By Murat Cizakca, 2000, Istanbul, Bogacizi University Press
Outlined the economic dimension of the awqaf during the Ottoman empire and the historical evolution of the same. After coming to the conclusion that the awqaf system had been eroded and emasculated by 2 major reforms – 1. State control of the awqaf and 2. Destruction of family waqf.
These 2 major reforms in Ottoman Turkey right through its reinvention as a republic in the 1920s were due to three main reasons . Firstly, misuse of powers of istibdal by trustees, secondly, family awqaf and questions relating to circumvention of Islamic inheritance laws and colonial perception that family awqaf cannot be considered as charitable and finally, non-availability of land held under private ownership of waqf to be taxed by the state.
In respect of other Muslim countries which were colonized by Western nations, the influence on land and administrative laws by the Western powers hastened the emasculation of the waqf and diminished its public role.
Revival and modernization of waqf in Turkey
However, developments in the second half of the 20th century in Turkey had restored the waqf somewhoat. Ironically, this was in part due to Turkey looking at the lessons of the great American foundations and trusts which were at the time actively involved in business simultaneously with the provision of public benefit..
The factors for the revival and modernization of the waqf in Turkey are:-
a. weakening of Kemalist Jacobinism and rise of democracy
b. capitalist accumulation
Both of these led to changes in the law:-
1. Law No 903 of 13th July 1967
a. The will described in the foundation documents is not changeable
b. The civil tribunal is authorized to register the waqf and to give it judicial personality
c. The word “establishment” tesis, used exclusively in the Turkish Civil Code is replaced by the word “vakif”
d. No waqf can be created that opposed the law or national interests, support current politics, a certain rae or community;
e. Vakifs can be tax exempt provided 80% of vakif revenues are to be reserved for public purposes. Tax exemption to be granted only by council of Miinisters
f. Control of vakifs is directly vested with the General Directorate of waqfs
g. Annual profit of a waqf is to be added to the original capital of the waqf stated in the waqf deed and is reported at the beginning of each calendar year to the inspetors
h. A multitude of persons, associations and even the state can create a waqf;
i. A waqf is now allowed to establish a company and allocate the latter’s total profits, or a share thereof, to its own specific purpose (including returning dividends to the waqf)
j. Establishment of a waqf has been simplifie
k. Istibdal has been reintroduced and is applied subject to decision of the court
2. Elimination of ambiguities regarding taxability of companies established by waqfs ie not tax exempt – Minitry of Finance Offiial Gazette dated 28 July 1994
3. Corporation Tax Law No 199 – limited donations to the tax-exempt waqfs by outside companies to 5% of the latters profit. (cf US position which allows max 10% of a corporation’s pre-tax net income, and 50% of individual income.
The result is that:
a. a tax exempt waqf can own a business if they are units internal to the waqf – they are exempt even though they are profitable eg Diyanet Vakfi
b. a waqf that is not tax exempt are considered as businesses
c. companies can establish their own waqf (see Article 137 of Turkish Trade Law eg Vehbi Koc foundation
d. waqf can purchase shares of a company which are not traded on the stock exchange – decision of General Directorate of Wqf on 6th August 1999.
Result:
GDW managed waqf properties inherited from the Ottoman era are 37,917 properties
between republic in 1923 to 1967 – only 73 new waqfs were established.
Between 1967 to 1985 alone, 1877 new waqfs had been formed.
GDW takes 5% of net income of all awqaf as supervision and auditing fees
Turkey also has a “Thirrd Sector Foundation” which is a waqf representing 700 other waqfs
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