Comparison of the Application of Zakat and Taxes in the Perspective of Social Finance: A Case Study of the Kingdom of Saudi Arabia and Japan

Abstract : This study examines a comparative analysis of social finance practices between the Kingdom of Saudi Arabia, as a member of the Organization of Islamic Cooperation (OIC), and Japan, a non-OIC secular country. The focus of the study lies on the role of zakat and taxes as instruments of wealth redistribution and social justice, by examining the institutional framework, fiscal mechanism, and socio-economic impact of each system. Saudi Arabia represents an Islamic-based hybrid fiscal system, where zakat is administered by the Zakat, Tax, and Customs Authority (ZATCA), while Japan exhibits a highly efficient secular tax system under the authority of the National Tax Agency (NTA). Using qualitative-descriptive research methods, as well as secondary data reports and academic literature from 2015–2025, this study evaluates key indicators of social finance such as distribution justice, poverty alleviation, and governance efficiency. The results show that zakat in Saudi Arabia is firmly rooted in spiritual obligations and the principles of maqashid sharia (welfare goals), while the Japanese tax system has managed to achieve high compliance and effective redistribution through fiscal education and administrative efficiency. This study highlights that although zakat and taxes are ideologically different, they have a common goal in realizing social welfare.