Wednesday, February 8, 2023
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Tax evasion, riba with oneself

Fatwaa ID: 454

Question:
Assalamu ‘Alaykum warahmatullah. I have 2 questions.
1) Because the government uses tax money to fund different wars and many impermissible things, is it permissible for me to not report income I made through cash transactions (with no receipt) on my tax return?
2) Is it permissible for me to engage in riba contacts in my businesses in between themselves? For example, if I have multiple businesses (all of which I own fully), and I write loan contracts in between them. In reality it’s all my money, just moving around in different places because the interest would be a deduction/expense for the business, letting me show less taxable income.

Answer:
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

  1. The government uses tax money towards many different avenues, some of which are beneficial and you also benefit from. They are not only used for impermissible things. This is aside from the fact that you are not responsible for that. Thus, it will not be permissible for you to lie or act deceptively with the government when filing for taxes. You must follow the fair laws of the country you reside in as long as it does not contradict your religious values. However, if there are legal strategems through which you can get deductions or pay less in tax, then you may use them to your benefit.
  2. The above will be permissible provided that you fully own both businesses. This would not be ribaa in reality. It will be permissible to get deductions through this as well.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

07/02/1444 AH – 01/24/2023 CE | AMG3-3226

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين

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