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Trust Law/Level VIII · Trusts of the world/8.2 Civil-law and religious systems/Lesson 3

Waqf today: the Gulf and Malaysia

How waqf is administered today in Malaysia, the Gulf and Turkey, how a cash waqf works, and how common-law-style trusts and foundations in the UAE’s financial free zones sit alongside waqf.

Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Malaysia: cash waqf to an approved religious authority, its body or a public university is deductible up to 10% of aggregate income, within a cap shared with certain gifts (Income Tax Act 1967 s.44(11D)). Catch: the Director General must have approved the recipient.
  2. Giving through a Malaysian state religious council’s own waqf scheme avoids drafting and private trustee costs, since the council generally acts as trustee. Catch: waqf is a dedication meant to be permanent, and the state’s own enactment governs the terms.
  3. UAE: there is no personal income tax, and a family foundation can apply to the Federal Tax Authority to be treated as tax-transparent for Corporate Tax (Corporate Tax Law Article 17). Catch: transparency is by application, not automatic, and its conditions must keep being met.
  4. DIFC offers a common-law trust (DIFC Law No. 4 of 2018) and foundation (DIFC Law No. 3 of 2018), and ADGM applies English common law, beside waqf. Catch: which law governs depends on where the asset is and how the arrangement was made.
  5. In Saudi Arabia and Turkey endowments sit under state supervision, by the General Authority for Awqaf or the Directorate General of Foundations. Catch: dedication is generally permanent and supervised, so only property meant to stay dedicated belongs in a waqf.

MaterialsItem 1 of List II (the State List) in the Ninth Schedule to Malaysia’s Federal Constitution, which places wakafs under state lawThe DIFC Trust Law (DIFC Law No. 4 of 2018) and DIFC Foundations Law (DIFC Law No. 3 of 2018), free in the DIFC legal databaseLesson 1.2.2, on the history of the waqf, and lesson 8.2.2, on the civil-law foundation, for background

Wonder

  1. Who manages a waqf’s property today when a state body, rather than a manager chosen by the founder, is in charge?
  2. How can money, which is meant to be spent, be endowed permanently?
  3. Why would a Gulf state offer common-law-style trusts and foundations in a financial free zone while waqf continues under its own law?

Explore

  1. The classical waqf described in lesson 1.2.2, property dedicated permanently to a purpose with its income going to beneficiaries, is still used across the Muslim world. In most countries, though, the state now registers, supervises or directly manages awqaf, and some twentieth-century governments restricted or abolished family waqf. This lesson surveys a few modern institutions. Their laws differ in detail and change over time, so each should be checked in the country’s own official sources. The lesson describes these systems and recommends none.
  2. In Malaysia, waqf is a state matter. Item 1 of the State List in the Ninth Schedule to the Federal Constitution gives the states power over Islamic law, expressly including wakafs, except in the Federal Territories, where federal law applies. Each state has an Islamic religious council (Majlis Agama Islam), which under that state’s legislation generally acts as trustee of waqf property in the state, and some states have passed waqf enactments of their own. Federal bodies support waqf administration nationally, but the state councils remain the trustees, so the rules for a waqf depend on the state where it is.
  3. In Saudi Arabia, the General Authority for Awqaf was established in 2010 under a Council of Ministers resolution, with its legal framework following in 2016; it supervises and regulates awqaf. Awqaf were earlier handled by ministries, and in 2016, after the transfer of endowment responsibilities, the religious affairs ministry took its present name, the Ministry of Islamic Affairs, Dawah and Guidance. In the United Arab Emirates, endowments are handled by federal and emirate-level bodies. In Dubai, the Awqaf and Minors Affairs Foundation manages endowments and also the property of minors.
  4. Turkey’s Directorate General of Foundations (Vakıflar Genel Müdürlüğü) was founded on 3 March 1924, when the Ottoman ministry responsible for religious affairs and endowments was abolished. Today it manages and audits foundations under the Foundations Law, Law No. 5737 of 2008, including old endowments now run by the state, and looks after thousands of historic buildings and properties. New foundations in Turkey are created as legal persons under the Civil Code, so a modern Turkish foundation is closer to the civil-law foundation of lesson 8.2.2 than to a trust. The Directorate’s archives also preserve many original waqf deeds.
  5. A cash waqf endows money rather than land or buildings. In the Ottoman Empire, cash endowments were lent or invested and the return funded the purpose. Jurists disagreed about whether money could be endowed at all, and the sixteenth-century Ottoman jurist Ebussuud Efendi helped shape the practice. Today cash waqf schemes are run by religious councils, waqf authorities and some financial institutions. Typically the capital is invested in Sharia-compliant instruments and only the return is spent; some schemes link waqf with Islamic finance, for example through sukuk. Schemes vary widely and are not compared here.
  6. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are financial free zones with their own civil and commercial laws based on common-law models, separate from the law applied elsewhere in the UAE. The DIFC Trust Law (DIFC Law No. 4 of 2018) provides for express trusts, and the DIFC Foundations Law (DIFC Law No. 3 of 2018) for foundations. ADGM applies English common law directly. These structures sit beside waqf rather than replacing it; which law governs a particular asset depends on where it is and how the arrangement was made.

Key facts

  • In Malaysia, wakafs fall under state law (Federal Constitution, Ninth Schedule, State List item 1), and state Islamic religious councils generally act as trustees of waqf property.
  • Saudi Arabia’s General Authority for Awqaf was established in 2010 under a Council of Ministers resolution and supervises and regulates awqaf.
  • Dubai’s Awqaf and Minors Affairs Foundation manages endowments and the property of minors in Dubai.
  • Turkey’s Directorate General of Foundations was founded in 1924 and manages and audits foundations under Foundations Law No. 5737 of 2008.
  • A cash waqf endows money that is invested, typically in Sharia-compliant instruments, with only the return spent on the purpose.
  • The DIFC has a Trust Law (DIFC Law No. 4 of 2018) and a Foundations Law (DIFC Law No. 3 of 2018), and ADGM applies English common law directly.

Exercise nine, six, three, one

9CollectList up to 9 features of modern waqf institutions or free-zone trust and foundation laws described in this lesson or a source you are reading (some sources give fewer), such as who manages the property, which law applies and what can be endowed.
6ClusterSort them into 6 categories: Malaysia, Saudi Arabia, the United Arab Emirates, Turkey, cash waqf, and free-zone trusts and foundations.
3DistillReduce the 6 categories to 3 groups: who manages endowed property, what kinds of property can be endowed, and which law governs the arrangement.
1CrystallizeWrite 1 sentence explaining, in your own words, how the role of the state in waqf today differs from the classical picture in lesson 1.2.2.

Fact check

Dates, figures and claims checked against the published sources listed below.

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