Theory therefore states that the decision to act (or not take action) is driven by the readiness to respond (or not to act). As a result, the current zakat study was conducted using the idea of reasoned action, with the goal to comply with zakat giving serving as the primary focus of the study. The TRA is suggested to be reasonably appropriate to explain behavioral intention to comply with zakat giving because it is relevant in forecasting voluntary behavior (Azjen 1985). Zakat compliance is primarily a voluntary act in the context of zakat giving, and hence the theory is appropriate for dealing with this issue.. 12. FYP FKP. 2.1 Introduction.

(23) comprehension, trust in a zakat institution, tax perception, the commitment of respondents and the facilities given by the zakat institution, shall be determined in the context of the study. Intention is suggested as the closest determinant of behavior by the concept of reasoned action. Intention here means how much a person is prepared to strive to work and hence intention is a history of behavior (Fishbein & Ajzen 1975). 2.3 Previous Studies 2.3.1 The Zakat Compliance Compliance is severely influenced by external and internal conditions of an individual. The concept of compliance is frequently discussed in terms of taxation, but in the Zakat field it is still limited. In fact, compliance with Zakat might differ from tax compliance simply because it is an Islamic obligation to satisfy the pureness and goodness of the soul. In the Holy Quran, Surah 87 and Verses 14 it is obvious that "he who purifies himself has certainly been victorious." In Surah 9, verse 9-10, another event of the Holy Quran is noted: "What does make it to grow and who does not bury it" It is apparent that the concept of compliance with zakat is a notion in which action (compliance) is done to comply with Almighty instructions and command to be willing. Several research explored the observance of zakat payment by official channels Zakat (Sanep, Nor Ghani, & Zulkifli, 2011; Nur Barizah & Hafiz Majid, 2010). The notion of zakat is compliance of human (Muslim) behavior in order for zakat (official or non-official) to be paid for in conformity with the provisions of laws to be fulfilled in this and the following lives and to be satisfied in this lifetime (Al-Falah) (Sanep et al., 2011; Nur Barizah & Abdul Rahim, 2007). The compliance level among Muslim employees for paying Zakat is remains poor in Malaysia, according to past surveys (e.g., Kamil, 2002). Kamil's study (2002), which showed 13. FYP FKP. The above six basic criteria, i.e., the implementation of zakat laws, zakat.

(24) employment earnings, showed that they did not. In Perlis, where the compliance level was very poor, Kamil, Chek Derashid and Engku Ismail (1997) also said (about 35 percent paid for the zakat salary). It generally showed that Muslim employees in both states did not comply with the payment of zakat on employment income appropriately. If compliance between these two states is minimal, do Muslims in Selangor have the similar picture? Zakat compliance, as a dependent variable, refers to behavior, according to established rules, regulations and standards, of Muslims in executing their requirement to pay zakat for job income using official channels (formal zakat organizations). 2.3.2 Zakat Enforcement Several experts define enforcement in various ways. Khamis and Yahya (2015) defined the application in zakat as enforcing instructions to encourage people's behaviour. Khamis and Yahya (2015) further claimed that if there are strong sanctions and action authority, individual compliance would be improved. The application of law is also needed to determine the zakat's income compliance and is directly related to the chance of paying zakat on income (Kamil, 2002). With zakat enforcement, such as issue of a religious guide, acts and so on, it clearly establishes that zakat is a mandatory responsibility. Mohamad Alayuddin (2008) argued that it could damage the total zakat collection without enforcement and in particular without specific legislation on zakat. Zulkifli and Sanep (2010) nonetheless observed that the law is negligible that Muslims are influenced by the official institution in accordance with zakat. This is because Muslim individual already know about the obligation to pay zakat. Idris (2002) stated that their compliance behavior would be improved if all zakat payers acted and behaved in accordance with an effective zakat law. It may be argued that compliance with Zakat payers will improve if the law enforcement authorities take harsh action against infringed behaviour. The findings of previous studies have generally suggested that the implementation of zakats is significantly. 14. FYP FKP. that 35% of 353 governmental certified Muslim staff in Kedah did not pay zakat for their.

(25) al., 2017; Khamis & Yahya, 2015). It can be considered that zakat compliance is high if a zakat payer receives zakat enforcement with penalties if he is taken away from zakat, as is the case with the deterrence pattern. According to the discussion, the more successful zakat enforcement, the more effective of the compliance. 2.3.3 Understanding Zakat Zakat knowledge thus refers to an understanding of zakat payers of the Islamic principles necessary for them to comply with zakat. The concept of knowledge as the basic foundation of information a person must provide, according to (Saad et al., 2016). Thus, zakat comprehension in this study refers to the fundamental foundation for information regarding zakat a worker needs to pay zakat. The data incorporates zakat terms and conditions, zakat estimation, zakat beneficiaries and zakat overall set of laws (Mohd. Safri, 2006). Numerous specialists utilized the degree of information as a significant variable toward foreseeing the conduct of a person's consistence with zakat installment (Hasan and Mohd-Shahnaz, 2005; Khamis et al., 2011). This information alludes to the fundamental premise of data on Zakat that a worker expected to pay Zakat. Kamleitner et al. (2012) reported a similar conclusion, showing that small business owners' lack of understanding made them more likely than not to comply with a fiscal requirement. This meant that less information was likely to lead to small business owners failing to comply with tax behaviour. Loo et al. (2010) corroborated this finding and examined past studies on Malaysia's taxpayer compliance behaviour. The study found that Malaysian taxpayers have a high level of ethics and that tax knowledge is important to their behaviour to comply. As expressed by (Saad et al., 2016), recommending information is to do consistence conduct. An investigation by (Saad et al., 2016) says that individuals who have a ton of 15. FYP FKP. linked to the decisions of zakat payers to comply with zakat instructions (Bidin, 2008; Farah et.

(26) zakat. An investigation by (Danial et al, 2017) said that the degree of comprehension of Zakat payers in this examination has less understanding about Zakat. (Danial et al, 2017) says that Zakat isn't noble cause and generally a type of love. Kamil (2002) has highlighted that Zakat's understanding is one of the major elements affecting Zakat payment by public officials in Kedah in terms of compliance with zakat. Therefore, the evidence was reinforced by Zulkifli & Sanep (2010), who demonstrated that zakat knowledge has influenced compliance significantly. Based on the foregoing, the research predicts that zakat understanding will contribute to the zakat compliance behaviour among Muslims. 2.3.4 Trust in The Zakat Institution Previous scholars in different disciplines, such as sociology, psychology, management, economy and political science, define their viewpoints by defining trust (Mayer et al., 1995; Robinson, 1996; Rotter, 1967) (Armstrong and Jae 2001). In society (Abdul-Rahman and Hailes 2000), trust plays an important role for people, groups or systems (Cook and Wall, 1980). "Furthermore (Rotter, 1967) sets forth the meaning of trust as 'the person or party is trustworthy, word or pledge, oral or written declaration.'. The other four foundations of Islam are in line with Zakat (Shaahadah, prayer, fasting and pilgrimage), since it has a part of Godrelation (hablum minallah). Interaction amongst Muslims is also needed (Singer, 2013). Investments (for revenue generation), livestock, fisheries, trading and businesses are paid out for Zakat. So, the income from Zakat doesn't only meet the religious duty, it adds to the country's overall stability. Past Moorman et al. research (1993) confirms the credibility and effectiveness of the agency as essential to trust. The zakat atmosphere will increase the total numbe institutions. Negative behavior however makes people pay zakat on informal shows (Eza and Mohd, 2011). Likewise, some scholars argue that the increase in the dedication of members,. 16. FYP FKP. comprehension about Zakat like to pay zakat and individuals who need information won't pay.

(27) (Kumar et al., 1995). It is therefore expected confidence will affect purpose. The zakat institution must become clean and faith in an institution affects the confidence of contributors to continue to contribute and continue to be dedicated to agency funding (Torres-Moraga et al., 2010). 2.3.5 Convenience of Zakah Mechanism Institutions of Zakat are responsible for the management of zakat funds generation and delivery. The Qur'an specifically describes the major categories of Zakat revenue. Also stated in the Quran is the appointment of officials to raise and administer zakat in the form of either a State Ministry or a public fund administered entirely by a public entity (Muhammad Ali, 2011). Zakat institution takes up the mandate of receiver, collector and dealer of zakat, according to Jamaliah et al (2012). The organizations apply different strategies and techniques to channel donation to asnaf in the distribution of zakat. The donation and delivery ranges from unproductive support to productive assistance in different ways (Abdul Wahab, 2011). This support is intended to assist the impoverished survive on and satisfy their principal requirements (Jamaliah et al, 2012). A variety of steps are being made to guarantee the efficient, fair and equitable distribution of zakat. In order to ensure that Zakat is delivered consistently and organized as it was executed by Rasullullah SAW and his associates, the mosque institution is viewed as one of the finest possibilities. Therefore, among the innovations and technologies provided by zakat institutions in the payment of zakat, are e-Zakat Pay, credit cards, internet banking, short message service (SMS), telephone banking and ATM machines. Internet users only need to browse the zakat institution's website, for example www.zakatselangor.com.my to obtain this e-Zakat Pay facility. A total of 12 banking institutions have participated in providing internet banking for zakat transactions. Meanwhile, Islamic credit cards and debit. 17. FYP FKP. both zakat compliance and trust is significant (Ganesan, 1994; Anderson & Weitz, 1989.

(28) today (Hamizan, 2012). So, there are significant between mechanism provided by zakat institutions. 2.3.6 Perception Towards Tax System Taxation is a required payment to a government based on tax base holdings (Mikesell, 2003). Taxation can be defined as a required payment to a government, depending on the holdings of a tax base (Mikesell, 2003). In the past, state taxation had been imposed to increase revenues, which ultimately support administrative and defense costs. It is also used to provide some services and the personal expenses of the governor, in the event of despotic royals (Hanson, 1972). The tax system no longer has these purposes. Taxation is indeed an obligatory role in the survival of governments. According to some authors taxes and state have become complementary, since the governments employ the taxing channel to cover their political, social and economic duties one may not survive without the other (Abbasi, 1985). This is a major political and economic issue (Connolly & Munro, 1999). In the system of taxation, if a person fails to pay tax through an official agency the individual is considered not to have observed the law. The other side of the coin, zakat is one of the five pillars of Islamic belief that Muslims must follow and one of the procedures that has been utilized to alleviate poverty and balance the social-economic situation of a society since prophet Muhammad's time (pbuh) (Ahmed & Md Salleh, 2016; Samad & Glenn, 2010). Zakat which is often referred to in literature as Islamic or religious tax is a religious duty of Muslims that God made necessary for Muslims who complied with zakat criteria to give the rightful beneficiaries or asnafs mandated in the Quran a specific amount of their money. Zakat decreases revenue inequality by allocating wealth from the rich to the poor, and so encourages social justice, accountability and compassion (Aziz & Mohamad, 2016; Abdul Rahman, 2010). On the one hand, zakat helps stimulate the economy. Paying zakaah will incentivize Muslim taxpayers to adhere to tax 18. FYP FKP. cards have become the new medium of cashless transactions desired by many young executives.

(29) paying zakat in Malaysia can receive tax rebates for reducing their real tax payments to Malaysia. Therefore, if taxpayers consider zakat as one option to reduce tax payments to the government, they are likely to comply willingly with tax legislation (Mohdali & Pope, 2014).. Some people not paying zakat because of their commitment in their life and also think income zakat is not important. In previous studies, Siti Zulaikha Nasir, Hairunnizam Wahid, & Mohd, (2021) said that each Zakat payer is likewise committed to paying income tax on compliance. The Government therefore enforced a move that has been executed via harmony by the adoption of Akta Cukai Pendapatan 1967 in its concern for two payment modalities in addition to the financial burden incurred by Muslims. This provides a Muslim with options when paying zakat income for income tax discounts. Tax discounts on purchases requires evidence of the receipt in formal institutions of payment zakat solely the basis of the date of receipt paid in the income tax assessment year from the Lembaga Hasil Dalam Negeri (LHDN). 2.4 Hypothesis Statement A review of the literature and theoretical background show that there seems to be a relationship between the level of adherence to giving zakat and involving the perceptions of Muslim members in Selangor. However, it is clear that the integrated relationship between these variables has not been empirically investigated. Therefore, this study proposes to test and study empirically the relationship between these variables. This study examines the probability of the relationship between the level of adherence to giving zakat and the perception of Muslim members in Selangor. The proposed conceptualization is shown in Figure 2.1. It is suggested that the level of adherence to giving zakat and the perception of Muslim members positively predict the performance of giving zakat. 19. FYP FKP. regulations or promote positive compliance in Muslim culture. In addition, Muslim taxpayers.

(30) following way: H1: There is a positive, linear and significant relationship between zakah enforcement and zakat compliance behavior among members in Selangor H2: There is a positive, linear and significant relationship between understanding zakat and zakat compliance behavior among members in Selangor. H3: There is a positive, linear and significant between trust in zakat institution and zakat compliance behavior among members in Selangor. H4: There is a positive, linear and significant between the convenience of zakah mechanism and zakat compliance behavior among members in Selangor. H5: There is a positive, linear and significant between perception towards tax system and zakat compliance behavior among members in Selangor. H6: There is a positive, linear and commitment and zakat compliance behavior among members in Selangor. 2.5 Conceptual Framework The purpose of this study is to calculate the probability of the relationship between the level of adherence to give zakat as a latent variable and observational variable involving the perception of Muslim members in Selangor on five factors that are expected to influence the level of adherence to give zakat. This section describes the proposed theoretical framework. In general, the main theories underlying the theoretical framework of the proposed study consist of the factors that lead to the adherence of Muslims in giving zakat. According to Sekaran (2006), a theoretical framework is a conceptual model of how one theorizes or makes sense about the relationship between several factors that have been r3identified as important to the problem. These include factors of understanding zakat, the. 20. FYP FKP. Based on the literature discussed in this chapter, this hypothesis can be summarized in the.

(31) zakat institution. This study will identify the main factors that influence the respondents' decision to implement income zakat.. Source: Adapted from Ahmad and Zulkifli (2010) Figure 1: Framework on Factors Contributing towards Zakat Compliance Behaviour 2.6 Summary The framework of research, that also constitutes the conceptual framework of this study, describing the connection between the level of zakat adhesion and the perception in five elements of Muslim members in Selangor. The researchers also discussed the factors of zakat compliance by presenting dimensions, components and definitions.. CHAPTER 3 RESEARCH METHODS. 21. FYP FKP. facilities provided by the zakat institution, the commitment of the respondents and trust in the.

(32) Chapter three defines the research methods that use to collect data for the research. It includes ten sections with the introduction in the first section. Section 3.2 begins with the research design. Section 3.3 elaborates the data collection methods. Section 3.4 discusses the study population and Section 3.5 discusses the sample size. Next, Section 3.6 about sampling techniques used in this research and Section 3.7 elaborate on research instrument development. Follow by Section 3.8 that discusses the measurement of the variation. Second, the last section is Section 3.9 that elaborates on the procedure for data analysis. Lastly, in Section 3.10 this chapter will conclude with the summary. 3.2 Research Design In this study, the researchers used the quantitative methods, which is primary data. In the quantitative research, two (2) regular methodologies are used by researchers: survey research and experimental research (Creswell, 1994). In this study, a survey researcher methodology is used because, according to Malhotra & Grover, (1998). In this study, this method helps to provide standardized information to describe variables or analyses relationship between variables. As a result, this study examined the relationship between convience,. perception towards tax system using survey research to collect data from respondents.. 3.3 Data Collection Methods This research will be conducted fully depending on the primary resources which is from the questionnaire. A questionnaire is a research tool comprised of a series of questions and other suggestions for collecting information from respondents (Kabir, 2016). The questionnaire will be answered by the participant among the employees in Selangor who are pay Zakat. 22. FYP FKP. 3.1 Introduction.

(33) questionnaire within the Google Form. This way, the researcher can reduce the price of printing furthermore as avoid paper waste. it's also a faster thanks to get the solution, can save time of looking ahead to the respondent to answer the questionnaire and a good thanks to get a definite answer. According to Kabir, 2016, questionnaires have advantages over certain other surveys because they are cheap, don't need the questioner as much effort as verbal or telephone surveys, and frequently have standardised responses that make compiling data easier. 3.4 Study Population. The objective and aim of this research are to determining factor contributing about zakat compliance behavior among Muslim members in Selangor. According from the Explorable website (2020), research populations can be defined as a large group that involving individuals or objects that make them being the main focus of scientific investigation. However, population is the large number of individual that we will study. Therefore, we will use sample size techniques to limit and obtain more accurate information. Unfortunately, according to Sekaran (2013), populations are defined as relative to the research study of responders from a group of persons. Additionally, all the target population were taken from among Muslim members in Selangor. Likewise, the respondents that we targeted are community Muslim in Selangor. The respondents are provided with questionnaires. Currently the total population in Selangor is 6, 569,000 million people. Meaning to say that the total of Muslims in Selangor is about 4,670,000 million people. (Department of Statistics Malaysia Official Portal, 2021) 3.5 Sample Size. 23. FYP FKP. The questionnaire will be distributed through online. The respondents will answer the.

(34) in order to get information on behalf of larger group or population. Since the total Muslim people in Selangor is 4,670,000 million people. The questionnaire will be distributed to the 384 respondents.. The sample size can be determined by following (Tajuddin, Azman, &. Shamsuddin, 2017) which is the primary sampling unit of youth between age of 21 years old up to 40 years old. To carry out this study, it will cover people from Selangor who work between 21 years to 41 years old. The sample size can be determined by following Krejcie & Morgan (1970). For example, when the population (N) that we decided is 4,670,000, the potential respondent or sample (S) are 384 people.. Table 3.1: (Krejcie & Morgan, 1970). 24. FYP FKP. Sample size is a group people that we chose out of a large number and are asked questions.

(35) FYP FKP 3.6 Sampling Techniques The sampling technique refers to a technique used to access the population as a whole through the study population section and depends on the information obtained. There are two major types of sampling which is probability and non-probability sampling. This research uses non-probability sampling technique for sampling. In non-probability sampling, the researcher chooses members for research at random. This sampling method is not a fixed or predefined selection process. This makes it difficult for all elements of a population to have equal opportunities to be included in a sample. This research has adopted convenience sampling technique to reach the sample and snowball sampling. In this type of sampling, the researcher. 25.

(36) research. Convenience sampling is a kind of non-probability that encompasses the sample being pulled from that part of the population that is close to hand and snowball sampling is a way for recruiting study volunteers to help researchers uncover more viable topics. So in this sampling, the researcher give the question to someone who stay in Selangor and give to another person. That is, a sample population selected because it is readily available and convenient, as researches are drawing on relationships or networks to which they have easy access. 3.7 Research Instrument Development. M collected through questionnaires. In this study, four variables and its items have been adopted from the most relevant research, empirically tested and adapted into the study context as in table below. Table 3.2: Shows Measurement Items Adapted and Adopted for the Study.. VARIABLES. INDICATOR ITEMS. 1. Zakat Compliance Behaviour 2. Zakat enforcement 3. Understanding Zakat Ahmad and Zulkifli (2010). 4. The Facilities Provided by The Zakat Institution.. 5. Trust in The Zakat Institution. 6. Perception towards tax system 26. FYP FKP. asks the initial subject to identify another potential subject who also meets the criteria of the.

(37) However, changes have been made to this item to match the validated study context. The dependent variable which is Zakat Compliance Behaviour Among Muslim Members in Selangor measured with 4 items adapted by the Ahmad and Zulkifli (2010) that can relate to the element of zakat compliance. The independent variables: (i) Intention are measured the Zakat Compliance Behaviour Among Muslim Members in Selangor with another 3 items which are (ii) Understanding Zakat (iii) The Facilities Provided by The Zakat Institution and (iv) Trust in The Zakat Institution. To encourage and facilitate the respondent answer the question, the questionnaires are going to be in bilingual language which is in Malay and English. Thus, the set questionnaire is split into two sections; A and B with the full number of questions are 38 items. Section A. status, education background, income and therefore the recipient or not recipient of zakat. While the section B consist of 4 items which are Convenience of Zakat mechanism, understanding Zakat, Zakat enforcement, Trust in The Zakat Institution, Respondent commitment and Perception towards tax system that will filled by the respondents. For the last section which section C consist of dependent variable which is Zakat Compliance Behaviour. Respondents are asked to show their level of agreement (from strongly disagree to strongly agree) with given statements (items) on a metric scale. The levels of this scale are 1 = Strong Disagree, 2 = Disagree, 3 = Neutral, 4 = agree and 5 = Strongly agree ("5-Point Likert Scale," 2010). Table 3.3: Shows the Distribution of Items in The Questionnaire Study.. SECTION. VARIABLES TO BE IDENTIFIED. SOURCE. 27. NO OF ITEM. TOTAL OF ITEM. FYP FKP. The measurement instrument for this study has been adapted from previous research..

(38) DEMOGRAPHIC PROFILE (Personal Information). 10. 1-10. INDEPENDENT VARIABLE I. Convenience of Zakat mechanism. B. (Abubajar,Kamil & Ram al Jaffri Saad, 2018) (The Suhaila & Noraini, 2016) II. Understanding (Rahim & Kaswadi, Zakat 2014) (Ram al Jaffri Saad, III. Zakat enforcement 2021) Trust in The Zakat (Haque & Jan, 2019) Institution. V. Respondent commitment VI. Perception towards tax system. 4. 15-18. 4 4 4. 19-22 23-26. 4. 27-30. 4. 31-34. 4. 35-38. IV.. C. DEPENDENT VARIABLE I. Zakat compliance. 11-14. behaviour TOTAL OF QUESTIONS. 38. 3.8 Measurement of The Variables There are numerous scales for measuring the variable, including nominal scale, ordinal scale, interval scale, and ratio scale. The ratio scale is the highest degree of measurement, allowing the researcher to determine the target while also ranking and evaluating the differences between them. The nominal scale, which allows us to only qualitatively distinguish groups by categorising them into mutually exclusive and collectively exhaustive sets, and the ordinal scale, which allows us to rank-order the preferences, are used in this study. The interval scale, on the other hand, allows us to measure the distance between any two points on the scale. The nominal variable was utilised to categorise specific properties that were being measured in section A. The ordinal scale was used to represent a rank or ordering on an attribute in sections B and C.A 5-point Likert Scale were used. The table below was example for Likert scale: Table 3.4: Level of Likert Scale ("5-Point Likert Scale," 2010) 28. FYP FKP. A.

(39) Likert Scale. Strongly Disagree. 1. Disagree. 2. Uncertain or not applicable. 3. Agree. 4. Strongly Agree. 5. 3.9 Procedure for Data Analysis In the course of business research, the data analysis is a well-planned step. This stage should be derived from the aim of analysing information in order to address the problem. Any method of analysis is designed to translate the data required for decision-making. The analysis of the data is a procedure for inspections, filtration, transformation and modelling of data with the aim of finding relevant information, informing decision-making and supporting it. The data collected, categorised, analysed, limited and summarized in one coding sheet from the form of a questionnaire issued to the participants was analysed from a coding sheet using the Statistical Package for Social Sciences (SPSS). Researchers can save time utilizing computer software for calculating data and can easily and swiftly facilitate quantitative analysis. For data administration and analysis, SPSS will be utilized in this investigation. The most often used types of statistical analysis are sophisticated software. During the quantitative part of the investigation, analytical approaches including sample analysis were employed. 3.9.1 Descriptive Analysis Descriptive statistics for manageable quantitative descriptions. The sample and the measurements will be summarized in a simple way. It shapes the concept of each quantitative evaluation of the material in combination with basic illustrative investigation. The researcher can obtain few measurements in a research project, or the researcher can measure a huge 29. FYP FKP. Level.

(40) a simplified summary through descriptive statistics. The study of the frequency is part of the statistic description. Frequency is an event that occurs a number of times. In a table that comprises the frequency and percentages, the frequency analysis to demographic profiles is analyzed via SPSS software and summarizes all the data. Average analysis carried out to determine the acceptance level of each variable for the objective of the researcher. Consequently, researchers can determine the factors that the target respondents in the average value range accept or reject in this study. 3.9.2 Reliability Test The tool utilized for data interpretation is reliability analysis, descriptive analysis and Pearson coefficient. In order to assess factors and to define the biographical information of the responder, descriptive analysis is utilized. The statistical reliability consists on knowing the relevant relationship between the research variable. Pearson's correlation coefficient is the study of independent variables used in the frequency analysis to examine data. A reliability analysis is required before any statistical analysis is performed in order to address the problem of internal consistency of the scale. Reliability refers to the fact that the structure you measure should always be imitated by a ladder. It can be helpful in favourable occasions and situations. Cronbach's Alpha is a relatively prevalent indicator of dependability in scientific publications. It is used to ensure that various aspects or scores that the researcher wishes to add are internal consistent, so that a summary or summary value of scales may be obtained. Alpha is based on the matrix of correlation and is similarly interpreted to other metrics of dependability. To give good support to reliability of internal consistency, Alpha should be positive and normally be larger than 0.70. 30. FYP FKP. number of people. The researcher can intelligently condense enormous quantities of data with.

(41) More than 0.90. Excellent. 0.80-0.89. Good. 0.70-0.79. Acceptable. 0.60-0.69. Questionable Poor. 0.50-0.59. Unacceptable. Less than 0.59. The examination of consistency and stability determines measurable reliability. The Cronbach Alpha is a dependability coefficient that shows the connectivity of items as a whole. The closer Cronbach's Alpha to 1, the more reliable the internal consistency. 3.9.3 Pearson Correlation Coefficient Pearson correlation coefficients were indeed test statistics that measure the statistical relationship or correlation between two continuous variables. It is known as the best method of measuring the relationship between the variables of interest because it is based on the covariance method. According to Hair et al., (2003), the correlation coefficient varies between 1.00 and +1.00. An R-value of 1 indicates a perfect positive linear correlation. This happens when the value of both variables increases together and their coordinates on a scatter plot form a straight line. Whereby, an R-value of -1 indicates a perfect negative linear correlation. This happens when the values of one variable increase while the other variable decreases and their coordinates on a scatter plot form a straight line.. Table 3.5: Rules of Thumb about Correlation Coefficient Size Size of correlation. Interpretation 31. FYP FKP. Reliability Level.

(42) Very strong. 0.71 to .90/ -0.71 to -0.90. High. 0.41 to .70/ -0.41 to -0.70. Moderate. 0.21 to .40/ -0.21 to -0.40. Small but definite relationship. 0.01 to 0.20/ 0.01 to -0.20. Slight, almost negligible. 3.9.4 Multiple Linear Regression Analysis The association between two or more independent variables and one dependent variable is calculated using multiple linear regressions. It will show how strong the relationship is between two or more independent variables and one dependent variable (e.g. how the trust. perception of tax system, and convenience of zakat system influenced the zakat compliance behavior). The value of the dependent variable at a certain value of the independent variables (e.g. the income zakat compliance behavior influenced by the trust towards zakat institution,. and convenience of zakat system). 3.10 Summary This chapter concludes by discussing the quantitative analytic methodology employed in this investigation. There was an extensive and detailed discussion of the quantitative approach to data collecting, including questionnaire use. The research steps on this topic have begun with the aim of the study, the identification of the samples, the tools employed and the way in which our data analysis may be achieved. Therefore, this research is important in studying the factors affecting income zakat compliance behaviour among Muslim members in 32. FYP FKP. .90 to 1.00/ -.90 to -1.00.

(43) FYP FKP. Selangor.. 33.

(44) 4.1 Introduction This chapter represents the analysis and major research findings of the study and the data in this chapter were analysed using the Statistical Package for the Social Science (SPSS) software program. Data analysis was used and performed to test the questions contained in the questionnaire provided by the researcher and distributed to the respondents of the place studied. The results of the data analysis are described using six types of analysis. Firstly, is preliminary analysis. Secondly, demographic profile of respondents. Thirdly, descriptive analysis. Next is validity and reliability test, followed by normality test, hypothesis testing and lastly, summary. The questionnaire made by the researcher was distributed to the private and government workers in Selangor. The main target population of this study is 386 respondents. The google form created by the researcher was successfully answered by the respondents. 4.2 Preliminary Analysis The preliminary analysis was conducted to determine whether the concept and variable were viable and reliable. Reliability test has been taken by using pilot test results. According to Junyong (2017), a pilot study is performed reflecting all the procedures of the main study and validates the feasibility of the study by assessing the inclusion and exclusion criteria of the participants, preparation of the drugs and intervention, storage and testing of the instruments used for measurements in the study, as well as training of researchers and research assistants. For this researc 0.60 is considered as lower acceptance limits. Table 4.1 shows the rules of thumb about. lpha Coefficient Size. 34. FYP FKP. CHAPTER 4.

(45) Excellent. Very Good. Good. Moderate. 0.6 >. 0.5. Poor. 0.5 >. Very Poor. For a pilot test on this research, the researchers have run the questions among 35 respondents randomly. This questionnaire was allocated to survey participants to check the reliability of the instrument. There are eight (8) sections in the questionnaire labelled as Sections A, B, C, D, E, F, G and H. Section A consists of nine (9) questions focusing on the demographic profiles of the respondents. Besides that, Section B, C, D, E, F, and G, consists of four (4) questions each focusing on the independent variable which are convenience of zakat. commitment, and perception towards tax system. While Section H focuses on the dependent variables which is the zakat compliance behaviour. Table 4.2 shows the results of the pilot test for all variables by reliability test analysed from SPSS.. 35. FYP FKP. Strength of Internal Consistency.

(46) Domain. 0.723. Convenience of Zakat Mechanism. 0.868. Understanding Zakat. 0.756. Zakat Enforcement. 0.711. Trust in Zakat Institution. 0.863. Respondents Commitment. 0.490. Perception Towards Tax System. 0.624. Zakat Compliance Behaviour l variables is more than 0.6. except for perception towards the tax system. For instance, the result for the dependent variable which is zakat compliance behaviour is 0.624. Meanwhile, the results for the independent variables that are convenience of zakat mechanism, understanding of zakat, zakat enforcement,. 0.864 respectively. In addition, the value is considered as good and reliable to be used. Therefore, the results show that the study has the high internal consistency of the item in measuring concept.. 36. FYP FKP. Table 4.2.1: The Results of Pilot Test for All Variable by Reliability Test.

(47) Questionnaires were distributed to the Muslims community targeting the private and government servants around Selangor. A total of 386 questionnaires were distributed and all were successfully completed. In section A, there are nine questions posed in the questionnaire. The nine questions are gender, age, academic background, marital status, occupation, working experience, employment status, estimated monthly income, and number of dependents. 4.3.1 Number of Respondent Based on Gender Table 4.3.1: Gender of Respondent. Frequency Percent Valid Percent Cumulative Percent. Valid Female. 184. 47.7. 47.7. 47.7. Male. 202. 52.3. 52.3. 100.0. Total. 386. 100.0. 100.0. 37. FYP FKP. 4.3 Demographic Profile of Respondents.

(48) FYP FKP. PIE CHART COUNT OF GENDER Female. Male. 48% 52%. Figure 4.3.1: Percentage of Gender Table 4.3.1 and figure 4.3.1 shows the gender of the respondents that were involved in this research. We can see that the majority of respondents are male respondents with a percentage of gender 52.3% while the percentage for female respondents is 47.7%. only. The number of respondents for male is 202 respondents and the number of females is 184 respondents from the total number of 386 respondents. 4.3.2 Number of Respondent Based on Age Table 4.3.2: Age of Respondent. Frequency Percent Valid Percent Cumulative Percent. Valid 20 years and below. 4. 1.0. 38. 1.0. 1.0.

(49) 134. 34.7. 34.7. 35.8. 31-40 years. 196. 50.8. 50.8. 86.5. 41-50 years. 43. 11.1. 11.1. 97.7. 51 years and above. 9. 2.3. 2.3. 100.0. Total. 386. 100.0. 100.0. PIE CHART COUNT OF AGE 20 years and below. 21-30 years. 11%. 31-40 years. 41-50 years. 51 years and above. 1%. 36%. 52%. Figure 4.3.2: Percentage of Age Table 4.3.2 and figure 4.3.2 shows the category's age range of 386 respondents. It can see that only 1% is the percentage and the number of respondents is 4 respondents for the age 20 years old and below. Then, 34.7% equals 134 respondents for age 21-30 years old and 50.8% equals 196 respondents for age 31-40 years old. At the same time, 11.1% is the percentage of age 4150 years old above and the number respondent is 43. Lastly, only 9 respondents from the total number of 386 respondents come from 51 years old and above.. 39. FYP FKP. 21-30 years.

(50) Table 4.3.3: Academic Background of Respondent. Frequency Percent. Valid. Valid Percent. Cumulative Percent. SPM. 38. 9.8. 9.8. 9.8. STPM/STAM/Matriculation. 34. 8.8. 8.8. 18.7. Diploma. 110. 28.5. 28.5. 47.2. Bachelor Degree. 170. 44.0. 44.0. 91.2. Master Degree. 32. 8.3. 8.3. 99.5. Doctorate Degree (PhD). 2. .5. .5. 100.0. Total. 386. 100.0. 100.0. 40. FYP FKP. 4.3.3 Number of Respondent Based on Academic Background.

(51) SPM. STPM/STAM/Matriculation. Diploma. Bachelor Degree. Master Degree. Doctorate Degree (PhD). 8%. 1%. 10% 9%. 44%. 28%. Figure 4.3.3: Percentage of Academic Background Referring to table 4.3.3 and figure 4.3.3 the results shows that 254 respondents have been divided into four categories for academic background, which is started with 9.8% equals to 38 respondents is SPM, 8.8% equals to 34 respondents is taking STPM/STAM/Matriculation. Then, for diploma, the percentage is 28.5% equals 110 respondents, while for bachelor degree holder is 44% which is equal to 170 respondents. 32 respondents have a master degree which is equal to 8.3%, and last but not least the doctorate degree holder is 0.5 percent equal to 2 respondents out of 386. 4.3.4 Number of Respondent Based on Marital Status Table 4.3.4: Marital Status of Respondent. Frequency Percent Valid Percent Cumulative Percent. Valid. Single. 110. 28.5. 28.5. 41. 28.5. FYP FKP. PIE CHART COUNT OF ACADEMIC BACKGROUND.