Avoiding paying taxes on bank deposits

10-3-2016 | IslamWeb

Question:

Assalaamu alaykum. I have some money which I kept in a Islamic Bank. The Bank gives me profits. Here, I do not find any service from the government, but the government taxes it. Am I bound to pay it? Of course, if I do not want to pay it, then I am to submit a statement concealing my income or showing the income on someone - who is actually not owner of that income - else's name. Please advice me according to the sharia.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad, sallallaahu ʻalayhi wa sallam, is His slave and Messenger. 

The religious ruling in this regard differs according to the kind of taxes. If these taxes are justly imposed and therefore imposing them is allowable by the sharee'ah, as is the case for the taxes imposed by the government to provide the essential services, e.g. paving roads, building hospitals and schools, and other public services, then it is not permissible for you to avoid paying these taxes, as they are taken (by the government) to provide services for the people. In this case, you are obliged to pay them and it is impermissible to try escaping them.

However, if these taxes are Islamically unjustified, as is the case when imposing taxes wrongfully for no real need or that the taxes are spent in other than their specified legal channels, then there is no harm on you to avoid paying them.

We have previously underlined the difference between the taxes imposed justly and those imposed unjustly and the religious ruling on avoiding paying each kind in fataawa 89947 and 85356.

Allaah knows best.